Technical Assistance Facility for the Clean Ocean Initiative in Sub-Saharan Africa

Item Description:

The European Investment Bank (EIB) is the European Union’s bank, set up in 1958 by the Treaty of Rome and now existing under the Treaty on the Functioning of the European Union. The EIB’s shareholders are the 28 EU Member States. Whilst EIB’s main activities are focused on Europe, it has been an active development finance partner in the African, Caribbean and Pacific Countries (ACPs) and in the Overseas Countries and Territories (OCTs) since 1963 and 1968 respectively. The EIB supports the EU’s external and development policies.

Currently, the EIB operates in the ACP and OCT regions under the ACP-EU Partnership Agreement (also known as the Cotonou Agreement) and the Overseas Association Decision. Financing under these frameworks is provided from a mixture of the EU Member States’ budgets and the EIB’s own resources. Within these frameworks, the EIB is entrusted with the management of the Investment Facility, a revolving fund which provides financial instruments that allow it to support a wide range of higher risk operations. The Investment Facility supports projects promoting the development of the private sector and commercially-run public enterprises.

In accordance with Article 2.9 of Annex II to the ACP-EU Partnership Agreement, up to 15% of the budget for interest rate subsidies may be used to support project related technical assistance in ACP countries.

The EIB in Sub-Saharan Africa and Market Outlook

In line with the objectives set out by the international community in the United Nations (UN) Sustainable Development Goals (SDGs), as well as the European Consensus on Development, EIB’s overriding aim in Sub-Saharan Africa and the ACP region in general is to support projects that deliver sustainable economic, social and environmental benefits whilst ensuring strict accountability for public funds.

A number of positive factors underpin SSA’s macroeconomic outlook:

• Growth recovery. Growth is projected to pick up from 3.0% in 2018 to 3.5% in 2019 and to further accelerate to 3.7%. Over the medium term, and based on current policies, growth is expected to further accelerate to about 4% (5% if Nigeria and South Africa are excluded). On the demand side, the gradual recovery is underpinned by private consumption and exports. On the supply side, it is being sustained by improving agricultural, mining and service output.
• Significant market friendly-reforms. SSA was the region with the highest total number of reforms according to the latest two editions of the WB Doing Business. Djibouti, Togo, Côte d’Ivoire and Kenya were amongst the 10 economies with the most notable improvement in Doing Business 2019. Mauritius now ranks 20^th (out of 190 countries) and remains the highest ranked economy in SSA. The next four best-ranked SSA countries are Rwanda (29^th), Kenya (61^st) South Africa (82^nd) and Botswana (86^th).

However, several economic and institutional characteristics constrain the outlook:

• Structural bottlenecks and widespread poverty. Despite market friendly-reforms, the region still underperforms in the following areas: Getting Electricity (average ranking in the region: 145^th), Trading across Borders (139^th) and Registering Property (131^st). Infrastructures are of poor quality in almost all the countries in the region, while access to finance is difficult albeit improving in some countries. Many SSA economies remain poorly diversified, making them vulnerable to exogenous shocks. Poverty remains widespread and with population growth estimated at 2.7% per annum (World Bank, 2017), currently expected growth rates fall short of what is needed to make a significant dent in the poverty rate.
• Weak governance. Despite improvements, many countries have weak institutions and still need to significantly enhance their revenue mobilization and public finance management systems. Tax revenue mobilization improved substantially in recent decades, but the average tax-to-GDP ratio is still below 18%, below the 25% threshold deemed sufficient to scale up infrastructure spending.
• Rising public debt levels. Public debt has risen from an average of 31% of GDP over the period 2010-15 to 48.5% in 2018. Foreign currency-denominated public debt increased from 23% of GDP in 2011-13 to 32% in 2017, signalling an increased exposure to foreign exchange risk. The IMF classifies 16 countries in SSA as either at a high risk of debt distress or already in debt distress. The share of concessional and multilateral lending is on a clear downward trend, with the bulk of bilateral lending provided by non-Paris Club creditors. Although the official sector remains the largest creditor group, private banks and bondholders increased their share to total debt by creditor to 15%. This shift is translating into heightened financial risk for borrowing countries.

The Clean Ocean Initiative

The Clean Ocean Initiative (COI), which forms the basis and framework for this assignment, was launched by the European Investment Bank (EIB), KfW group and Agence Française de Développement (AFD) in October 2018. The three banks have committed to a COI financing goal, including both loans and grants of EUR 2bn in the period 1 October 2018 – 31 December 2023.

The objective and goal of the COI and the scope of interventions are described below. It should be noted that this is a description of the COI in general and not of this specific assignment.

a) Objective and goal of the COI initiative

The Clean Oceans Initiative supports the development and implementation of sustainable, viable, low carbon projects that reduce pollution in the oceans, with a particular focus on plastics. To the extent possible, projects should demonstrate effective and efficient ways of reducing and/or preventing plastics and waste discharge in oceans.

The projects are expected to have positive environmental, climate and social impacts, not only in rivers and the sea, but also on land, as mismanaged waste and untreated wastewater adversely affect the environment, public health and quality of life in many cities and regions around the world.

b) Geographical scope of the COI Initiative

The COI is global in nature, with a particular focus on coastal countries in Asia and Africa. Projects in Latin America, the Caribbean and Europe are also eligible. However, the geographical focus of this assignment is Sub-Saharan Africa.

Projects shall be located in coastal/riverine cities/regions. Where not immediately evident, such as for landlocked cities/regions or in riverine locations far from the sea, the impact on ocean pollution reduction shall be justified on a case-by-case basis.

c) Project scope of the COI Initiative

Project types that contribute to the goals of the COI are listed below.

• Solid waste management with focus on plastics:
  • Collection, pre-treatment, recycling or recovery of plastics, other recyclable materials and bio-waste
  • Safe disposal of residual waste in sanitary landfills
  • Waste management in ports and harbours to reduce marine littering
  • Innovative plastics projects: projects that contribute to reduce plastics discharge in oceans, or to the development of new/improved reusable/recyclable plastics or bio-degradable plastics
  • Institutional support for plastic prevention and market development: EPR, single-use plastic bags, green public procurement, value-chain integration and support, public awareness building, etc.

Coverage: Plastics and waste management on land, in rivers and in near coastal parts of the sea, also covering informal settlements, informal sector, new forms of collection such as buy-back centres, and value chain support.

• Wastewater management systems
  • Wastewater treatment plants
  • Wastewater collection networks
  • Sludge management systems

Coverage: the systems must reduce discharge of plastics (including microplastics) to waterways, rivers and oceans, e.g. through screens, traps and other similar measures in inlet/pre-treatment/outflows, and the projects should include acceptable handling of extracted plastics / waste.

• Urban storm water management systems
  • New drainage and storm water management systems
  • Renovation and upgrades of existing drainage and storm water management systems

Coverage: Objects/components that contribute to preventing waste/plastics discharge in drains, waterways and the ocean through control of storm water. The projects must include plastic/waste traps or other similar measures to prevent discharge of plastics and acceptable handling of the extracted plastic / waste.

d) Project support under the COI Initiative

The three above-mentioned banks will support COI projects through the following means:

• Providing long-term financing to the private sector (both directly and indirectly) and to the public sector (both sovereign and sub-sovereign counterparties). Where justified, this may include tailor-made financing structures also catering for the needs of private enterprises of varying scale, including micro-enterprises, and for research and innovation projects
• Securing/deploying investment grants to improve the financial viability of projects, leverage positive environment, climate and social impacts and address affordability concerns
• Deploying technical assistance to support local authorities in the development and implementation of viable projects

The three banks will provide funding for COI projects individually, in cooperation with one of the COI partner banks, or together with other banks and institutions.

A major challenge in the implementation of the COI will be to identify and prepare projects that have a tangible impact and clear demonstration effect in countries and cities where the needs are highest. The Bank’s experience is that significant resources are required, not only to prepare projects and support their implementation, but also to bridge funding gaps and provide institutional development and capacity building support required to ensure sustainable project outcomes. This is in particular the case for solid waste projects, which are at the core of tackling plastics discharge to oceans.

All projects identified under this assignment should be aligned to and contribute to the objectives of the Clean Oceans Initiative.

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