Vice-President Fayolle on financing a green and just recovery through Global Gateway in Africa

It is a great pleasure to welcome you to this panel on financing a green and just recovery through Global Gateway. Investors are faced with growing uncertainty, following the COVID-19 pandemic and Russia’s invasion of Ukraine. The global economy is longing for stability, to recover and transform.

Let me highlight that the climate is changing faster than our capacity to adapt to it. We must speed up investment to cut emissions or face dramatic consequences. The window of opportunity for action is still open.

But the global investment gap is not closing. Global infrastructure investment collapsed in 2020, because of the pandemic. It took almost two years before it returned to pre-pandemic levels.

In short: the world needs a positive investment impulse, and it needs it now.

We are talking about investment in clean energy, in roads and bridges that are flood-proof, or buildings that can withstand extreme heatwaves. But also, investments to prepare health systems for the pandemics of the future, and to adapt farming to drier conditions. Investment to equip our workers with skills that match the jobs of tomorrow. And investments in digital infrastructure, because the fuel of the new economy is data.

This is where the European strategy, Global Gateway, comes into play. Global Gateway is Europe's initiative to foster investment in priority sectors. It aims at mobilising €300 billion by 2027, half of it in Africa, for projects that are sustainable both for the environment and for citizens, allowing for enhanced resilience to shocks and opportunities for socio-economic development. To bring our economies and societies closer, through cooperation and partnerships. There is no need to say this is crucial in areas such as health and vaccination, food security and agriculture value chains, and more globally on the climate action front.

In this framework, the European Investment Bank is redefining its role as a multilateral development bank. We have become Europe's climate bank. We are focused on the quality of our investment, maximising the impact of every euro we spend, in terms of environmental and sustainability impact, as well as in job creation and innovation.

Our goal is to mobilise as much private investment as possible. We need an “investment revolution” that goes well beyond the public sector to make the most of the green and sustainability opportunities of the 2020s. To do so, we must explore new forms of global cooperation on green finance, towards a climate-friendly economy. Last month in Abidjan, our Finance in Common summit came to the conclusion that climate change can only be addressed through global cooperation and joint public and private finance mobilisation.

Public institutions need to go the extra mile in thinking how to generate more value and make our value proposition attractive for private investors, crowding them in. We need their creativity, their risk-taking attitude, and their financial firepower.

The EIB’s Climate Bank Roadmap sets the course for our action until 2025 and beyond. Our transformation into the EU’s climate bank entails the following objectives, which are fully in line with Global Gateway:

• Scaling up and accelerating the green transition, using scarce public resources, to bring along the private sector and our partners, particularly in Africa.
• Blending public and private finance. For instance, in 2021, the EIB entered into cooperation with Allianz to develop a fund-of-funds to mobilise capital for climate action in developing countries. This fund-of-funds has already made its first investment in ARCH Cold Chain Solutions East Africa Fund, which finances temperature-controlled storage and distribution infrastructure in East Africa to cut emissions from post-harvest food loss, among other things. We encourage further partners to join in this initiative.
• We contribute to the development of green finance through financial markets (and we look forward to helping operationalise the EU Taxonomy). Much of this is through Green and Sustainability Awareness bonds, which scale-up the mobilization of resources to finance sustainable projects. Let me highlight that, in 2022, the European Investment Bank is the largest multilateral development bank issuer of green, social and sustainability bonds, with over €50 billion in Climate Awareness Bonds and around €9 billion in Sustainability Awareness Bonds.
• The green bond market needs particular support for expansion. The experience with green bonds has shown that these are excellent tools for scaling up volumes of green finance. However, they remain too scarce in the poorer regions of the world. The EIB stands ready to support the growth of green bonds in emerging and developing regions and is proud to be part of a global Team Europe Initiative to scale up Green Bonds in emerging and developing countries, the Global Green Bonds Initiative. The EIB will participate together with other leading European Development Financial Institutions in this equity vehicle to purchase green bonds in emerging and developing markets. The Global Green Bonds Initiative will provide a tag-along technical assistance to enhance issuing capacity of local issuers and support first time issuers in partner countries. We hope that the fund will go live in 2023.
• Another example would be the Greening Financial Systems Technical Assistance Programme, under which we support financial institutions and corporates to launch their first green bonds and to align their activities to a low carbon transition. We are also partnering with the European Commission and other EU stakeholders to create a platform to invest on first issuances of green bonds in the African continent.
• And a very important point: we leave no one behind. We need to support a ‘just transition’ for the regions, communities and businesses most affected by the shift to a low-carbon economy—those who are most vulnerable to the negative impacts of a changing climate.

To scale up climate action, particularly in Africa, we are ready to take on more risk. Typically, we finance up to 50% of a project. We have decided to increase this to 75% for projects that are primarily motivated by climate change adaptation – and up to 100% for projects in the most vulnerable parts of the world.

Climate, innovation, and development, are inseparable parts of the same approach. We cannot afford that measures and projects in one country are to the detriment of others, whether this concerns energy, vaccines or food. We need global schemes that protect the most vulnerable, while serving common objectives.

For all this to happen we need a new, strong partnership model, forged on trust and respect, and respect begins with listening to each other. In Team Europe, the European Union, together with member states and European financial and development institutions, seeks to mobilise the private sector to leverage investment. I can assure you that the European Investment Bank and our development arm, EIB Global, are listening and eager to learn and share. We are ready to be, within Global Gateway and Team Europe, part of strong, strategic partnerships between the African Union and the European Union, in strategic sectors for us all.

Thank you for your attention.