Lessons from Western Balkans Investment Framework: A development cooperation model that delivers

As Western Balkans Investment Framework has celebrated its tenth year anniversary in 2019 and is looking ahead with even more ambition for the next decade, it is time to reflect on the lessons learned.

WBIF was established in December 2009 by the EC, the partner IFIs - EBRD, EIB and CEB - and 19 bilateral donors, and was subsequently endorsed by the European Council. Subsequently, KfW, the World Bank and more recently AfD joined this partnership. The WBIF is an innovative financing initiative, which pools grant resources in order to leverage loans for the financing of priority infrastructure and socio-economic development in the Western Balkans. 

During the past decade, it has approved over €1 billion in grants, leveraging €5.6 billion in loans and an estimated total investment amount of €18 billion. As an active investor in the Western Balkans, EBRD alone invested close to EUR 13bn in the region in the last decade; half of which was possible thanks to WBIF support over EUR 450 million.

These investments improve lives of the citizens of Western Balkans countries. People spend less time in traffic jams, travel in safer transport, breathe cleaner air, have access to more jobs and children have a better learning environment. This progress is of crucial importance not only for the citizens themselves but also for rest of us, given the strategic importance of the region for the stability and peace of the European continent.

WBIF is a concrete development cooperation model that delivers.

What are the key ingredients of this successful model?

·      First is the clear and strong policy steer coming from the European Commission together with all the donors. It fosters EU approximation of the Western Balkans countries; achieving the best standards in all fields is the common objective that brings all together.

·      Second is the country ownership. Beneficiaries are at the front and centre; project selection is country driven and directly linked to their own objectives. 

·      Third is the spirit of partnership. EU and bilateral donors as well as IFIs come together to coordinate and finance projects with a strategic approach, and a division of labour.

·      Fourth is the inclusive governance and consensus-based decision-making. Roles of each party are clear; a strong secretariat facilitates effective planning, coordination, communication and reporting.

As one decade ends and another begins, what is on the horizon for the next decade?

There is much to look forward to with confidence for the next 10 years, building on this strong track-record. Reform efforts under “WBIF 2.0” have already started and will get more intensive as discussions on the next multiannual financial framework. 

For a revamped WBIF to support enhanced delivery at accelerated pace, it should consider four key priorities:

·      First is to aim for higher impact. This means that WBIF investment support should be in the context of implementation of structural reforms and adapting to new policy priorities. There is indeed a strong case for a structural reform support facility for the Western Balkans. Green investments and low carbon transition in line with European Green Deal for the Western Balkans should also be a key priority for the next phase. In addition, digitalisation, business environment for SMEs, job-readiness training for youth, governance of public utilities and public procurement are other very important policy priorities. 

·      Second, higher involvement and a stronger voice from the representatives of the Western Balkan countries is required. This would utilise WBIF to support reforms programmes, EU approximation and national investment plans.

·      Third, WBIF should accelerate its own delivery. Rising influence of other geopolitical and economic powers points to the fact that it can at times be slow on delivering on expectations. Acting with a greater sense of urgency, proposals should be reviewed, decisions should be taken and funds should be mobilised more quickly.

·      Finally, assistance for project implementation should also be considered, particularly on cross-cutting issues like environmental and social standards. 

As a final word and going beyond the Western Balkans, it is timely to expand the “WBIF spirit” to other regions and countries. As a concrete development cooperation model that delivers, WBIF could usefully serve as a source of inspiration in the current debates around how Europe should organise itself to meet challenges in its neighbourhood and beyond.