EU’s New Consensus on Development needs support

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EU external action is vital in preventing humanitarian disasters, such as the one unfolding in West Africa. [Giro 555 SHO/ Flickr]

With national discourse becoming increasingly insular, few politicians are brave enough to make the case for multilateralism on the domestic stage. But the need for multilateral action and effective support of development and growth outside Europe has never been greater, argues Werner Hoyer.

Werner Hoyer is president of the European Investment Bank.

Present humanitarian disasters such as that unfolding in parts of East Africa, where millions are being driven to starvation by drought and famine, undoubtedly demand immediate action. At the same time, we in Europe need to demonstrate how valuable and relevant our longer-term support is in building stability, resilience and prosperity beyond our borders.

We need to raise our game and inject new rigour and effectiveness into the way we operate together. That means deploying the full range of EU tools, expertise and resources at our disposal to the benefit of all countries. It also demands a relentless focus on impact and efficiency.

Where necessary we must be prepared to abandon some of our long held preconceptions about aid. One excellent starting point is to re-examine the relationship between development and finance, and take a good, evidence-based look at what is really needed and what is working on the ground.

This is why the New European Consensus on Development, at the top of this week’s EU Development Ministers Agenda is so very important. It represents a real opportunity for the EU to redefine how it works together beyond its borders and to set out a new EU development policy to reflect the sea changes we have seen of late with the adoption of the UN’s Agenda 2030 Sustainable Development Goals (SDGs) and the COP21 Paris Climate Agreement in particular.

Combined with the EU Global Strategy adopted last year, I believe the New Consensus has the potential to guide the EU to an approach which is genuinely fit for purpose. It will equip the Union and its institutions to face our future challenges and to make a real difference in delivering the SDGs.

I’ve been an economist in both foreign affairs and, now, in finance for more than 30 years. Whether in the national or the European realm, development and finance have often seemed compartmentalised, or even at times in competition, rather than actively working with each other.

Confronted with the stark reality of squeezed budgets and jostling political priorities, I became convinced that in order to generate the development and growth we all preached and promised, this needed to change.

At the heart of the EU’s New Consensus on Development is a recognition that development and finance must work hand in hand. There is a clear emphasis on the role of the private sector as a key partner in fostering more sustainable models of development. Combining public and private resources to leverage more investments is also at the centre of the way the European Investment Bank (EIB) operates.

For example, it is at the core of our new Economic Resilience Initiative for the Western Balkans and Southern Neighbourhood, allowing us to step up engagement particularly in challenging environments.

The fact that the EIB is present at the informal EU Development Ministers’ discussions this week is testimony to the progress we have already made in overcoming these separated policy silos of development and finance. In practice at the EIB, supporting development means confronting poverty and building opportunity but also explicitly investing in climate action, migration and mobility, sustainable innovative growth and jobs, trade and economic prosperity.

Last year 10% of our financing – €8 billion – went on thousands of projects outside the EU, mostly involving us working closely with the European Commission, regional banks and local partners.

There are many examples of what can be done when development and finance work symbiotically. The Malawi Agri-storage project particularly springs to mind. In one go, the EU Bank’s loan to the National Bank of Malawi (NBM) has been able to support financial sector capacity, small businesses, microenterprises and food security in one of the poorer countries in Africa.

This project, carried out according to EU standards, will bring finance to companies to build desperately needed agri-storage warehouses for harvested cereal crops in Malawi, reducing the risks of food shortages. It also means the National Bank of Malawi will be able to lend to the sustainable agriculture sector, considered vital to boost food resources and the Malawian economy as a whole.

Once complete, the sub-projects financed under this loan can be expected to create around 1,200 jobs in Malawi and improve incomes for around 130,000 people. The completed warehouses will have the capacity to store enough food to feed around one million Malawians for a year.

The evidence of the EU’s success outside its borders can only be measured on the ground both by the prosperity and jobs we create but also by our material support for good governance and peaceful societies.

I am firmly convinced we are going in the right direction with the New Consensus for Development and that the EU bank, through its support and modern approach to development and finance, will continue to act as a powerful multiplier of EU External Action and the achievement of EU and global goals.