The (EIB) Introduction to EIB activities in the OCTs OCT-EU Forum Ilulissat, Greenland, 26-27th September 2012 Flavia Palanza, Associate Director, Africa, Caribbean and Pacific Investment Facility Department 1
The (EIB) European Union s long-term lending bank Long-term finance promoting European objectives Finances investment in productive sectors and revenue generating infrastructure In the OCTs, under the Overseas Association Decision (OAD) Duration: 27/11/2001-31/12/2013 Beneficiaries: 20 OCTs Sources of funding European Development Fund (EDF), i.e. Member States budget EIB Own Resources 2
Sectors of Intervention Infrastructure Energy Water Transport Telecoms - public & private sector - Financial sector SMEs Microfinance - mainly through intermediaries - Top horizontal objectives : private sector development, including support for small and mediumsized enterprises (SMEs); climate change mitigation and adaptation 3
Criteria of intervention Bankable and economically viable projects Meeting EIB operating criteria in terms of environment, social protection, procurement Loans finance max 50% of investment costs Interest rates: cost of funding + admin. margin + risk pricing (can be mitigated by guarantees (e.g. sovereign) Interest rates may be subsidised for projects with important envir. or social benefits Technical assistance for capacity building or feasibility studies 4
Financial instruments Senior loans Junior or subordinated loans Intermediated loans / credit lines Quasi-equity funding Equity funding Guarantees Currencies: Internationally traded currencies local currencies Interest rate subsidies Technical assistance 5
Resources & utilisation (1) EDF funds OCT Investment Facility (since 2003): a sustainable instrument for financial cooperation private sector focus loan repayments (reflows) are used again for new commitments capacity to absorb higher risk operations e.g. SMEs EUR m OAD I 2003-2007 (9th EDF) OAD II 2008-2013 (10th EDF) TOTAL ENDOWMENT 20 28.5 48.5 USE OF FUNDS (Net cancellations) 8.83 15 23.83 ESTIMATED REFLOWS --- 9 9 AVAILABLE (for new operations) 33.67 PIPELINE 28 28 AVAILABLE (after pipeline) 5.67 * as at September 2012 * OCT INVESTMENT FACILITY 6
Resources & utilisation (2) own funds lending grants (interest rate subsidies, technical assistance) EIB OWN RESOURCES EUR m OAD I 2000-2007 OAD II 2008-2013 ENDOWMENT 20 30 USE OF FUNDS (Net cancellations) 0 10 AVAILABLE (for new operations) 0 20 PIPELINE --- 20 AVAILABLE (after pipeline) 0 0 No carryover GRANT FUNDING EUR m OAD I 2000-2008* OAD II 2008-2013 ENDOWMENT 2 1.5 USE OF FUNDS (Net cancellations) 0.6 1.1 AVAILABLE (for new operations) 0 0.4 PIPELINE --- --- AVAILABLE (after pipeline) 0 0.4 7
OCTs portfolio Breakdown by sector EUR 37 m Breakdown by region 4 % EUR 2 m Energy 27% EUR 15 m 6% EUR 3 m Pacific Regional 96 % EUR 53 m Credit line 67% EUR 37 m Caribbean Why the low uptake and regional imbalance? product / instrument not adapted? insufficient knowledge about EIB? Insufficient dialogue on EIB requirements? poor financial viability, notably in the infrastructure sector non-compliance with EIB requirements, e.g. in terms of procurement 8
The way forward Under the 11th EDF: Sectors: continuing focus on financial sector (SMEs), infrastructure and climate change adaptation Proposed amounts: Investment Facility revolving fund Grants Own funds lending (ca. total EUR 28m p.a., i.e.> 3x increase) How to ensure full utilisation and even distribution? More systematic dialogue on investment requirements OCTs EU Member States European Commission EIB More involvement in preparatory work (grant funding) Feasibility studies, upstream capacity building Technical Cooperation Facilities under the EDF? EUR 13m annually EUR 5 m EUR 100 m 9
Thank you! f.palanza@eib.org http://www.eib.org/acp 10