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European Development Finance Institutions (EDFI)

The association of European Development Finance Institutions (EDFI) was set up in 1992. It has 15 members dedicated to financing the private sector in emerging and developing countries. EDFI's role is to promote technical and financial cooperation between its members, as well as with the other bilateral, multilateral and regional development finance institutions.

EDFI website

This cooperation between European institutions has led to the signing of several agreements that provide a framework for their investments, such as the Principles on Responsible Financing and Guidelines for Offshore Financial Centers.

It has also led to the creation of two mutual funds: 

  • European Financing Partners (EFP), dedicated to financing the private sector in the ACP (Africa-Caribbean-Pacific) region
     
  • Interact Climate Change Facility (ICCF), dedicated to the development of renewable energies and energy efficiency in Southern countries

European Financing Partners (EFP) was set up in 2004 by the European Investment Bank (EIB) and 12 EDFI members, including Proparco. It is a joint venture dedicated to financing private sector operations in African, Caribbean and Pacific (ACP) countries.

EFP contributes to promoting sustainable private sector development in ACP countries, but also to strengthening cooperation between European financial institutions, especially between EDFI members and EIB.

Several operations conducted by Proparco have benefited from EFP sub-participations, such as a telecoms project in Tanzania (Millicom) and energy project in Jamaica (JPS), as well as a project for infrastructure in Sub-Saharan Africa (Africa Finance Corporation).

The Interact Climate Change Facility (ICCF) was set up in 2011 by AFD, the European Investment Bank (EIB), PROPARCO and 10 other EDFIs. It is a mutual investment fund dedicated to financing private sector operations for renewable energies (wind, solar, hydroelectric…) and energy efficiency in developing and emerging countries. This initiative is today held up as an example in terms of financial and technical cooperation among donors for “climate” projects.

The aim of ICCF is to contribute to reducing greenhouse gas emissions and promoting best environmental and social practices.

Between 2012 and 2014, ICCF committed EUR 269m for 15 “climate” projects submitted by its members, first and foremost PROPARCO, FMO and DEG. ICCF contributes a maximum of two-thirds of the cost in senior or subordinated loans, with the originating EDFI member providing the remaining third.

To date, AFD and PROPARCO have been among its main financial contributors in terms of financial input (a total of EUR 165m out of the EUR 458m available, i.e. 36%) and the amounts committed (EUR 101m out of a total of EUR 269m, i.e. 38%).

This approach reflects the commitment of European Development Finance Institutions to pool their resources and harmonize their practices in order to increase their impacts on development. It also contributes to enhancing their results and their joint positions on the private sector’s role in the South with national governments, international organizations and the European Union.

Building on a portfolio of about EUR 50bn in 2020, EDFI members are continuing to develop their technical and financial cooperation via staff training and exchanges, the organization of regular meetings between their teams, cofinanced operations…

In 2016, EDFI Management Company (EDFI MC) was established. It implements European Union financing for business development. EDFI MC manages ElectriFI and AgriFI, two instruments financed by the EU to promote renewable energies and sustainable agriculture in developing countries, as well as other cofinancing mechanisms (such as European Financing Partners (EFP) and the Interact Climate Change Facility (ICCF)). In February 2021, Proparco acquired a 12.5% stake in EDFI MC.

By working exclusively with the private sector, EDFI has developed a specific role in Europe and among European institutions based on its extensive experience and expertise. For example, 74% of European Union funds allocated to the private sector in Sub-Saharan Africa are channeled through EDFI. 

Further reading

Private Sector & Development #43 - European development finance institutions: strategic players in changing ti...

This issue highlights the levers for action of European development finance institutions, who invest over €12 billion a year in the private sector in emerging countries. This issue was prepared in col...

Published on may 21 2025