European development finance leaders and experts gathered for EDFI’s Annual Meeting, on 28 May 2021.
Executives from European DFIs met virtually to discuss strategic priority issues, including new ways for development finance to strengthen private sector development in emerging and developing countries. This annual gathering has become a key moment for European development finance leaders to take stock of progress and explore new strategic directions for the industry.
The Covid-19 response was the over-arching theme for European DFIs and their clients in 2020. EDFI member institutions responded quickly by stepping up cooperation in support of clients and early on declaring their determination to play a countercyclical role. The data on combined activities of the EDFI member institutions in 2020 demonstrated the effectiveness of the response:
- New commitments of €7.5bn
European DFIs continued to finance existing and new clients during a period where many other international investors retreated from emerging and developing economies. Collectively, new investments were €7.5bn, which was a decline of ~18% compared to 2019 but approximately at par with 2018. The response followed a decade-long period of growth in EDFI member institutions’ investment activity at a rate of almost 10% per year.
- Crucial role of impact investing in turbulent times
At the same time, EDFI members maintained their impact focus. The proportion of investments in sub-Saharan Africa (33%) and SME finance (20%) increased. The share of new investments reported as gender-smart according to the 2X Challenge criteria was 17%. EDFI-financed clients contributed to supporting more than 10 million jobs, and paying €15bn in taxes and fees to governments.
- Stepping up client advisory services and risk-sharing
EDFI members stepped up technical assistance provided to clients to €38m (40% increase), and blended concessional finance implemented on behalf of donor agency partners to €0.8bn (18% increase) in order to help clients to respond to the crisis.
While 2020 proved to be a challenging year, EDFI members reinforced their commitment to collaborate to support private sector development as a driver for reaching the SDGs.
EDFI members also adopted their new strategic plan for 2021-2023, which emphasises impact, DFI collaboration to respond to Covid-19, and partnership among European institutions.
IMPACT Harmonisation Initiative
European DFIs have long sought to be at the forefront of responsible financing for sustainable development and act as an example for other investors. The harmonisation initiative was launched in 2019 to build on DFIs’ experience as impact investors with a strong commitment to the effective measurement of impacts on the SDGs. The initiative has made strong progress in the harmonisation of impact measurement in respect of several SDGs: Gender Equality (SDG 5), Decent Work and Economic Growth (SDG 8), Reduced Inequality (SDG 10), and Climate Action (SDG 13).
EDFI members noted important progress in terms of gender smart investing. The majority of EDFI members have now adopted the 2X Challenge criteria. EDFI also continues to engage with a wider coalition of DFIs and private impact investors to promote the value of widely harmonised impact indicators such as the “Joint Impact Indicators” launched in March 2021.
A current priority in the harmonisation initiative is to deliver on the commitments made in the EDFI Climate & Energy Statement at the end of 2020 to align financing with the Paris Agreement.
THE response to covid-19
Collaboration among European institutions
Immediately following the coronavirus outbreak, European DFIs established a CIO Task Force responsible for coordinating the investment-related crisis response. The collaborative approach strengthened the response in support of clients affected by the crisis, and also included the establishment of a joint Covid-19 financing facility under the framework of the European Financing Partners facility.
European DFIs have emphasised the importance of support of the private sector in response to Covid-19, This has also allowed EDFI members to strengthen partnerships with EU institutions and strengthen their visibility within the “Team Europe” approach. EDFI members have adopted an EU Partnership Plan, which will reinforce the DFIs’ contributions in the European Financial Architecture for Development alongside other institutions over the coming year.
“It has been very important that DFIs continued to operate in emerging and developing economies affected by Covid-19 in a period when other investors are leaving or ceasing additional financing for these markets. This positions DFIs to be relevant partners for private co-investors during the recovery.” Søren Peter Andreasen, CEO, EDFI.
Strengthening joint financing platform to promote private sector development
European DFIs have taken a further step to reinforce their involvement in the ownership and governance of EDFI Management Company (EDFI MC), which is now owned directly by nine European DFIs and the EDFI Association in equal shares. During its incubation period since 2016, EDFI MC was 99%-owned by the EDFI non-profit association. The new structure allows the European DFIs to continue to develop joint financing facilities in areas of common interest. This is particularly relevant in view of the significant emphasis on expanding initiatives to promote private sector development in the EU’s recently adopted multi-annual financial framework for the 2021-27. In addition, EDFI MC became accredited to manage budgetary guarantees under the EU’s European Fund for Sustainable Development (EFSD), an important milestone recognising the company’s business practices and expertise built over the years.
APPOINTMENTS TO EDFI BOARD OF DIRECTORS
During the Annual Meeting, EDFI also elected a new Board of Directors, consisting of the CEOs of five member institutions and a Chairman serving in an individual capacity. The EDFI Board for the next two years is composed of:
- Bruno Wenn– Chairman
- Grégory Clemente – CEO, Proparco
- Maria Håkansson– CEO, Swedfund
- Marta Mariz – CEO, SOFID
- Nick O’Donohoe – CEO, CDC
- Luuk Zonneveld – CEO, BIO
“We are very pleased to welcome Marta Mariz and Grégory Clemente to EDFI’s Board of Directors. The new board will have the strong expertise, leadership and balanced backgrounds needed to lead EDFI in the coming years. It will play an important role to guide the Association’s work and oversee the implementation of its new strategic plan, which emphasises impact, strong partnerships and collaboration among DFIs.” Bruno Wenn, EDFI Chairman.
“The challenge for the forthcoming years will be the implementation of the new European Financial Architecture. European DFIs have proved their capacity to mobilize the private sector. EDFI`s activities are aligned with Sustainable Development Goals Agenda and with Paris Agreement. EDFIs together are prepared to deliver more. I am very proud to be joining the board of directors and hope to contribute to EDFI objectives.” Marta Mariz, CEO, SOFID
“Joining EDFI Board will help Proparco and the group of large members it represents, actively participate in EDFI’s key projects and we hope this will further strengthen EDFI’s position and voice”. Grégory Clemente, CEO, Proparco
The next EDFI Annual Meeting with shareholders and partners will take place in May 2022, in Rome hosted by Simest and CDP Development Finance.
Participants included representatives from the 15 EDFI members:
Simest and CDP Development Finance (Italy)