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Blending grants with loans for EA development-European Day Supplement

By Vision Reporter

Added 10th May 2012 03:48 PM

The European Union Delegation in Uganda has exchanged views with many stakeholders in the East African Community region, partner institutions within the Ugandan Government.

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The European Union Delegation in Uganda has exchanged views with many stakeholders in the East African Community region, partner institutions within the Ugandan Government.

By Joyce Nyakato

The European Union Delegation in Uganda has exchanged views with many stakeholders in the East African Community region, partner institutions within the Ugandan Government. Others are European Union Member States active in the region, International Monetary Fund and other development banks.

This is in an attempt to find a concrete way of implementing the new approach to development cooperation. It is included in the recent European Commission’s Communication “An Agenda for Change” and within the framework of the preparation of the programming exercise for the next 11th European Development Fund.

Importance
The efforts are aimed at limiting grant allocation to substantially contribute to leveraging loans and financing infrastructure development in the region. According to the European delegation in Uganda, blending of EU grants with loans coming from different types of financial institutions, including private capital and banks, could be one the most effective methods to boost infrastructure development and consequently assist the region in developing its huge potential.

Uganda needs a sound transport, communication, energy, water and sanitation systems to realise quick development. Therefore, the development impact of blending the EU grants with loan finances can be much faster than continuing with the traditional grant financing.

The leverage will accelerate the process of infrastructure development to facilitate access to markets, access to energy and water supply and sanitation. It will also assist the region to reach and maintain the desired level of sustainable and inclusive growth. The fund size is yet to be determined.

The already existing EU-Africa Trust Fund for Infrastructure could be potentially restructured. Additionally, it could use the already available regional funds, allocated within the national EDF envelope of a given country, to be blended with loans coming from a variety of financiers. Another national institution could be entrusted to manage the mechanisms of blending EDF funds with loans.

The main investors will be the European Union and EU member states, official finance institutions, private banks, international finance institutions and foundations. Other include National Social Security Funds (NSSF) and other interested private investors from Uganda and abroad.

Investments will focus in the fields of energy, water, urban sanitation, communication, transport infrastructure (land acquisition excluded) Technical assistance will be given by European Commission, European Investment bank, European Union, MS development agencies. Other already existing investment funds, private banking institutions or foundations working with Uganda will also participate.

European Development Funds could be used for preparation of feasibility study and business cases, among others. Most importantly, technical assistance will be required in the quality management of the execution phase of the infrastructure projects.

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Blending grants with loans for EA development-European Day Supplement

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