The EU’s Global Gateway aims to mobilise infrastructure investments of up to €300bn by 2027. The major focus on capacity-building could leverage even longer-lasting private investment.
The EU Global Gateway has been welcomed by industry and is one of the largest international development programmes ever created. Behind its ambitions for digital, transport and energy infrastructure is a drive to enhance investment capabilities that could radically improve long term prospects.
What the €300bn is made up of?
The initial financing comes from several different sources of funding, but primarily these are:
- €135bn in investments made possible by the European Fund for Sustainable Development Plus (EFSD+), including a new initiative with the European Investment Bank (EIB) that could bring €25 billion of additional investments;
- Grant financing of up to €18bn under other EU external assistance programmes; and
- €145bn of planned investment volumes by European financial and development finance institutions.
Leveraging private finance mobilisation
Just as importantly, the EU has set out plans to significantly de-risk private investment in infrastructure around the world.
Its Neighbourhood, Development and International Cooperation Instrument (NDICI) has established a guarantee mechanism for up to €53.4bn of investment, and the EU plans to further leverage private investment through its Pre-Accession assistance programmes and the Horizon Europe programme.
Importantly, the EFSD+ will be the main tool for mobilising additional private investments. This will be used to de-risk project investments alongside the EIB and the European Bank for Reconstruction and Development (EBRD).
The EU also plans to co-ordinate across its member states to better engage with multilateral development banks (MDBs). This could see it strongly influence board-level support for Global Gateway projects.
It is also exploring the possibility of establishing a European Export Credit Facility to complement the existing export credit arrangements of member states. This would help ensure a more level playing field for EU businesses in third country markets.
Transparency and good governance
Potentially most significant, is that the Global Gateway aims to create an enabling environment for mobilising infrastructure investments. Indeed, the EU is making this, along with high technical outcomes, competition, and environmental, social and governance standards, a high priority for all activity.
As a result, the EU plans to:
- Strengthen domestic resource mobilisation in partner countries;
- Improve public finance management and debt management;
- enhance and improving debt sustainability; and
- Facilitate reforms in partner countries to establish transparent, non-discriminatory, and sustainable regulatory frameworks aligned with international standards,
Work will also be conducted to scale up access to sustainable finance in low-and-middle-income countries while helping those countries to develop comprehensive infrastructure plans and develop credible pipelines of projects.
If this approach proves successful, the improvement in the investment and project delivery environment across dozens of partner countries would be dramatic. It could potentially open up the prospect of an even larger scale of impact on infrastructure than the initial €300bn of spending.