ACP Investment Facility Presentation by H. Rüttgers, HoD Portfolio Management & Policy, ACPIF Department, EIB to the ACP-EU Joint Parliamentary Assembly Committee on Economic Development, Finance and Trade Brussels, 21.03.2013 1
EIB lending in ACPs & OCTs ACPs: the oldest mandate entrusted to the EIB (1963) Since 2003: Cotonou Partnership Agreement Builds on 50 years of experience OCTs: since 1968 Since 2001: Overseas Association Decision EIB s role focuses on Financial Cooperation: managing the Investment Facility & lending from its own resources Sources of funding: - European Development Fund (EDF) - EIB Own Resources 2
Sources of funding European Development Fund (EU Member States budgetary funds) European Union Grants Investment Facility Subsidies Own resources National and regional indicative programmes Loans* Equity Guarantees Interest rate Technical assistance Senior loans Intra-ACP and interregional cooperation Revolving fund Total capital endowment under 9th and 10th EDFs Amounts available under the 10th EDF 2008-2013 ACPs EUR 3 137m ACPs EUR 400m ACPs up to EUR 2 000m OCTs EUR 48.5m OCTs EUR 1.5m OCTs up to EUR 30m * Senior, junior, subordinated and intermediated loans, as w ell as quasi-equity operations. 3
Lending under the IF and OR The objectives The means Use of a wide range of risk-bearing instruments Value added of the IF Private sector development, through Foreign Direct Investors, Local private sector Financial sector Commercially viable public entities Economic growth Poverty reduction & Millennium Development Goals The constraints Ensure the long-term sustainability of the IF through risk pricing Mitigate the risk of MS as guarantors vs. developmental objective 4
STRATEGIC FOCUS Infrastructure Energy Water Transport Telecoms - public & private sector - Financial sector SMEs Microfinance - mainly through intermediaries - ACROSS SECTORS CLIMATE ACTION IS A KEY PRIORITY Other Sectors are also eligible but will remain marginal in the EIB portfolio 5
EIB lending in the ACPs & OCTs - instruments - 6
The Investment Facility 7
Own resources 8
EIB Own Resources Funds borrowed on the capital markets providing Senior debt denominated in EUR and widely traded currencies 1 st class guarantee or prime-quality security usually required (unless sovereign risk) Mainly Public sector investments: sovereign/sub-sovereign borrowers European Investment 9
Own Resources versus Investment Facility OR & IF resources complement each other EIB own resources: Public sector investments: sovereign/sub-sovereign borrowers Private sector projects covered by a third party guarantee IF resources: Private sector investments requiring risk-bearing instruments e.g.: conditional loans/ subordinated loans/guarantees/equity 10
Range of Available Financial Instruments in the ACPs Investment Facility EIB Own resources Senior debt Junior/subordinated debt Intermediated loans Quasi-equity Equity Guarantees Currencies - widely traded - local Only widely traded currencies Interest rate subsidies Project related TA European Investment 11
Other Instruments European Investment 12
Interest Rate Subsidies Available to increase concessionality for: Infrastructure projects in Least Developed Countries, postconflict and post-natural disaster countries, HIPC countries projects with substantial and clearly demonstrable environmental or social benefits restructuring operations in the framework of privatisations General rule applied : - Interest rate subsidy: maximum 3 % - Final rate of loan: cannot be less than 50% of the reference rate - In the case of HIPC countries, the interest rate may be reduced by such amount as required to comply with the level arising from the HIPC initiative 13
Technical assistance Up to EUR 60 m (ACPs) and 0.15 m (OCTs) over the 2008-2013 period to provide Project-related Strategic initiatives Capacity building, covering the whole project cycle: microfinance undertakings infrastructure projects focus on project preparation & implementation - enhancing project quality and success rate - increasing the efficiency of EIB s investment activities - complementing other EIB products 14
Innovative forms of blending EU resources Finance Institutions resources other resources Leverage additional public and private resources for EU development policy objectives (financial leverage) Increase aid effectiveness: Grant element can improve the quality and sustainability of projects and speeds up processes (non-financial leverage) Careful use of loans can assist in increasing financial discipline and ownership compared to exclusively grant receipts Promote cooperation and coordination between aid actors (donors and finance institutions) 15
Overview of 2012 operations 16
EIB and the Cotonou Agreement 9 years down the road (31/12/2012) Total net signatures of EUR 5.5 bn EUR 3 052m under the IF (EUR 355m in 2012) EUR 2 477m under EIB own resources ( EUR 289m in 2012) Two thirds of the portfolio relate to private sector operations Close to 80 % of the portfolio relate to Africa More than one third of total investments went to African infrastructure European Investment 17
IF v. OR overall figures Year Investment Facility (IF) in EUR m Own Resources (OR) N projects Total 2009 414.1 413.2 29 827.3 2010 369.1 597.8 25 966.8 2011 203.9 386.6 26 590.5 2012 354.8 282.0 23 636.8* * A further EUR 100 m was signed for two projects in the Republic of South Africa, bringing total lending for the 2012 year to EUR 736.8m 18