The largest source of grant finance for EIB mandates for blending worldwide is the so-called “EU contribution” contracted with the European Commission (EC).
The EC has established a number of regional blending facilities grouped under the EU Blending Facilities framework. This framework covers the entire geographic range of the EU’s external cooperation policy and key policy areas of intervention. As such, it contributes to the strategic development goals of the EU and partner countries.
The framework of the Neighbourhood, Development and International Cooperation Instrument – Global Europe (NDICI – Global Europe) provides access for the EIB to EC blending resources, in order to better support countries facing long-term development challenges and to contribute to the EU’s international commitments and objectives.
The EIB is also part of the Western Balkans Investment Framework (WBIF), a joint initiative of the EU, financial organisations, bilateral donors and beneficiaries. WBIF aims to enhance harmonisation and cooperation in investments for the socio-economic development of the region and contribute to the European perspective of the Western Balkans.
How it works
The EIB enters into agreements with the European Commission (representing the EU) for specific operations under the various NDICI blending facilities.
The principle of blending mechanism outside the EU is to combine long-term financing from eligible financial institutions (FIs), such as the EIB, with EU grant financing, and to attract loans or equity investments from public authorities and private financiers.
On a case-by-case basis, the EU grant contribution can take different forms to support investment projects:
- Investment grant - decreasing the total funding needs for the promoter/partner country at given investment project costs or Interest rate subsidy - reducing the total amount of debt service
- Technical assistance - ensuring the quality, efficiency and sustainability of the project
- Financial instruments such as: risk capital (i.e. equity, quasi-equity) - attracting additional financing or Guarantees - unlocking financing for development by reducing risk
Who benefits
What is blending?
Blending involves the strategic use of a limited amount of grant resources to catalyse additional financing for development projects. Grants are often combined with loans, equity, beneficiary resources or other forms of financing, with the aim of de-risking projects and making them bankable. Blending allows partners to get the most out of their grant resources and enhance their overall development impact.
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