The European Commission (EC) is about to approve the revised Development Cooperation Instrument (DCI), which has an explicit poverty reduction focus. The EC´s new proposed development strategy – the Agenda for Change – places ‘inclusive and sustainable growth for human development’ at its center. It also introduces a change of focus towards channeling Official Development Assistance (ODA) funds to the private sector. ´Blending mechanisms´- investment facilities that mix EU grants with loans are being promoted as result of this trend. The EU Latin American Investment Facility (LAIF) is an important example. These mechanisms are designed to mobilise additional financing to support development, especially for large infrastructure projects but also for SMEs, under the framework of the “green economy” model.

As of September 2012, ten projects have received final approval from the LAIF operational board headquartered in Brussels. Of these projects, five are regional or country projects in Central America, and three cover all of Latin America. The European Commission is responsible for informing the European Parliament and society as a whole about the possible strengths and weakness of “blending” as a method of poverty reduction. Questions also arise about effectiveness of the private sector as a new aid provider and its role in setting strategic priorities. The lack of opportunities for local beneficiaries’ participation is also concerning. Further issues that need clarification include the absence of minimum requirements for project selection, monitoring and evaluation, sound and transparent socio-environmental safeguards and accountability. The distinguished members of the European Parliament would like to invite you to hear the conclusions of a series of reports carried out by civil society organizations on this subject, accompanied by the testimony of experts, researchers and Latin American representatives.

 

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