EUROPEAN INVESTMENT BANK FINANCING OPPORTUNITIES Trade Seminar SADC EPA Group EIB Southern Africa & Indian Ocean Regional Office Pretoria, RSA 14-15 November 2012 European Investment Bank 1
SUMMARY 1. General Introduction 2. The EIB and the ACP & OCT mandate 3. The EIB in Botswana 4. The EUAITF 5. Cooperation EIB/EU/MS European Investment Bank 2
General Introduction 1. General Introduction 1.1 EIB at a glance 1.2 External Mandates European Investment Bank 3
EIB: European Union s long term financing institution Birth: Treaty of Rome, 1958 Shareholders: 27 EU Member States Subscribed Capital (2009): EUR 232.4bn Purpose: Policy-driven bank: EIB implements EU policy Provide long term lending to promote European objectives * Support of EU Development and Cooperation Policies in Partner Countries European Investment Bank 4
EIB: European Union s long term financing institution Europe still EIB s main focus but the Bank works in nearly 150 other countries, under EU cooperation agreements Investment in 2011 Total EUR 60.9bn EUR 53.8bn inside EU EUR 7.1bn outside EU Biggest group of countries are the ACP African, Caribbean & Pacific countries. EIB working in some of them for over 45 years In the ACP, the EIB has channelled some EUR 13 billion to investment EUR 5.5 billion since 2003 (76% to private sector) Plus EUR 2.4bn in South Africa since 1995 European Investment Bank 5
ACP Mandate 2.1 The EIB and the ACP & OCT mandate Purpose and Priorities Beneficiaries Financial Products Terms and Conditions Project requirements 2011 Key results European Investment Bank 6
EIB lending in ACPs & OCTs European Investment Bank 7
The EIB mandate under Cotonou Purpose & Priorities Build up economic infrastructure Private Sector Development Support Foreign Direct Investment Development of local financial sector Support for commercially viable public enterprises Encourage public/private partnerships European Investment Bank 8
The EIB Mandate under Cotonou Notable developments Subsidies (limited) available to increase concessionality mainly for infrastructure projects in LDCs, post-conflict and post natural disaster countries, HIPC countries, and projects with substantial and clearly demonstrable environmental or social benefits (new Results Measurement (REM) framework as of 1st January 2012) Seek complementarities with operations/ instruments of EU, bilateral or multilateral institutions (EU-Africa Infrastructure Trust Fund) Play a catalytic role in mobilising local resources and encouraging foreign lending and investment European Investment Bank 9
Who can benefit? Private entrepreneurs and commercially-run public sector enterprises Investment funds and other financial intermediaries ACP and EU Member States entrepreneurs Large enterprises and MSMEs European Investment Bank 10
Instruments: Investment Facility Flexible / risk-bearing financial instruments denominated in EUR, widely traded currencies or local currencies Senior loans Junior or subordinated loans Quasi-equity funding Equity funding Guarantees Currencies Internationally traded currencies Local currencies Interest rate subsidies Technical assistance European Investment Bank 11
Instruments: EIB Own Resources Funds borrowed on the capital markets providing Direct loans / senior debt Intermediated loans Currencies EUR and internationally traded currencies 1st class guarantee or prime-quality security usually required (unless sovereign risk) European Investment Bank 12
Interest Rate Subsidies Available to increase concessionality for: Infrastructure projects in Least Development Countries, post-conflict and post-natural disaster countries, HIPC countries Projects with substancial and clearly demonstrable environmental or social benefits Restructuring operations in the framework of privatisations By end-2011, a total of EUR 81m in interest rate subsidies committed in favour of 45 projects in the ACPs and OCTs European Investment Bank 13
Technical assistance Up to EUR 40m over the 2008-2013 period to provide Project-related TA grant funding covering the whole project cycle Aim(s): enhancing project quality and success-rate increasing the efficiency of EIB s investment activities complementing other EIB products European Investment Bank 14
Terms and Conditions EIB operates on market related terms: Risk pricing Cost recovery Long maturities and grace periods EIB = catalyst encourages co-financing Max. 50% of funding is provided by EIB Direct or indirect intervention Major / smaller scale investments European Investment Bank 15
Project requirements Projects should be: Technically sound Financially viable Show a positive impact on the economy Results Measurement Framework (REM) Comply with environmental protection requirements If in public sector, follow open tendering principles (competition to cut costs and protect the consumer) Significant financial contribution from promoter Co-financiers (EIB maximum 50% of project cost) European Investment Bank 16
2011 Key Results in the ACPs and OCTs EUR 590.5m total lending 26 projects in 13 countries, and 5 regional groupings 68% of projects in support of financial sector operations, representing 42% in terms of value 30% of lending targeted SMEs EUR 81m of grant funding in the form of technical assistance and interest rate subsidies 38% of projects co-financed with other development finance institutions, of which 92% were non-financial sector operations A further EUR 165m was signed for 3 projects in South Africa, bringing total lending for 2011 to EUR 755.5m EIB disbursed a record EUR 428m in 2011 European Investment Bank 17
Signed in ACP - 2011 (IF & OR) Breakdown by Sector Credit Lines - EUR 198m Transports - EUR 180m Water, Sewerage - EUR 102m Energy EUR 57m Services EUR 46m Telecommunications EUR 8m 68% of operations targeted the financial sector / financial services, including microfinance European Investment Bank 18
Signed in ACP - 2011 (IF & OR) Breakdown by Region Southern Africa & Indian Ocean - EUR 184m Central & Eastern Africa - EUR 165m Caribbean - EUR 123m West Africa & Sahel EUR 101m Regional Africa & ACP States EUR 17m European Investment Bank 19
EIB in Botswana Involved since 1980 Financed 18 projects Sectors Totalling EUR 135.75m Energy; 42.6 Services; 0.25 Industry; 15 Agriculture, Fisheries, Forestry; 2 Water, Sewerage; 72.9 European Investment Bank 20
Examples of Projects Name of Project Status Sector Signature Date Description of Project Amount in m EUR Martin s Drift Kimberlite Project Disbursed Industry 24/10/2007 Development of diamond mine near Lerala, eastern Botswana 5.0 Fabulous Flowers Fully Reimbursed Agriculture 04/10/2004 Production roses and export of 2.0 Francistown Water Supply Disbursed Water 14/02/2003 Extension of water supply network for greater Francistown area 12.5 Botswana Power Corporation V Disbursed Energy 17/06/1996 Construction of electricity substation to interconnect with Zimbabwe and South African networks 6.6 North South Carrier Disbursed Water 23/10/1995 Construction of dam for supplying water to Gaborone 40.0 European Investment Bank 21
EU-Africa Infrastructure Trust Fund 4. The EU Africa Infrastructure Trust Fund Eligible projects / Beneficiaries Products Projects financed in Mozambique and SADC European Investment Bank 22
EU-Africa Infrastructure Partnership Eligible Projects / Beneficiaries Trans-border infrastructure projects linking African populations, countries and regions National projects with clear international vocation (airports, maritime ports ) National projects that in practice close gaps in regional or transborder networks Sectors: Energy, Water, Transport, ICT Ownership: Public, Private and mixed-capital projects all eligible European Investment Bank 23
The Trust Fund provides grant support in 4 ways: Interest rate subsidies on medium/long term project loans Technical assistance, feasibility studies and project-related capacity building One-off grants for social or environmental components Payment of early-stage premiums on project risk insurance (risk mitigation) European Investment Bank 24
EU-Africa Infrastructure Partnership Current Projects / Beneficiaries In SADC areas: Caprivi Link Interconnector (Nam, Btw, Zam, Zim) EASSY Undersea Telcoms cable (Eastern & Southern Africa) (ITC) Beira Corridor project Sena Railway & Beira Port (Mozambique) (transport) Ruzizi 3 (Great Lakes Region) (energy) Tanzania Energy Backbone (energy) CESUL project in Mozambique (energy) Lesotho Highlands (water) European Investment Bank 25
Future Cooperation 5. Cooperation EIB / EU / MS EU programming - 11th EDF SE4ALL Mutual Reliance Initiative (EIB/AFD/KfW) Other forms of blending with bilateral MS Projects in pipeline: Energy, Financial Sector, Water, Transport European Investment Bank 26
EIB Contact Details European Investment Bank, Southern Africa and Indian Ocean Regional Representation, Greenpark Estates, 27 George Storrar Drive Pretoria, RSA Tel. +27 (0) 12 425 0460 Mob. +27 (0) 76 025 8347 Email: munetsi@eib.org, or southernafricaoffice@eib.org Web: www.eib.org/acp European Investment Bank 27