EU - Tollbox of instruments

The EU doesn't just write one check. It uses a toolbox of instruments depending on what's needed:

• Grants (free money for projects, budget support)
• Loans (low-interest financing from EIB)
• Blending (grants + loans + private money)
• Expertise (technical assistance, training)
• Emergency aid (disasters)
• Coordination (Team Europe bringing everyone together)

The National Indicative Programme is your starting point—it's the master plan that shows how much money is allocated and to which sectors. Everything else flows from that strategic framework.

1. National Indicative Programme (NIP)

The strategic framework 

What it is: Think of this as a 5-7 year "contract" between the EU and Cabo Verde that says "here's how much money we're giving you, and here's what we'll spend it on together."

How it works: Every few years, the EU and Cabo Verde sit down and agree on priority areas (like renewable energy, education, or water). The EU commits a specific amount of money for that period. For example, the 2021-2027 NIP might allocate €100 million with €40 million for energy, €30 million for governance, €30 million for water.

Why it matters: This is the main planning document. If you want to understand EU-Cabo Verde cooperation, find the current NIP—it's your roadmap.

Real-world example: "The EU will give Cabo Verde €55 million over 5 years, with €25 million going to renewable energy projects."

2. Budget Support

What it is: The EU transfers money directly into Cabo Verde's government budget, rather than funding specific projects. It's like giving someone cash instead of buying them specific groceries.

How it works: Cabo Verde's government receives millions of euros that go straight into their national treasury. They can use this for salaries, services, infrastructure—whatever the government budget covers. BUT there are conditions: Cabo Verde must meet specific targets (reduce deficit, improve education outcomes, pass certain laws).

Why it matters: It's flexible money that strengthens government systems, but it requires trust—the EU must believe Cabo Verde will spend it properly and meet agreed targets.

Real-world example: "The EU gives Cabo Verde €15 million for their education budget, but only if they increase the number of trained teachers by 20% and reduce dropout rates."

Two types:

• General Budget Support: Money for overall government budget
• Sectoral Budget Support: Money for a specific sector (education, health)

3. Project Financing

What it is: The EU funds specific, defined projects with clear objectives, timeframes, and deliverables. This is the traditional "development project" most people imagine.

How it works: The EU (often through implementing partners like NGOs, UN agencies, or companies) pays for everything needed to complete a specific project: construction, equipment, training, salaries of project staff.

Why it matters: You can see exactly where money goes and what it builds. It's concrete and measurable.

Real-world examples:

• "Build 5 solar power plants in rural areas"
• "Train 500 nurses over 3 years"
• "Construct water treatment facility in Mindelo"

Who implements: Could be international NGOs, Cabo Verdean organizations, private companies, or UN agencies—whoever wins the tender.

4. European Development Fund (EDF)

What it is: This is the "pot of money" that historically funded EU development cooperation with African, Caribbean, and Pacific (ACP) countries. It's not part of the regular EU budget—member states contribute separately.

How it works: EU member countries contribute money to the EDF every 5-7 years. This money is then allocated to countries like Cabo Verde through NIPs and other instruments.

Why it matters: When you read "EDF 11" or "EDF 12," that refers to the funding cycle number. Cabo Verde has received EDF money since independence in 1975.

Current change: The EDF is being phased out and integrated into the regular EU budget under a new instrument called NDICI (see below). But older projects may still reference EDF funding.

Real-world example: "This water project is funded by the 11th European Development Fund"

5. NDICI – Global Europe (Neighbourhood, Development and International Cooperation Instrument)

What it is: This is the new "mega-instrument" that replaced the EDF starting in 2021. It combines multiple previous funding streams into one big instrument covering development, cooperation, and foreign policy.

How it works: Instead of having separate pots for development aid, democracy support, crisis response, etc., the EU now has one big flexible budget (€79.5 billion globally for 2021-2027) that can be used for all these purposes.

Why it matters: This is the current framework. Any new EU funding to Cabo Verde after 2021 likely comes through NDICI-Global Europe.

Real-world example: "Cabo Verde's digital transformation programme is funded under the NDICI-Global Europe instrument"

6. European Investment Bank (EIB) Loans and Guarantees

What it is: The EIB is the EU's public bank. Instead of giving grants (free money), the EIB provides low-interest loans or guarantees for large infrastructure projects.

How it works: Cabo Verde (or a Cabo Verdean company) borrows money from the EIB at favorable interest rates (much lower than commercial banks). The EIB might also guarantee a loan from another bank, reducing the risk and therefore the interest rate.

Why it matters: This is for big, expensive infrastructure (ports, airports, energy plants) that costs more than grants can cover. The money must be repaid, but at good terms.

Real-world example: "The EIB loaned €22 million to CV Telecom to upgrade fiber optic networks and deploy 4G. Cabo Verde will repay this over 15 years at 2% interest."

Difference from grants: Grants are free money; EIB loans must be repaid (though at favorable terms).

7. Blending Facilities

What it is: A "blending" mechanism combines EU grants (free money) with loans from development banks like the EIB or private investors. The grant makes the overall package more attractive and affordable.

How it works: Imagine a €50 million port project. The EIB might loan €35 million, a private bank €10 million, and the EU provides a €5 million grant. The grant reduces the total amount Cabo Verde must borrow and repay, making the project financially viable.

Why it matters: It allows bigger projects than grants alone could fund, while making them affordable for Cabo Verde. It also attracts private sector investment.

Real-world example: "The São Vicente port expansion costs €40 million: EIB loans €25 million, private investors €10 million, and the EU provides a €5 million grant to reduce risks."

Key instruments:

• Investment Facility: Specifically for infrastructure and private sector projects in ACP countries
• ElectriFI: Blending for energy access projects
• EU-Africa Infrastructure Trust Fund: For trans-African infrastructure

8. Technical Assistance and Twinning

What it is: Instead of money or infrastructure, the EU provides expertise, training, and knowledge transfer. European experts work with Cabo Verdean counterparts to improve systems and build capacity.

How it works:

• Technical Assistance: EU hires consultants or experts to advise Cabo Verdean ministries on policy, regulations, or implementation
• Twinning: A Cabo Verdean ministry is paired with a similar ministry in an EU country (e.g., Cabo Verde's Ministry of Justice works with Portugal's Ministry of Justice) to learn best practices

Why it matters: Money alone doesn't work if systems and skills aren't in place. Technical assistance builds the "software" (knowledge, procedures, regulations) that makes the "hardware" (infrastructure, money) effective.

Real-world examples:

• "EU experts help Cabo Verde draft new cybersecurity laws"
• "Portuguese tax officials train Cabo Verdean tax collectors for 6 months"
• "Consultants help design Cabo Verde's renewable energy strategy"

9. Thematic Programmes

What it is: These are EU funding programmes open to all developing countries (not just Cabo Verde) focused on specific global issues like human rights, environment, or civil society.

How it works: Organizations in Cabo Verde (NGOs, universities, local governments) can apply for funding from these programmes if their project fits the theme. They compete with applicants from other countries.

Why it matters: This is additional money beyond the NIP. A Cabo Verdean environmental NGO could get funding even if environment isn't a NIP priority.

Main thematic programmes:

• Civil Society Organizations (CSO): Funding for NGOs
• Human Rights and Democracy: Supporting activists, elections, freedom of press
• Global Public Goods (environment, health): Climate, biodiversity, pandemics
• Peace and Stability: Conflict prevention, security

Real-world example: "A Cabo Verdean women's rights NGO receives €200,000 from the EU's Human Rights programme to combat domestic violence"

10. Humanitarian Aid (ECHO)

What it is: Emergency funding for disasters, crises, or humanitarian emergencies. Managed by the EU's humanitarian office called ECHO (European Civil Protection and Humanitarian Aid Operations).

How it works: When disasters strike (drought, hurricane, volcanic eruption), ECHO can rapidly deploy funding for emergency relief: food, water, shelter, medical care.

Why it matters: This is fast, flexible money for emergencies, separate from long-term development funding.

Real-world example: "After a severe drought in 2022, the EU provided €500,000 in emergency food aid and water purification equipment"

Important note: Cabo Verde rarely needs humanitarian aid (it's politically stable with no conflicts), but ECHO funds are available for natural disasters.

11. Team Europe Initiatives (TEI)

What it is: A new coordination approach (started around 2020) where the EU, EU member states, and European development banks work together on major projects instead of separately.

How it works: Instead of the EU doing one project, France another, and Germany a third, they coordinate under one "Team Europe" umbrella for bigger impact. Each contributes what they do best.

Why it matters: Combines resources for larger, transformative projects. Also reduces duplication and coordination headaches for Cabo Verde.

Real-world example: "Team Europe Initiative for Digital Connectivity: EU funds submarine cables, Portugal provides technical assistance for e-government, EIB finances data center construction—all coordinated as one package worth €80 million"

Focus areas: Usually big strategic priorities like green energy, digital transformation, migration management.

How These Instruments Work Together: A Concrete Example

Cabo Verde Renewable Energy Transformation (Hypothetical but Realistic)

The challenge: Cabo Verde wants to reach 50% renewable energy by 2030 but lacks money and expertise.

The EU response uses multiple instruments:

1. National Indicative Programme: Allocates €30 million for renewable energy sector (2021-2027)
2. Budget Support: €10 million paid directly to Cabo Verde's energy ministry budget, conditional on passing renewable energy laws and establishing a regulatory agency
3. Project Financing: €8 million to build a specific 20 MW wind farm on Santiago island (implemented by a European renewable energy company)
4. EIB Loan: €40 million loan at 2% interest to finance the large pumped-storage hydropower plant
5. Blending Facility: €5 million EU grant combined with the EIB loan to reduce total costs
6. Technical Assistance: €2 million for German energy experts to help Cabo Verde design grid integration and electricity market reforms
7. Twinning: Portuguese energy regulators train Cabo Verdean counterparts for 18 months
8. Thematic Programme: A Cabo Verdean university receives €500,000 from the EU's Global Public Goods programme to research optimal renewable energy solutions for island conditions

Total package: ~€95 million combining grants, loans, and expertise

Result: Cabo Verde gets the money, infrastructure, knowledge, and systems to actually achieve the renewable energy transition—not just one piece in isolation.