OREANDA-NEWS. January 28, 2013. KfW, the French Development Agency (Agence Francaise de Developpement - AFD) and the European Investment Bank (EIB) have agreed on a unique model for improving coordination and division of work among development banks for joint infrastructure projects in the energy and water sector in developing countries (Mutual Reliance Initiative, MRI). The model falls under the framework of foreign and development policy of the European Union and the international Aid Effectiveness Agenda. Among others, the initiative is used with projects in which EU grants are employed.

"This initiative aims to increase the synergies between the European financial institutions through a division of tasks when implementing the project. It contributes to improving the effectiveness, efficiency and impact of European development cooperation efforts. At the same time it allows the MRI partners to meet the urgent investment needs in the partner countries by leveraging the EU grants," said Dr Norbert Kloppenburg.

The MRI agreements foresee that most of the tasks related to projects will be carried out by a lead financier over the entire project cycle. These include the inception reports, the preparation of the lending decisions and the implementation of the financed projects. One of the three partners takes on the role of lead financier for each selected project. Only the respective financing agreements and rules associated with the disbursement of the commitments remain under the control of the partners.

The three partners are important actors of European foreign and development policy; nevertheless, they conduct their work under different legal and administrative framework conditions. Therefore, it was a key aim of the MRI to create detailed and binding guidelines for implementing financings that take into consideration the requirements of all partners fairly. The executing agencies of investment projects in the EU partner countries benefit from a larger financing volume and a simplified partnership, as the MRI financiers speak with one single voice.

In a preparatory pilot phase, since 2010 already 14 jointly financed projects in sub-Saharan Africa and the Middle East/North Africa have been successfully completed. For example, an electricity transmission project in Egypt, a countrywide water sanitation project in Morocco and the water supply system in the Ugandan capital of Kampala.

The projects, in which this financing mechanism was utilised, are primarily infrastructure projects with a strong orientation on poverty reduction, employment and climate protection. The focus is on providing access to broad sections of the population to energy and water.

Starting immediately, the MRI is also available for projects in other regions such as Asia, Latin America and Eastern Europe. In principle, the plan is to extend the MRI to other interested development finance institutions.