2. Contributions for micro-projects shall be made:
(a) by the local community concerned, in kind or in the form of services or cash and adapted to its capacity to contribute;
(b) by the Fund, in which case the contribution shall not normally exceed three-quarters of the total cost of each project and may not exceed ECU 300 000;
(c) exceptionally, by the ACP State concerned, either in the form of a financial contribution or through the use of public equipment or the supply of services.
3. The amounts representing the Fund's contribution shall be drawn from the grant allocation of the national indicative programme.
4. Special priority shall be accorded to the preparation and implementation of micro-projects in the least-developed ACP States.
Article 253.
With the agreement of the ACP States concerned, at the request of the ACP local communities concerned and in accordance with the provisions on multiannual micro- project programmes in Article 290, ACP and Community non-profit organizations may, in addition to the possibilities of cofinancing, coordinate, supervise or implement individual micro-projects and/or multiannual micro-project programmes.
Section 6. Emergency Assistance
Article 254.
1. Emergency assistance shall be accorded to ACP States faced with serious economic and social difficulties of an exceptional nature resulting from natural disasters or extraordinary circumstances having comparable effects. The assistance, which is intended to make, by the most suitable means, a real contribution to remedying the immediate difficulties:
(a) shall be sufficiently flexible to take any form adapted to the circumstances, including the supply of a wide range of relief goods and services and/or the distribution of cash to victims;
(b) may also cover the financing of immediate measures to make damaged structures and equipment operational again and to ensure minimum viability;
(c) shall be non-reimbursable and made available quickly and easily.
2. The Community shall take adequate steps to facilitate speedy action which is required to meet the immediate needs for which emergency assistance is intended. To this end:
(a) funds provided under emergency assistance must be fully committed and disbursed and action completed within 180 days of the establishment of the implementation arrangements unless otherwise stipulated by common agreement;
(b) where the funds made available have not all been fully disbursed within the time limit set, or such other agreed time limit as referred to in subparagraph (a), then the balance shall be paid back into the special appropriation referred to in the Financial Protocol;
(c) the detailed rules for the allocation and implementation of emergency assistance shall be the subject of emergency and flexible procedures;
(d) funds may be used for the retroactive financing of immediate relief measures undertaken by the ACP States themselves.
Article 255.
1. Assistance may be granted to ACP States taking in refugees or returnees to meet acute needs not covered by emergency assistance, to implement in the longer term projects and action programmes aimed at self-sufficiency and the integration or reintegration of such people.
2. Similar assistance, as set out in paragraph 1, may be envisaged to help with the voluntary integration or reintegration of persons who have had to leave their homes as a result of conflicts or natural disasters. In implementing this provision account shall be taken of all the factors leading to the displacement in question including the wishes of the population concerned and the responsibilities of the government in meeting the needs of its own people.
3. Underlining the developmental nature of the assistance granted in accordance with this Article, assistance may be used together with the indicative programme of the State concerned.
4. Such assistance shall be administered and implemented under procedures permitting flexibility and rapid action. Special attention shall be paid to the most effective manner of providing such assistance to the population concerned. Conditions for payment and implementation shall be laid down case by case. The assistance may be implemented, if the ACP State so agrees, in conjunction with specialized organizations, including those of the United Nations, or by the Commission direct.
Article 256.
Contracts under emergency assistance shall be awarded on the basis of the relevant rules provided for in Section 5 of Chapter 5.
Article 257.
Post-emergency action, aimed at physical and social rehabilitation consequent on the results of natural disasters or extraordinary circumstances having comparable effects, may be undertaken with Community assistance under this Convention. The post-emergency needs may be covered by other resources, in particular the counterpart funds generated. by Community instruments, the special appropriation for refugees, returnees, and displaced persons, the national or regional indicative programmes or a combination of these different elements.
These needs may also be covered, subject to the provisions of Article 2 of the Financial Protocol, by the unexpended balance of the special appropriation for emergency assistance remaining upon expiry of that Protocol.
Chapter 3. Investment
Section 1. Investment Promotion
Article 258.
The ACP States and the Community, recognizing the importance of private investment in the promotion of their development cooperation and acknowledging the need to take steps to promote such investment, shall:
(a) implement measures to encourage participation in their development efforts by private investors who comply with the objectives and priorities of ACP-EEC development cooperation and with the appropriate laws and regulations of their respective States;
(b) accord fair and equitable treatment to such investors;
(c) take measures and actions which help to create and maintain a predictable and secure investment climate as well as enter into negotiations on agreements which will improve such climate;
(d) promote effective cooperation amongst ACP and between ACP and Community economic operators in order to increase the flow of capital, management skills, technology and other forms of know-how;
(e) facilitate a greater and more stable flow of resources from the Community private sector to the ACP States by contributing to the removal of obstacles which impede the ACP States' access to international capital markets, and in particular within the Community;
(f) create an environment which encourages the development of financial institutions and the mobilization of resources which are essential to capital formation and the growth of entrepreneurship;
(g) promote the development of enterprises by taking such steps as are necessary to improve the business environment and, in particular, foster a legal, administrative and incentive framework which is conducive to the emergence and development of dynamic private sector enterprises including grass roots operations;
(h) strengthen the capacity of national institutions in ACP States to provide the range of services which can encourage greater national participation in business activity.
Article 259.
In order to encourage private investment flows and the development of enterprises, the ACP States and the Community, in cooperation with other interested bodies, shall within the framework of the Convention :
(a) support efforts aimed at promoting European private investment in the ACP States by organizing discussions between any interested ACP State and potential investors on the legal and financial framework that ACP States might offer to investors;
(b) encourage the flow of information on investment opportunities by organizing investment promotion meetings, providing periodic information on existing financial or other specialized institutions, their facilities and conditions and encouraging the establishment of focal points for such meetings;
(c) encourage the dissemination of information on the nature and availability of investment guarantees and insurance mechanisms to facilitate investment in ACP States;
(d) provide assistance to small and medium-sized enterprises in ACP States in designing and obtaining equity and loan-financing on optimal terms and conditions;
(e) explore ways and means of overcoming or reducing the host-country risk for individual investment projects which could contribute to economic progress;
(f) provide assistance to ACP States in:
(i) creating or strengthening the ACP States' capacity to improve the quality of feasibility studies and the preparation of projects in order that appropriate economic and financial conclusions might be drawn;
(ii) producing integrated project management mechanisms covering the entire project development cycle within the framework of the development programme of the State.
Section 2. Investment Protection
Article 260.
The Contracting Parties on their respective affirm the need to promote and protect either party's investments territories, and in this context affirm the importance of concluding between States, in their mutual interest, investment promotion and protection agreements which could also provide the basis for insurance and guarantee schemes.
Article 261.
1. A Contracting State may request the negotiation of an investment promotion and protection agreement with another Contracting State.
2. The States party to such agreements shall practise no discrimination between Contracting States party to this Convention or against each other in relation to third countries when opening negotiations for, concluding, applying and interpreting bilateral or multilateral investment promotion and protection agreements.
By "non-discrimination", the Parties understand that, in negotiating such agreements, either side may be entitled to provisions in agreements negotiated between the ACP States or Member States concerned and another State, provided that in every case reciprocity is accorded.
3. The Contracting States shall have the right to request a modification or adaptation of the non-discriminatory treatment referred to in paragraph 2 when international obligations or changed de facto circumstances so necessitate.
4. The application of the principles referred to in paragraphs 2 and 3 does not purport to and cannot in practice, infringe the sovereignty of any Contracting State party to the Convention.
5. The relation between the date of entry into force of any agreement negotiated, provisions for the settlement of disputes and the date of the investments concerned will be set out in the said agreement, account being taken of paragraphs 1 to 4. The Coritracting Parties confirm that retroactivity shall not apply as a general principle unless Contracting States stipulate otherwise.
Article 262.
In order further to encourage European investment in development projects of special importance to, and promoted by, the ACP States, the Community and the Member States, on the one hand, and the ACP States, on the other, may also conclude agreements relating to specific projects of mutual interest where the Community and European enterprises contribute towards their financing.
Section 3. Investment Financing
Article 263.
1. With a view to assisting the implementation of directly productive investment, both public and private, contributing to the economic and industrial development of the ACP States, the Community shall provide financial assistance, subject to the provisions laid down in Chapter 2 of this Title, in the form of risk capital and/or loans from the Bank's own resources. This financial assistance may be used inter alia for:
(a) increasing, directly or indirectly, the own resources of ACP public, semi-public or private enterprises and providing financing in the form of loans for investment in such enterprises;
(b) supporting productive investment projects and programmes identified and promoted by the joint bodies set up by the Community and the ACP States in accordance with the Convention;
(c) financing schemes in favour of small and medium-sized enterprises.
2. In order to achieve the objectives set out in paragraph 1, a significant part of risk capital shall be devoted to supporting private sector investment.
Article 264.
In addition to the resources provided for above, the ACP State or States may use the resources of the national or regional programme, inter alia, for:
(a) financing schemes in favour of small and medium-sized enterprises;
(b) encouraging the setting up or the strengthening of national or regional financial institutions in order to enable them effectively to support private secor needs;
(c) appropriate and effective support for export promotion;
(d) providing general or specific technical cooperation to cater for private sector needs.
Article 265.
The financing of directly productive projects may concern new investments as well as the rehabilitation or utilization of existing capacity.
Article 266.
Where the financing is undertaken through an on-lending body, it shall be the responsibility of that body to select and appraise individual projects and to administer the funds placed at its disposal in the conditions provided for in this Convention and by mutual agreement between the parties.
Section 4. Investment Support
Article 267.
In order effectively to achieve the various objectives of the Convention in relation to promoting private investment and to realize its multiplying effect, the Bank and/or the Commission shall participate by way of:
(a) financial assistance, including equity participations;
(b) technical assistance;
(c) advisory services;
(d) information and coordination services.
Article 268.
1. The Bank shall utilize risk capital resources to supplement the activities aimed at promoting and providing support for the private sectors in the ACP States. To this end, risk capital may be used to:
(a) provide direct loans for the investment in ACP States' public, semi-public and private enterprises, including SMEs;
(b) increase the own resources, or resources treated as such, of public, semi-public or private enterprises through direct holdings in the name of the Community;
(c) participate, with the agreement of the ACP State, in the capital of financial institutions promoting private investment in ACP States;
(d) provide finance to ACP States' financial institutions or, with the agreement of the ACP State concerned, ACP and/or Community promoters wishing to invest, in addition to their own contribution, in ACP-EEC joint ventures in order to reinforce the own resources of ACP enterprises;
(e) with the agreement of the ACP State or States concerned, assists ACP or Community financial intermediaries which contribute towards the financing of SMEs in the ACP States in:
(i) acquiring participations in the capital of ACP SMEs;
(ii) funding the acquisition of participations in ACP SMEs by ACP private investors and/or Community promoters in the conditions laid down in point (d);
(iii) on-lending for financing investment in ACP States' SMEs;
(f) assist with the restructuring or recapitalization of financial institutions of the ACP States;
(g) finance specific studies, research or investment for the preparation and identification of projects; provide assistance, including training, management and investment-related services, to enterprises in the context of the Bank's operations during the pre-investment period or for rehabilitation purposes and, where appropriate, contribute to the start-up costs, including investment guarantee and insurance premiums, necessary to ensure that the investment decision is taken.
2. Where appropriate, loan financing of investment, both directly or indirectly, as well as of sectoral support programmes, shall be provided from the Bank's own resources.
Article 269.
The ACP States may, to encourage the promotion and development of their respective private sectors, use the resources of the indicative programme for:
(a) supporting the development of enterprises, by providing training, assistance in financial management and project preparation, specialized business start-up services and development and management services, and by encouraging technology transfers;
(b) providing appropriate and effective support for investment promotion, including the provision of assistance to promoters;
(c) supporting the setting up or the strengthening of national or regional financial institutions in the ACP States to finance export operations;
(d) financing imports of intermediate materials needed for the export industries of a requesting ACP State;
(e) credit lines in favour of SMEs;
(f) providing appropriate and effective support for export promotion;
(g) supporting the improvement of the investment climate including the legal and fiscal framework for business, and the development of services in support of the enterprise sector so as to provide enterprises with advisory services in the legal, technical and managerial fields;
(h) providing technical cooperation to reinforce the activities of bodies in the ACP States working for the development of small and medium-sized enterprises;
(i) implementing appropriate programmes for vocational training and developing the. capacity of individual entrepreneurs, particularly in the small-scale and informal sectors;
(j) providing assistance for the mobilization of domestic savings, development of financial intermediation and of new financial instruments, rationalization of enterprise promotion policies and encouragement of foreign investment;
(k) financing ventures undertaken by cooperatives or local communities in ACP States and the creation or strengthening of SME guarantee funds.
Article 270.
In order to mobilize external investment resources, both private and public, particular efforts should be made in exploiting the possibilities of cofinancing or attracting parallel financing for the various projects or programmes.
Article 271.
In assisting the ACP efforts to invest in PMDT, particular attention shall be paid to supporting optimal use of existing capacity of the ACP State concerned and the needs for rehabilitation.
Article 272.
In order to support the promotion of investment in the ACP States and with due regard to the complementarity of their roles, the Commission and the Bank will closely coordinate their activities in this field.
The Commission and the Bank shall, with the assistance of Member States and ACP States, ensure effective coordination at the operational level among all parties interested in supporting investment in ACP States.
With a view to keeping those parties informed on investment prospects, the Commission shall produce reports and studies notably on:
- investment flows between the Community and the ACP States, economic, legal or institutional obstacles hampering those investments, measures which will facilitate private capital movements, joint financing, access of ACP States to international financial markets and the effectiveness of domestic financial markets,
- activities undertaken by national and international systems of investment guarantees,
- investment promotion and protection agreements between Member States and ACP States.
The Commission shall submit to the ACP-EEC Development Finance Cooperation Committee the results of these studies. It shall also, in collaboration with the Bank, submit a report on the results of coordination in the field of investment and private sector support.
Section 5. Current Payment and Capital Movements
Article 273.
1. With regard to capital movements linked with investments and to current payments, the Contracting Parties shall refrain from taking action in the field of foreign exchange transactions which would be incompatible with their obligations under this Convention resulting from the provisions relating to trade in goods and services, establishment and industrial cooperation. These obligations shall not, however, prevent the Contracting Parties from adopting the necessary protective measures should they be justified by reasons relating to, serious economic difficulties or severe balance-of-payments problems.
2. In respect of foreign exchange transactions linked with investments and current payments, the ACP States, on the one hand, and the Member States, on the other, shall avoid, as far as possible, taking discriminatory measures vis-à-vis each other or according more favourable treatment to third States, taking full account of the evolving nature of the international monetary system, the existence of specific monetary arrangements - and balance-of-payments problems.
To the extent that such measures or treatment are unavoidable, they shall be maintained or introduced in accordance with accepted international monetary rules and every effort shall be made to minimize any adverse effects on the parties affected.
Section 6. Qualification and Treatment of Business Entities
Article 274.
1. As regards arrangements that may be applied in matters of establishment and provision of services, the ACP States, on the one hand, and the Member States, on the other, shall treat nationals and companies or firms of the ACP States and nationals and companies or firms of the Member States respectively on a non-discriminatory basis. However, if, for a given activity, an ACP State or a Member State is unable to provide such treatment, the ACP State or the Member State, as the case may be, shall not be bound to accord such treatment for that activity to the nationals and companies or firms of the State concerned.
2. For the purpose of this Convention, "companies or firms of a Member State or of an ACP State" mean companies or firms constituted under civil or commercial law, including corporations, whether public or otherwise, cooperative societies and other legal persons and partnerships governed by public or private law, save for those which are non-profitmaking, formed in accordance with the law of a Member State or an ACP State and whose statutory office, central administration or principal place of business is in a Member State or ACP State.
However, a company or firm having only its statutory office in a Member State or an ACP State must be engaged in an activity which has an effective and continuous link with the economy of that Member State or the ACP State.
Chapter 4. Technical Cooperation
Article 275.
Technical cooperation shall assist the ACP States in the development of national and regional manpower resources, the sustained development of their institutions, and contribute to the achievement of project and programme goals. To this end:
(a) support through the provision of technical assistance shall be made available only at the request of the ACP State or States concerned;
(b) technical cooperation shall be cost-effective and relevant to the need for which it is intended, and also favour the transfer of know-how and increase national and regional capabilities;
(c) efforts shall be made to encourage the participation in Fund-financed contracts of ACP experts, consultancy firms, educational and research institutions and also to make greater use of secondment of ACP national cadres as consultants to an institution in theic own country, or a neighbouring country, or to a regional organization;
(d) ACP States may, either on a national or regional basis, use the instruments and resources of financial and technical cooperation to develop knowledge of national and regional manpower constraints and potential and to establish a register of ACP experts, consultants and consultancy firms suitable for employment on Fund projects and programmes, as well as to identify ways of employing qualified national and regional personnel on Fund projects;
(e) intra ACP technical assistance shall be supported through the instruments of development finance cooperation in order to enable the exchange between the ACP States of technical assistance, management and professional expertise;
(f) action programmes for long-term institution-building and staff development shall be an integral part of project and programme planning, account being taken of the necessary financial requirements;
(g) with a view to reversing the brain drain from the ACP States, the Community shall assist ACP States who so request to facilitate the return of qualified ACP nationals resident in developed countries through appropriate re-installation incentives;
(h) project and programme appraisal shall take due account of national human resources constraints and ensure a strategy favourable to the promotion of such resources;
(i) technical assistance personnel shall be qualified for the specific tasks as defined in the request from the ACP State or States and shall be integrated within the beneficiary ACP institution;
(j) the effective training of national personnel shall be part of the assignment of technical assistance personnel so as to phase out technical assistance with a view to staffing projects entirely and on a permanent basis with nationals of the ACP States;
(k) the cooperation shall include arrangements to enhance the capacity of the ACP States to build up their own expertise and improve the technical skills of their own consultants, consulting companies or firms;
(l) special attention should be given to the development of the ACP States' capacities in project planning, implementation and evaluation.