Audit report squanders opportunity to address EIB development effectiveness

The European Court of Auditors yesterday released a long-overdue report evaluating an important financing mechanism of the EU development cooperation. However, the audit of the European Investment Bank’s ACP Investment Facility takes a purely financial perspective on the mechanism, instead of looking at results delivered on key development objectives. As it stands, the audit offers no added value to the debate on the effectiveness of EU efforts toward achieving the Sustainable Development Goals. The Court’s conclusion on the Facility’s ‘success’ is thus utterly misleading.

The ACP Investment Facility is a financial tool of the European Investment Bank (EIB). It supports private development investments in developing countries in Africa, the Caribbean and the Asia-Pacific Region with public funds, contributed to by EU Member States under an agreement made between the EU and ACP countries in 2000.

Although it is positive to note that yesterday’s report is the first evaluation of an EIB development finance instrument in decades, the audit focuses only on the financial added value of this support.

It neglects to assess the mechanism’s effectiveness at bringing about tangible results for beneficiaries and advancing vital sustainable development objectives, such as the reduction of poverty and inequality, strengthening women’s economic opportunities and tackling climate change. Considerations of the mechanism's human rights safeguards, as well as its impact on social and environmental issues, taxation, innovation and employment are sidelined.

Oxfam’s EU Policy Advisor on Development Finance, Hilary Jeune, said: “This failure to provide an independent evaluation of the Investment Facility’s impact on beneficiaries and their communities represents a skewed approach. It is absurd to assess just the financial added value and not look at qualitative results at the same time. Because of this, the audit does not offer sufficient guidance on which to base future decision-making on the extension of, and the budget for, this type of development financing mechanism.”

Action Aid, Bond, CAFOD, Counter Balance, EURODAD and Oxfam have underlined the crucial importance of taking such evaluations beyond simple number crunching. Only the inclusion of qualitative indicators for human development goals can lead to a thorough evaluation of the effectiveness of development financing mechanisms.

The organisations therefore call on the European Court of Auditors to undertake further research in this line, and to offer greater transparency concerning the criteria used in its assessments. Prior to any extension of funding for financing instruments like the ACP Investment Facility, which combine EU grants with mostly private investments, the impact of such blending mechanisms on sectors such as education and health care need to be properly investigated.

By drawing on existing sustainable development criteria for public-backed private finance which have been developed by the organisations, the auditing body could address the shortcomings of its most recent report. This would enable the European Investment Bank to ensure that its financing instruments maximise tangible positive benefits for end beneficiaries.