Multilateral Funding

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Dora Lawson
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1 East African Power Industry Convention eapic Nairobi, 31 August 3 September 2010 Multilateral Funding Kurt Simonsen Head of Regional Representation EIB East & Central Africa Office European Investment Bank

2 ) Multilateral Funding Who? World Bank Group AfDB EIB Other banks (regional, Islamic)

3 ) Multilateral Funding and its Alternatives Multilateral Funding vs. Bilateral Funding Multilateral Funding vs. Private Capital

4 ) Private Capital Main Issues 2 main issues for Commercial Banks, Private Equity, Bonds: Profit Security Other issues? E.g. Equator Principles

5 ) Multilaterals Main Issues (1) No profit motive Development perspective! Assuring socio-economic development Base: Policies, Guidelines, Safeguards etc.

6 ) Multilaterals Main Issues (2) Policies: Sustainability, socio-economic development Environmental and social protection, climate action, labour standards, indigenous peoples Procurement rules - transparency, fairness, economic use of loans Corruption, money laundering, anti-terrorism Public scrutiny - NGO concerns, complaint mechanisms

7 ) Specific EIB Key Documents Sustainability: the Statutes, the Operational Strategy , the Cotonou Agreement, Statement on Corporate Social Responsibility Environmental and social issues: the EIB Statement of E&S Principles and Standards, the E&S Practices Handbook EIB Procurement Guidelines Public scrutiny: EIB Transparency Policy (public disclosure), EIB Complaints Mechanism

8 ) Multilaterals Main Advantages Long-term loan maturities Attractive interest rates (AAA rating) Catalytic effects attracting other investors Technical assistance often as grant Technical expertise in-house specialists

9 Asanteni Sana! For more information: East & Central Africa Regional Representation

10 Background slides about EIB For information only

11 2009 Key EIB Figures European Union: Partner countries: Total lending: EUR EUR EUR 70.5bn 8.6bn 79.1bn Borrowings: EUR 79.4bn

12 ) Africa, Caribbean & Pacific (ACP) Cotonou Agreement Mandate ( ): EIB can lend up to EUR 3 537m under the Investment Facility and Up to EUR 2 000m from its Own Resources 2009: EIB Loans of EUR 863m signed for: Industry and services Energy and infrastructure SMEs

13 Main EIB Instruments Loans Global Energy Efficiency and Renewable Energy Fund (GEEREF) Technical Assistance Carbon Funds EU-Africa Infrastructure Trust Fund (ITF)

14 EIB Loans - Direct loans (large scale projects, preferably more than EUR 25m) - Intermediate loans through local/regional banks (for small and medium sized projects) ACP Investment Facility (from the EU budget): - Private sector investments (risk-bearing) EIB s Own Resources (raised on international capital markets): - Public sector, sovereign and sub-sovereign borrowers - Private sector, third party guarantee required Up to 25 years tenor, up to 50% of total project costs

15 Global Energy Efficiency and Renewable Energy Fund (GEEREF) GEEREF is an innovative fund of funds, a pioneering partnership to combat climate change, providing risk capital through private investment in developing countries and economies in transition GEEREF aims to accelerate the transfer, development and use of environmentally sound technologies for the world's poorer regions Target: 15 private equity funds dedicated to small and medium sized projects in Africa, Latin America, Asia, etc. Funds under management: EUR 180m committed so far, target in 2010: + another EUR 200m See website:

16 Technical Assistance (1) TA for ACP promoters under Cotonou Linked to a project to be co-financed by EIB Total of EUR 40m grants - to enhance project quality and success rate - to increase efficiency of EIB investments - to complement other EIB products Dedicated for the whole project cycle

17 Technical Assistance (2) CCTAF: Climate Change Technical Assistance Facility To help promoters prepare, register and validate a carbon credit project (under CDM or JI) Must be linked to a project to be co-financed by EIB EUR 10m

18 Carbon Funds - in Partnership Developing carbon markets: - Buying carbon credits (CC) on behalf of fund participants - Acting as a sales outlet for project promoters - Stimulating the private sector in the CC market Carbon Funds: Multilateral Carbon Credit Fund with EBRD EUR 190m Carbon Fund for Europe with WB 1 st tranche EUR 50m The EIB/KfW Carbon Programme EUR 100m Post-2012 Carbon Credit Fund, with Caisse des Dépôts, ICO, KfW and NIB EUR 100m Fonds Capital Carbone Maroc, with French Caisse des Dépôts EUR 26.5m

19 EU-Africa Infrastructure Trust Fund Grant resources from the European Commission and 11 EU member states (pledged so far EUR 148m) + Lending and technical capacity of EIB and EU member state development financiers Purpose: To support infrastructure projects with a cross-border/regional impact (energy, transport, water & sanitation, telecommunication) Managed by EIB

EDF SEMINAR - PRAGUE

THE INVESTMENT FACILITY AND THE EU-AFRICA INFRASTRUCTURE TRUST FUND MANAGED BY THE EUROPEAN INVESTMENT BANK EDF SEMINAR - PRAGUE Luis Baptista (ACP / IF Department) Prague, 27th April 2010 European Investment