In a bold step to turbocharge global development and foster private sector expansion in emerging markets, the European Commission and the International Finance Corporation (IFC) have officially signed a landmark guarantee agreement worth €291 million. The agreement, announced today, underpins the EU’s Global Gateway strategy and signals a powerful new chapter of collaboration aimed at mobilizing private sector investments, driving economic growth, and generating jobs across key regions worldwide.

Under the framework of the Better Futures Programme, the European Union will channel up to €291 million in financial guarantees to the IFC. This strategic move is expected to unlock more than $1 billion in private sector investments, particularly in critical sectors like energy, manufacturing, and agriculture. Special attention will also be given to micro and small businesses, alongside projects supporting climate adaptation—areas seen as fundamental to building resilient and sustainable economies.

This initiative is especially focused on EU enlargement countries, the Eastern and Southern Neighbourhood, sub-Saharan Africa, the Asia-Pacific region, Latin America, and the Caribbean—regions that often face significant investment gaps and structural barriers to economic growth.

A Strategy to De-risk and Catalyze Investment

A key feature of the new partnership lies in its de-risking mechanism. In many emerging markets, high levels of uncertainty deter private investors from participating in critical sectors, even when the potential for returns is significant. Political instability, currency fluctuations, and weak infrastructure are among the factors that often elevate risk levels.

By offering guarantees, the EU effectively mitigates these risks, making investment ventures more attractive to private actors. If losses do occur, the EU’s guarantees provide a financial safety net, thereby boosting investor confidence. Such de-risking is not just a financial instrument—it is a catalyst for large-scale economic transformation, unlocking capital that might otherwise stay on the sidelines.

Makhtar Diop, Managing Director of IFC, emphasized the transformational nature of the collaboration. “By reducing risk, we unlock private sector potential—a powerful engine for job creation and economic growth. This collaboration drives new opportunities and helps replicate success and prove the strength of private sector solutions,” Diop stated.

An Investment Blueprint for Global Development

Today’s announcement fits squarely within the Global Gateway strategy—a €300 billion plan launched by the EU in 2021 to address the massive global infrastructure and investment gap, particularly in developing and emerging economies.

Rather than fostering dependency, the Global Gateway seeks to empower countries to build sustainable, smart, and secure connections, particularly in digital technology, clean energy, transportation, education, and healthcare. It promotes a “Team Europe” approach, pooling resources and expertise from EU institutions, Member States, and European development finance institutions.

EU Commissioner for International Partnerships, Jozef Síkela, highlighted the mutual benefits of the agreement. “This €291 million EU guarantee not only drives sustainable growth and resilience abroad, but also opens new markets and business opportunities for European companies. By investing in strategic sectors like energy, manufacturing and agriculture, we are fostering mutual prosperity, building strong economic ties, and supporting lasting economic transformation,” he noted.

Indeed, this model moves away from traditional aid dependency toward fostering genuine economic partnerships based on investment, innovation, and mutual interest.

Regional Focus: Investing in Resilience and Stability

While the scope of the initiative is truly global, specific focus areas have been outlined. The deployment will span Southeast Europe, Türkiye, Asia-Pacific, Sub-Saharan Africa, and the Middle East and North Africa. These regions represent both enormous opportunity and significant development challenges.

For instance, €90 million of the total guarantee amount had already been earmarked through an agreement signed last year for targeted investments in Armenia, Azerbaijan, Georgia, Moldova, and Ukraine. These countries, particularly Ukraine given the ongoing conflict, require urgent economic support to maintain resilience and continue progressing towards EU standards.

EU Commissioner for Enlargement, Marta Kos, stressed the importance of supporting the EU accession process through targeted investment. “The guarantee that we are signing today with our partner IFC has an important focus on supporting the EU accession process in our Enlargement and Eastern Neighborhood regions. It will boost economic convergence with the EU by mobilising private investment at scale in key sectors such as energy, manufacturing and agriculture,” Kos explained.

Meanwhile, EU Commissioner for the Mediterranean, Dubravka Šuica, pointed out the significance of the initiative for countries in the Middle East and North Africa (MENA) region. “Thanks to our collaboration with the IFC we improve the security and reliability of private investments in the Middle East and North of Africa. Today’s agreement will contribute to unleashing the untapped investment potential in these regions, unlocking new opportunities for small and medium businesses and supporting the green transition,” she said.

This strategy not only promotes economic growth but also reinforces political and social stability by addressing some of the root causes of fragility and migration pressures in these regions.

About the Institutions Behind the Initiative

The €291 million guarantee is backed by the European Fund for Sustainable Development Plus (EFSD+), a central financial pillar of the EU’s external investment strategy. EFSD+ plays a pivotal role in the EU’s efforts to deliver the Global Gateway, offering financial guarantees and blended finance to make projects in challenging markets bankable.

With a global guarantee capacity of €39.8 billion for the 2021–2027 period, EFSD+ aims to stimulate private sector-led sustainable development, creating jobs, reducing inequalities, and contributing to the green and digital transitions worldwide.

Meanwhile, the IFC, a member of the World Bank Group, is the world’s largest development institution focusing solely on the private sector in developing markets. In fiscal year 2024 alone, the IFC committed $56 billion to private companies and financial institutions across over 100 countries. Its mission is to leverage private capital and expertise to eradicate poverty and boost shared prosperity on a livable planet.

The combination of the EU’s policy leadership and guarantee capacity with IFC’s investment expertise creates a potent formula for driving impactful and sustainable development.

Broader Implications: Private Sector at the Heart of Sustainable Development

The collaboration between the EU and IFC exemplifies a wider shift in global development thinking: the private sector is no longer seen as an add-on but as a central player in achieving sustainable development goals (SDGs).

Investments in infrastructure, energy, agriculture, and digital connectivity are vital to lifting millions out of poverty, ensuring food security, and enabling access to essential services. However, the scale of investment required vastly exceeds what public resources alone can deliver. Private sector capital, innovation, and management expertise are indispensable.

The €291 million guarantee program showcases how strategic public-private partnerships can bridge funding gaps, introduce best practices, and create lasting economic ecosystems rather than temporary relief.

Crucially, the initiative is also closely aligned with global climate goals. Many of the targeted projects will include climate adaptation measures, renewable energy solutions, and green technologies. This integrated approach ensures that economic growth does not come at the cost of environmental degradation—a key principle of both the EU Green Deal and the IFC’s own sustainability framework.

Conclusion: A Future Built on Partnership

The signing of the €291 million guarantee agreement between the European Commission and IFC is more than just a funding announcement. It is a strategic, values-driven investment in the world’s collective future. By reducing risk and mobilizing private capital, the EU and IFC are planting the seeds for sustainable growth, resilient livelihoods, and deeper economic cooperation.

As Global Gateway projects begin to roll out across continents, the world will be watching to see whether this model of partnership—one that centers around trust, mutual benefit, and long-term sustainability—can truly transform development finance.

One thing is clear: with targeted guarantees, smart investments, and genuine collaboration, the road to a more connected, prosperous, and inclusive world is well within reach.

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Photo source: Google

By: Montel Kamau

Serrari Financial Analyst

29th April, 2025