Promoting jobs and growth - across borders - The importance of - European Investment Bank
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04-2013
152
Promoting jobs
and growth
across borders
The importance of
microfinance
The Western Balkans
rise again
ISSN 0250-3891 www.eib.org
152 The EIB – The EU bank
December 2013
Editorial
The EIB may be the EU bank, but its history of external
action goes back half a century. We are active mainly
in the EU pre-accession countries, like Croatia before
it became a Member State in July, and in the Eastern
and Southern Neighbourhoods.
We are also active in Asia – where we recently signed The EIB is a natural
our first loan with Nepal – and Latin America. 2013 also partner to support
marked the 50th anniversary of our involvement in the EU policy objectives
outside the Union.
African, Caribbean and Pacific regions, in addition to
the Bank’s own 55th anniversary. Since 1963’s first loan
in the region, we have supported over 1 300 projects
in 92 countries, territories or regional groupings. The
total lending value is over EUR 16bn. Contents
This shows that the EIB has a vital role to play in EU ex- EIB IN FOCUS
ternal policy, showcasing Europe’s expertise and know- 03 Promoting jobs and growth across borders
how as much as financial support. Our loans – be they 06 “If we are not careful, there may be another Spring”
under mandates or from our own resources and at our 08 Lending for clear results
own risk – have a multiplying effect, attracting more 09 News in brief
finance to projects and initiatives in sectors prioritised
EIB IN ACTION
by the EU. And they have a real impact on improving
10 EIB’s Results Measurement framework in figures
people’s lives. Speaking in July, President Werner Hoyer
12 Microfinance for sustainable development
underlined the importance of agreeing on the exter-
14 More than finance… EIB technical assistance around the world
nal lending mandate within the multiannual financial
16 The Western Balkans rise again
framework for 2014-2020. From the Bank’s perspec-
18 Agricultural SMEs get a much-needed boost in Palestine
tive, the new mandate must be in place by mid-2014
19 Working together on access to water in Malawi
to avoid disruption to operations. The ceiling under
20 Nepal powers ahead on the path to sustainable development
the previous mandate should also at least be matched.
21 Sustainable transport thanks to Quito’s first metro line
All of our external actions seek to develop social and NEW@EIB
economic infrastructure, local private sectors and cli- 22 ealing Europe’s investment crisis: the 2013 EIB Economics
H
mate action and we have developed tools to assess their Conference
results. The EIB helps build sustainable futures within 23 New@EIB
and outside the European Union. From mid-2014 on-
wards, we will continue to do just that.
EIB INFO is published periodically by the Communication Department of the European Investment Bank – Editor in charge: Bruno Rossignol with Brian Power, Úna Clifford-Bahcecik,
Tim Bending – Layout: EIB graphicTeam, Sabine Tissot – Photos: EIB photographic library, © AfDB, © BERD, © Bankwatch, © World Bank / Yuri Mechitov, © DONG Energy, © FONDEP
Microcredit, © Metro de Quito S.A., © BERD/Dermot Doorly– Your feedback is welcome. Please send your comments and suggestions to eibinfo@eib.org.
E I B I N F OC US
Promoting jobs and growth
across borders
It may be the EU bank, but approximately 10% of EIB lending goes
to projects outside the 28 Member States. The EIB is a natural part-
ner to support EU policy objectives outside the Union. It is vital that
the Bank continues to operate in these markets.
E
xternal lending has been part First loans were also rolled out in Greece
of the fabric of the European In- in 1963, while operations began in Turkey, External lending is part of the fabric of
vestment Bank for all but a few Cameroon and Côte d’Ivoire two years the EIB.
years of its 55-year history. Founded to later. From these beginnings, the Bank
fund investments in the then six-country is now the world’s largest supranation-
European Economic Community, the EIB al borrower and lender, and is active in
signed agreements with Greece in 1961 some 160 countries and territories across In 2012, the EIB approved 90 opera-
and Turkey in 1963. In the same year, the the globe, supporting EU external policies tions outside the EU, for a total value of
first Yaoundé Convention was signed with and acting under a variety of mandates EUR 8.1bn, making a genuine difference
18 African and Malagasy states. and initiatives. to people’s lives (see pages 10 and 11).
EIB INFO 4 – 2013 3
EIB IN FOCUS
Different regions, different erating in the highly developed and af- cuts to the ELM will reduce its effective-
instruments fluent European Free Trade Association ness in carrying out lending priorities out-
countries. side of the EU neighbourhood. These are
The Bank’s external operations fall mainly the development of economic and social
into three separate categories depend- infrastructure, projects in climate change
ing on where they are being carried out. Keeping current levels adaptation and mitigation and support
The Cotonou Agreement is a multiannu- for SMEs.
al arrangement, currently running from The pre-accession countries and Eastern
2000 until 2020, involving funds or guar- and Southern Neighbourhood regions
antees from EU Member States, used in come together under the External Lend- Substantial returns
Sub-Saharan African, Caribbean and Pa- ing Mandate (ELM) to form the EIB’s larg-
cific countries and overseas countries and est external market by volume. The ceiling On a policy level, it is clear that the ELM
territories. of the 2007-2013 ELM was EUR 29bn. Dis- upholds the values and interests of the
cussions are on-going for the EU’s ELM for EU: democracy, transparency, sustainabil-
Operations in the pre-accession countries, the period 2014-2020. Herein lies the chal- ity and inclusiveness. However, its effec-
Southern and Eastern Neighbours and lenge: the European budget for the com- tiveness on the ground is a salient feature,
partnership countries in Asia and Latin ing years will be reduced for the first time and one that should not be compromised.
America, as well as the Republic of South in history. If there is to be a squeeze on the EIB financing offers a multiplying effect of
Africa, are based on an external mandate budget for external action, it is highly likely 25-30 times, meaning that relatively small
agreed by the EU Member States and are that there will be an effect on how the EU amounts are needed to maintain current
implemented under guarantee. The cur- is perceived on a global level, not to men- levels of investment outside the EU, and
rent External Lending Mandate runs from tion the implications for the role of the EIB. maintaining those levels means there is
2007 until the end of 2013, and is current- no reduction in EU visibility or the reach
ly up for being maintained and almost The Bank itself is unwavering in its com- of external action.
certainly renewed. mitment to work with the other EU insti-
tutions, the Commission and the Europe- Increasing EIB lending by EUR 2bn would
In addition to these, the Bank also has an External Action Service (EEAS), headed give total volumes of EUR 50-60bn in sup-
dedicated facilities for lending at its own up by Catherine Ashton. This intertwines port of projects meeting EU standards. The
risk across these regions, as well as op- the EIB into EU external strategy, but any guarantee fund, which covers the risk of
4 EIB INFO 4 – 2013
E I B I N F OC US
cycle for both lenders and borrowers. The
lead financier takes on most of the tasks
required, from appraisal to preparing lend-
EIB ing decisions to implementation, and can
operations take that role for a number of reasons, not
outside the least geographical or sectoral experience.
EU have
The projects have to meet the standards
a notable set out by the other financiers, not just
positive those of the lead, and close cooperation
impact on is thus necessary. As each of the three IFIs
the real is governed by different regulations, stat-
world. utes and legal and governance structures,
those of the lead financier become the de
facto operational ones.
Active and observant
All three partners do not have to take an
active role in each MRI project. They are
not all active in the same regions. There
is not a specific ceiling set out, but the
MRI promotes EU goals for development
outside the Union. For example, KfW (as
lead financier) and the EIB are involved
in financing the Keyal Khwar hydropow-
er plant in Northern Pakistan, but a Sea
Water Air Conditioning project for French
defaults on loans outside the Union from tion and Development (EBRD) regularly Polynesia’s main hospital (see EIB Info 151)
the EIB and other European financial work together on projects to provide com- sees AFD and the EIB working together.
institutions, would need an additional bined financial support. This cooperation Likewise, AFD and KfW are both active in
EUR 55m from the EU budget to support is being extended to the Southern Neigh- development in Afghanistan, where the
this. To say the least, this is a modest share. bourhood. The EIB has also joined forces EIB is not present.
with long-time partners AFD (the French
Agence Française de Développement) and All projects supported under the scheme
Operational evolution KfW (Kreditanstalt für Wiederaufbau – Ger- are with public sector promoters at pre-
many’s Development Bank) to create the sent as by nature the MRI is designed to
Since the previous ELM was agreed for Mutual Reliance Initiative (MRI). back public sector projects in infrastruc-
the period of 2007-2013, the EIB has not ture: energy, transport and water.
simply kept external lending ticking over,
but has been actively seeking to improve Taking the lead
the quality of its offers. The new Results Our value
Measurement Framework (see page 10) The operational guidelines that make up
strengthens reporting and assessment the MRI were formally signed on 21 Janu- EIB operations outside the EU have a no-
of project results and impacts within the ary 2013 following a successful three-year table positive impact on the real world. It
Bank. Close cooperation and active inte- pilot phase taking in an initial 14 projects. is essential that the Bank retains a position
gration with the EEAS, meanwhile, has These were co-financed by the three part- to keep on doing what it can for good so-
given the EIB a further EU platform on ners – who have collaborated with each cial, economic and environmental projects
which to operate. other for a long time – and were located and practices.
in North and Sub-Saharan Africa, as well
External development is also about collab- as the Middle East, although MRI projects The impact of reducing the ELM is spelled
oration. The Bank has a network of trust- are not limited to these regions. out in bare numbers. It is only natural that
ed partners in the private sector, among the EU becomes a smaller player on the
public authorities and non-governmental Under the MRI umbrella, one of the IFIs world stage, but there is much expertise
organisations. In the Eastern Neighbours takes the role of lead financier in a pro- to share and no little development know-
and other countries such as Turkey, the EIB ject, meaning better organisation and im- how. For these, the EIB is a potent and in-
and the European Bank for Reconstruc- proved efficiency across the project life fluential organisation. p
EIB INFO 4 – 2013 5
EIB IN FOCUS
Interview
Manana Kochladze
Manana Kochladze
is Regional
Coordinator for the
South Caucasus at
CEE Bankwatch
Network.
She spoke to EIB Info
at the Eastern
Partnership Summit in
Vilnius, Lithuania, in
late November about
the Bank’s activities in
her region, and where
its strengths and
weaknesses lie.
The steering committee
1
“If we are not careful,
there may be
of wise persons was set
up at the request of the
European Parliament and
the Council of the EU to
supervise the independent
another Spring”
evaluation of the EIB’s
financing activities
outside the Union.
It was chaired by former
IMF Managing Director
Michel Camdessus.
6 EIB INFO 4 – 2013
E I B I N F OC US
You were part of the wise persons1 SMEs, I remain sceptical, however. Why do you
group established to supervise the EIB’s not use more local credible banks and ensure
financing activities outside the EU in 2010. that financing goes to local projects that benefit
What conclusions from then remain key local people? We would welcome more transpar-
today? ency. Not a full list of final beneficiaries, but bet-
ter information on where the money goes and
“The EIB is a powerful tool for the EU’s external how it is being used, to see the final develop-
architecture and contributes to its development ment impacts: number of jobs created, reduc-
policy. The Bank has good technical expertise tion of poverty, etc.”
to help ensure it only finances projects that are
sound, particularly from a design and technol- Going forward then, where should the
ogy point of view. It is also the only bank that is Bank set its ambitions in your opinion?
fully EU, meaning that it should implement EU
policies and standards also outside of the EU. This “The Bank is making a major contribution on
is a valuable and unique feature of the EIB, and climate action, but I feel you can do more. We
one that is not always sufficiently recognised by would like to see a more ambitious target on cli-
our politicians and legislators. mate action than the current 25%, and we would
appreciate the Bank investing more in renewable
As the Bank has a role in promoting European energies, for example supporting the European
values and interests, it has an indirect develop- Energy Community Treaty implementation by
ment mandate that accounts for several billions Ukraine, Moldova and Georgia.
for numerous countries outside of the EU. It could
do this more effectively if it had more human We would also like the Bank to finance only large
resources both at its headquarters and on the hydro rehabilitation, and not get involved in large
ground in those countries in which it operates, in new dams. In some cases there is urgent work to
my opinion. This would further facilitate compli- do on rehabilitation, and the people living near
ance of the project standards with EU standards to these dams are at serious flood risk if that work
and foster a better understanding of the context is not carried out. As new large dams usually re-
in which the projects contribute to a country’s quire resettlement of a large number of people,
economic and sustainable development. It would that itself presents human rights challenges, to
also result in less controversial projects that may which the Bank should not be exposed.
have a potential reputational risk for the EIB.”
Sharing the same offices with EU delegations
Where do you think the Bank has made on the ground would also support EIB financing
progress over the past few years? and EU country strategies. It strengthens compli-
ance and gives a strong signal to the local partner
“I have always been concerned that develop- country that the EU and the EIB are fully joined
ment is understood as a by-product of EIB financ- up, and that EU joint programming starts on the
ing; improving living standards for local people ground.”
should be the objective of EIB financing, rather
than GDP growth. I recognise that you only in- In the context of the Eastern Partnership
vest in sound business projects, and I am encour- Summit, what message would you give
aged by the steps taken to better measure the regarding your region?
results of your projects. There were a number of
significant improvements in recent years in ex- “I encourage the EIB to continue financing local
ternal lending, including the Results Measure- SMEs to help the Eastern Partners build a middle
ment Framework and the indicators, that should class, the rule of law and better governance and
be used to provide very useful insights on pro- transparency. The EU and the EIB should continue
ject outcomes for people locally. The role of the to engage strategically with the Eastern Partners,
Bank’s evaluation group is really crucial, as they and maintain dialogue with civil society. There is
give recommendations on how societal and en- too much at stake in countries like Ukraine, Mol-
vironmental consequences of projects can be dova and Georgia, as well as Azerbaijan and Bela-
better managed.” rus. Poverty is increasing while economic welfare
is going down. If we are not careful, there may
Where do you see room for improvement? be another Spring, but this time on the eastern
borders of Europe.” p
“On its private sector lending, and more particu-
larly lending through financial intermediaries to
EIB INFO 4 – 2013 7
EIB IN FOCUS
Lending for clear results
In a global society driven by information technology, demand for accountabil-
ity is growing. Transparency is a must to remain on the development agenda.
That’s why the EIB is becoming a member of the International Aid Transpar-
ency Initiative (IATI)
ment experts. Since its establishment in
2011, the IATI has attracted over 150 signa-
tories. Together, these signatories account
for an impressive 75% of all global public
official development assistance. a quarterly basis. The Bank already disclos-
es certain data sets through its project lists
on the EIB website and is currently work-
Supporting development policies ing with the IATI Secretariat to set in place
the necessary systems and procedures to
In 2012, the EIB was responsible for more implement the IATI reporting standard.
than EUR 7bn of public and private sector in-
vestment outside the EU. In October of this
year the EIB signed up to the IATI – proof of Long-term benefits
our efforts to ensure openness in our opera-
tions and of our continued commitment Joining the IATI is a logical step in the
to support the aid effectiveness agenda. Bank’s road to building a robust Sustain-
ability Framework which supports respon-
The move was welcomed by European sible business. It is one in a series of actions
Commissioner for Development, Andris which we have undertaken in recent years
Piebalgs: “The EIB plays a key role in sup- to underscore our belief that sustainabil-
porting Europe’s development objectives ity and accountability is not only good for
and its lending contributes significantly people and the planet, it also quite simply
D
eveloping countries face huge to the EU’s external cooperation and de- makes business sense. Our Transparency
challenges in accessing up-to- velopment policies” he said. “Striving for Policy commits us to the highest standards
date information about aid – transparency to make aid and develop- in our daily work and in 2014 we expect to
information that they need to plan and ment finance more effective requires effort launch a public register of EIB documents.
manage those resources effectively. Simi- to implement; however, this determination And 2012 was the pilot year for the Results
larly, citizens in developing countries and will pay off in the long-run”. Measurement Framework (ReM) (see page
in donor countries lack the information 10), which implemented a strengthened
they need to hold their governments to Unlike the majority of IATI signatories, the approach to assessment of EIB projects
account for the use of those resources. EIB does not provide grants; but outside outside the EU and maximisation of their
the EU it plays a key role in supporting EU related environmental, social, economic
To address this, the International Aid Trans- development policies and is the leading and financial results.
parency Initiative (IATI) is making informa- development financier in many regions
tion about aid spending easier to access, of the world. Our investments support pri- The Bank has joined a long list of its devel-
use and understand. It has developed a vate sector growth, the shift towards a pos- opment peers as IATI members and syn-
common standard for aid and develop- itive climate path and the development of ergies between signatories are expected
ment finance flows to increase effective- strategic infrastructure, all of which con- to develop, bringing further value to the
ness in tackling global poverty. tribute to poverty alleviation and econom- quality of our investments. The effect of
ic revitalisation. the IATI on results will not be immediate.
The initiative is voluntary and open to Development finance is not a sprint; it is
a wide range of stakeholders, including Signing up to the IATI means that the Bank a marathon whose end-results can be im-
donor and developing countries, civil so- agrees to report data according to the IATI pressive in terms of impact and of which,
ciety organisations and aid and develop- standard on investments outside the EU on as an institution, we can be truly proud. p
8 EIB INFO 4 – 2013
E I B I N F OC US
News in brief
Belgium’s EVS is maiden Energising Bangladesh
GFI beneficiary
The EIB is providing its first loan to the
The Growth Finance Initiative (GFI) is Government of Bangladesh, as part of
a new pilot instrument established by a broad investment programme for
the EIB and European Commission. It the densely populated nation’s ener-
allows for loans of up to EUR 25m to gy sector.
midcap companies focused on re-
search, development and innova- The EUR 82m loan will finance two
tion. The first loan (EUR 12m) under specific projects, principally the conversion of the gas-fired power plants in
the scheme was signed with Belgian Baghabari and Shagibacar to combined cycle technology.
broadcast equipment specialists EVS
in November. The conversions will improve efficiency by 75% and increase capacity by
50% for the same amount of fuel used. The resulting savings in CO2 emis-
EVS manufactures broadcast and media sions are notable in a country so vulnerable to the capricious impacts of
production systems mainly for broad- climate change.
casters, production companies and film
studios. It employs some 500 people, of
which half work in R&D. The company’s
products enable the production of live EIB’s largest ever SME loan
and enriched video programming and
span four markets: sports, entertain- The EIB has agreed a EUR 1bn deal with Spain’s Instituto de Crédito Oficial
ment, news and media. (ICO) to facilitate access to finance for SMEs (and midcaps to a certain ex-
tent), in what is the biggest loan ever granted by the Bank to a European
The idea behind GFI is that it is fast and financial institution.
flexible. Set up under the Risk Sharing
Finance Facility (RSFF), it allows for a ICO are matching the EIB contribution, meaning that a pot of EUR 2bn will
wide range of solutions, from senior be available to finance the medium and long-term investment projects and
secured debt to mezzanine financing. working capital needs of companies in the primary, industrial and service
The EIB can provide direct loans of be- sectors, helping them to safeguard and create the jobs that are so badly
tween EUR 7.5m and EUR 25m to quali- needed in Spain.
fying companies. The application and
approval processes have been stream- A substantial portion of the EIB loan will be channelled by ICO through to
lined. The GFI brings the EIB closer to mid-sized regional banks or institutions. This enables finance to reach busi-
them. nesses that may otherwise be out of range, geographically or by sector.
EIB invests in Jordan wind farm
The JWPC Tafila Wind Farm in Jordan supports the nation’s renewable energy
strategy, and will contribute to reducing a heavy energy import dependency.
The 38-turbine, 117 MW onshore wind farm will increase Jordan’s national
power capacity by 3%, and the EIB is contributing a quarter of the total pro-
ject cost with a loan of USD 72.24m.
The project is the first of its kind in Jordan, a large-scale renewable energy
facility to be installed by an independent power producer. Jordan’s national
renewable energy target for 2020 is 1 200 MW, and the JWPC Tafila wind farm
will contribute almost 10% of this once it is fully operational.
EIB INFO 4 – 2013 9
EI B IN AC TION
How to pick a project...
Introducing the EIB’s Results Measurement
framework
H
ow does the EIB decide which Every application for EIB support is rigorous-
projects to support outside the ly assessed to see whether it advances these
EU? As the EU bank, we work to EU-EIB objectives. We also ensure that each
further the EU’s external policy goals in project has a sound investment plan and our
our operations outside Europe. involvement will really make a difference.
Our mandate for these operations sets out Since 2012, a Results Measurement (ReM)
strategic objectives: local private sector framework improves our assessment of ex-
development, development of social and pected results and further enhances the
economic infrastructure, climate change Bank’s ability to monitor and report on ac-
mitigation and adaptation, and regional tual results.
integration.
The Results Measurement framework
Does EIB offer What outputs How well do
more than and out- these fit
the market comes can be mandate
alternative? expected? objectives?
REM
Is the planned operation What inputs What impacts
sound and sustainable? are required? are expected?
What are the risks?
10 EIB INFO 4 – 2013E I B I N AC TION
Great expectations
for EIB external operations approved in 2012
EIB finance will enable
intermediaries to make over
600 000
loans
to micro, small
and medium-sized
enterprises helping to
sustain
3.3 million jobs
better urban
water electricity healthcare transport
148 000 308 000 740 500
households households more patients 3.4 million
connected connected treated users
EIB INFO 4 – 2013 11EI B IN AC TION
Microfinance for
sustainable development
Some four billion people worldwide are estimated to live in poverty series of microfinance investment inter-
mediaries – funds and holdings – which
and lack access to basic financial services. Microfinance is a key tool for
the Bank has vetted to ensure that their
achieving financial inclusion, providing sustainable financial services to activities promote the provision of respon-
the world’s poor. With over EUR 300m of finance committed to micro- sible finance to the poor. Our investments
finance activities outside the EU by the end of 2012, the EIB is a major are designed to help intermediaries lever-
player in this growing global sector. age private funds and foster the funding
of innovative concepts such as micro-in-
surance.
The remaining 30% of EIB microfinance has
been lent directly to microfinance institu-
tions and commercial banks for on-lending
to micro and small enterprises, as well as
self-employed micro-entrepreneurs.
Capacity-building for effective
microfinance
In addition to direct and indirect funding
operations for microfinance outside the
T
hanks to the Grameen movement EU, the EIB has concentrated efforts on
led by Professor Muhammed Yu- Financial inclusion: a global building capacity to promote financial
nus in the 1970s, microfinance has challenge inclusion through technical assistance
entered the development mainstream. By
extending affordable credit to the poor- The EIB continues to develop its involve-
est in society, it unlocks the potential for ment in the microfinance sector to create
entrepreneurship that exists within these jobs and address gaps in the supply of fi-
communities, helping them to help them- nancial services where they are most need-
Expanding Microfinance
selves and to improve their economic and ed in the world. By the end of 2012 the in Africa
social well-being. Bank had committed more than EUR 300m
to microfinance activities across 30 coun- In 2012 the EIB pioneered an invest-
In recent years, there has also been a grow- tries outside the EU, concentrating on the ment facility spanning the region of
ing focus on how microfinance can facili- most vulnerable parts of sub-Saharan Afri- eastern Africa – the East African Com-
tate financial inclusion. Access to formal ca, but also in the Caribbean and the Medi- munity Microfinance Facility (EAC I).
financial institutions and a range of finan- terranean region. The EUR 50m regional facility was
cial services – enterprise credit but also fully allocated in 2013, and its suc-
transfer accounts, micro-savings, micro- The financial services enabled by the cess has led to the design of a second
insurance, and so on – can be critical to Bank’s microfinance investments outside in 2013 to the value of EUR 75m, of
enabling full participation in the economic the EU have reached 8 million people. which EUR 30m has been allocated.
and social life of a community. The simple In the African, Caribbean and Pacific re- A third regional facility was estab-
act of having a bank account allows peo- gions alone we estimate that our fund- lished for Southern Africa in 2013.
ple to save in order to reduce their vulner- ing has supported almost 3.4 million loans Together, these significantly boost
ability to economic stress, and to invest in to final beneficiaries, amounting to some the level of direct investment in the
their own future, building businesses, im- EUR 1.7bn. Bank’s microfinance portfolio.
proving their living conditions and provid-
ing their children with access to improved Outside the EU, 70% of EIB microfinance
health and education services. funding has been channelled through a
12 EIB INFO 4 – 2013E I B I N AC TION
activities. The aim is to support the cre-
ation of financially sustainable microfi-
nance institutions and to help them to Combining credit
broaden and deepen their provision of and know-how
financial services to promote financial
inclusion. On-going technical assistance
Faulu Kenya is a microfinance
includes the MicroMED project to help
institution that has received
expand and diversify the microfinance
EIB support through the East
sector in Tunisia, and institution-build-
African Community Microfi-
ing as part of the Southern Africa Micro-
nance Facility.
finance Facility.
EIB finance was comple -
Microfinance is also one of the focus areas mented by the funding of
for the EIB Institute, which complements training for final beneficiaries
the EIB Group’s financing activities with in order to support them in
its contribution to knowledge creation. preparing business plans and
Through its research grants and sponsor- managing their operations.
ship of European initiatives, such as Univer- Faulu staff were also trained
sity Meets Microfinance (UMM), the EIB Insti- in subjects such as credit
tute fosters cooperation between university risk management. Combin-
students in Europe and microfinance practi- ing finance with training has
tioners, with the goal of contributing to mi- improved the creditworthi-
crofinance education, research, professional ness of final beneficiaries and
exchange and communication. increased the number of qual-
ifying projects.
Changing the world, one micro
enterprise at a time
The Bank’s microfinance investments the money-making cycle. […] Yes, peo-
Microfinance currently reaches only 10% ple want to make money (but they) also
outside the EU have reached eight
of the world’s poor. As such it is clear that want to change the world. That part has
million people.
the EIB’s work in microfinance is an on- to be revealed and unfolded. That is the
going story. We are also focused on en- opportunity we need to create within this
hancing the positive impact that we can institution.”
have through our microfinance business environmental goals. As Professor Yunus
framework. An emerging area is social en- said when he visited the EIB last year: The Bank is currently setting in place a
trepreneurship – entrepreneurial activity “The EIB is working in the right direction number of social initiatives for microfi-
that aims to achieve broader social and to solve social problems, but still within nance – a strategy for the future? p
Microfinance impacts in the Mediterranean
In the Mediterranean region, the EIB is the third largest micro-
finance lender, with small but effective investments made in
local currencies via tailor-made financial instruments such
as equity and quasi-equity.
By the end of 2012, the Bank had invested some EUR 22m in
microfinance institutions and it is estimated that for every
euro of EIB microfinance funds, 38 euros have been lent to
micro-borrowers. Microfinance institutions backed by the
EIB are estimated to have over 830 000 active micro bor-
rowers, of whom 53% are women, with an average loan of
around EUR 600.
EIB INFO 4 – 2013 13EI B IN AC TION
More than finance… EIB technical
assistance around the world
O
ur work outside the EU is not just ture financing, climate change mitigation programmes usually in partnership with
about lending. It’s also about and adaptation, urban development or other institutions or benefiting from
sharing knowledge on how to SME support. Our project-related advi- grants, notably from the European Com-
successfully invest for sustainable growth. sory activities support promoters or fi- mission budget. The impact of the advice
nancial intermediaries in preparing, struc- the EIB can provide may even outlive that
Our advisory services include substantial turing or implementing projects that the of the project itself. It helps ensure that
technical and financial expertise for pro- Bank may finance or has already financed. our lending goes to projects and invest-
jects in lesser developed regions or with They encompass a wide range of activi- ment programmes that are both econom-
a weaker institutional framework. We rely ties from very specific technical support ically sound and socially and environmen-
on the unique expertise developed by the during project preparation or implemen- tally responsible. p
EIB's staff in key areas such as infrastruc- tation to very large technical assistance
Here are some examples of the EIB in action as an advisor beyond the EU’s borders.
Sharing Europe’s flood protection
know-how in Moldova
The EIB is assisting the Moldovan Ministry of Environ-
ment in developing a master plan and investment pro-
gramme for flood protection to respond to this growing
environmental challenge.
Moldova was hit by major floods in 2010, forcing the
evacuation of more than 3 100 people, destroying criti-
cal infrastructure and washing away crops and livestock.
With climate change, events like this are expected to
become more frequent and devastating. There is a need
for investment in adaptation measures and a high level
of public preparedness. In Moldova flood protection
measures had not been maintained since Soviet times,
and this is why the bad weather proved so damaging.
The EIB support is provided through the Eastern Part-
nership Technical Assistance Trust Fund (EPTATF). It will
help the Ministry of Environment to design, procure
and implement the upgrading and operation of the
national flood protection system. It will also support
the implementation of the EU Flood Directive and the
Water Framework Directive.
14 EIB INFO 4 – 2013E I B I N AC TION
Building microfinance capacity in Tunisia
Tunisia has recently boosted the microfinance sector, making it much easier to set up new institutions and provide a greater
diversity of services. This is critical for meeting growing demand, to enable entrepreneurial activity to flourish in even the
poorest communities. There is a need for technical support and training to implement the reforms successfully and allow
the microfinance sector to fulfil its role.
The three-year MicroMED programme brings together the EIB, the FEMIP Trust Fund, the Government of Luxembourg and
the NGO Appui au Développement Autonome (ADA) to improve the ability of microfinance institutions to grow and respond
to new opportunities. The programme is studying and piloting the establishment of different types of microfinance services
in Tunisia – such as mobile finance, micro-insurance and micro-savings – to promote greater inclusion.
Training is being provided on subjects such as risk management and performance indicators. A Microfinance Investors Fair
will be organised in Tunis to help microfinance institutions, investors and donors build new partnerships.
Pooling power in West Africa
Between them, Côte d'Ivoire, Liberia, Sierra Leone and Guinea
have significant potential for renewable hydropower genera-
tion. But they also suffer from a high reliance on imported fossil
fuels, and access to reliable electricity is a challenge, especially
after years of civil war.
The CLSG Interconnection project, part-funded by the EIB, is
creating a 1 300 km high-voltage electricity transmission back-
bone between these countries with a combined population of
40 million and connecting them to the West African Power Pool
(WAPP). It will allow the export of low-cost renewable energy
from Côte d'Ivoire and Guinea to Liberia and Sierra Leone, replac-
ing expensive diesel generation and increasing access.
Technical assistance from the EIB and the EU-Africa Infrastruc-
ture Trust Fund has been vital for advancing the preparation of
this complex regional project, be it for the feasibility study, the
planning of the transmission routes or the environmental and
social impact assessment.
EIB INFO 4 – 2013 15EI B IN AC TION
The Western Balkans rise again
The EIB is the largest international financier in
the Western Balkans where it has been active
since 1977. We invested a total of EUR 7.3bn in
the past decade in the Candidate and Poten-
tial Candidate Countries in the region, as well
as new in Member State Croatia, but there is
still much to be done.
I
t is impossible to consider the fu- upgrading of regional and municipal infra- Balkan nations to a position where they
ture of the Western Balkans with- structure – transport, energy and the en- can be properly integrated into Europe
out keeping in mind the region’s vironment – in the Western Balkans, com- as a whole.
tragic recent history. Emotional scars run prising Candidate Countries Montenegro,
deep across the population, matching a Serbia and the Former Yugoslav Republic
landscape still pockmarked by conflict, of Macedonia (FYROM) and Potential Can- Multiple levels for multiple
and yet ambition to progress remains didate Countries Albania, Bosnia and Her- benefits
amongst the region’s approximately zegovina and Kosovo*.
22.5 million inhabitants. The Western Balkans Investment Frame-
Major projects in the region are co-fi- work (WBIF) is an example of how inter-in-
nanced with other IFIs, especially the stitutional cooperation can bring benefits
Vital cooperation European Bank for Reconstruction and De- to the region. Formally set up in 2009, the
velopment (EBRD), the World Bank and WBIF brings together the European Com-
Set against the backdrop of this situation, Council of Europe Development Bank mission, the EIB, EBRD and CEB as found-
it is understandable that the EIB’s focus has (CEB), as well as bilateral donors. Such co- ing partners.
been on support for reconstruction and operation is needed to bring the Western
The WBIF provides joint grant and joint
lending facilities for strategic investments
in the region and simplifies access to cred-
Reforming education in Albania it by pooling and coordinating different
sources of finance and technical assis-
tance. As of June 2013, a total of 145 pro-
jects had been supported across the ben-
eficiary countries of Albania, Bosnia and
Herzegovina, Croatia, Kosovo, FYROM,
Montenegro and Serbia. The total in-
vestment for all of these projects (for all
stakeholders) comes to approximately
EUR 13bn.
* This designation is without prejudice to the positions
An EIB loan worth EUR 12.5m is supporting the Albanian government strategy expressed by the EU Member States on Kosovo’s status
to reform the education system over the period of 2004-2015. Learning condi- and is in line with United Nations Security Council
tions are being improved for secondary school students, increasing enrolment in Resolution No. 1244/1999 and the International
education and improving infrastructure, with a view to a comprehensive reform Court of Justice Opinion of 22 July 2010 on Kosovo’s
declaration of independence.
of the sector.
16 EIB INFO 4 – 2013E I B I N AC TION
The idea is to support socio-economic
development with a view to EU acces- Water upgrade in Former Yugoslav Republic of Macedonia
sion in the six countries by focusing on
key sectors of their economies, notably
The EIB has been helping finance a programme to improve drinking water sup-
transport, energy, energy efficiency, en-
ply and quality and wastewater treatment in FYROM over the period 2009-2013.
vironmental investments and private sec-
The Bank committed EUR 50m to the scheme, covering half of the total cost. The
tor development.
programme included 84 municipalities and improved quality of life and eco-
nomic development in smaller towns and villages.
Improving social systems
In addition to this, assistance is provided ment and Innovation Facility (WB EDIF) in start growth and boost regional venture
to develop social policy. Reform of social December 2012. capital markets, as well as promoting pol-
systems is a necessity in a region still suf- icy reforms to support SME access to fi-
fering the turmoil of the disintegration of The initial capital of the WB EDIF was nance through financial engineering in-
the former Yugoslavia. To fall into step with EUR 145m, which will effectively trans- struments. p
the European Union’s 2020 strategy, mod- late into over EUR 300m of direct finance
ernisation of education, health and pen- for high growth and innovative SMEs in
sion systems is required. Poverty reduc- the Western Balkans. These businesses
tion and social inclusion measures must are the ones that can write the future, yet
be put into place. they are also the ones most in need of fi- Breaking ground in
nance. By placing these funds at their dis- Kosovo
In some of these countries, a quarter of posal, it is hoped that this facility can kick
the population live in poverty. Clearly liv- Having signed a framework
ing standards have not improved across agreement with Kosovo in June
the board, and the fact remains that the Road safety in Serbia
2013, the EIB signed a credit line
Western Balkan nations also need physi- worth EUR 10m with the fledg-
cal social infrastructure. The WBIF supports ling state in November. It is the
measures to add to or modernise existing Bank’s first operation in Kos-
social housing stocks and health, educa- ovo, and will support very small,
tion and judicial facilities. small and medium sized enter-
prises in the form of long term
loans, to be disbursed over a two
A fair crack of the whip for SMEs year period.
Like in many parts of the world, SMEs are Serbia’s road network requires sig-
the backbone of the Western Balkan econ- nificant upgrades. To assist with this,
omies, and an important driver of econom- the EIB signed a loan worth EUR 100m
ic growth and job creation. And, as in many with the country’s Ministry of Finance
of those other parts of the world, access in November to support efforts to Montenegro:
to finance can be tricky for Western Bal- rehabilitate 1 100km of major roads a convincing candidate
kan SMEs. To address the funding gap for over the coming five years. The total
these companies, the WBIF partners and cost of the project is estimated at In 2012, the Bank signed a loan
the European Investment Fund launched EUR 390m. worth EUR 49m with Montene-
the Western Balkans Enterprise Develop- gro. While EUR 25m is destined
to support SMEs in the country,
a further EUR 20m was allocated
Powering Bosnia and Herzegovina
to repair work and flood dam-
age prevention after exceptional
rainfall and flooding in late 2010.
In 2007, the EIB lent the Bosnian government Grants were also provided for
EUR 103m to rehabilitate its creaking hydropower the reconstruction of the water
plants and electricity transmission networks. The supply system in the historical
programme modernised eight dams, and led to city of Cetinje under the WBIF,
a better use of energy by improving reliability and a wastewater treatment
and efficiency. The Bank is now supporting wind plant in Pljevlja.
power feasibility studies in the country.
EIB INFO 4 – 2013 17EI B IN AC TION
Agricultural SMEs Client numbers are set to treble
over the coming years, with women
accounting for 75% of them.
get a much-needed The financing package will have a signifi-
cant impact on ACAD’s micro-lending ac-
boost in Palestine tivities; client numbers which have been
stable at around the 3 000 mark are set to
triple over the coming five years. Women
account for 75% of the ACAD client base.
More than a loan
The Palestinian Territories have
To manage the shift to a financial compa-
suffered from continued polit-
ny, ACAD will create additional jobs for fi-
ical conflict spanning decades, nancial specialists and supply training to
resulting in a heavily fragmented provide existing staff with the capacity to
economy. Despite international manage the new responsibilities. The Bank
plans to boost economic growth is combining its investment with technical
and job creation in Palestine, assistance to manage this process. We are
providing advice and support to ACAD, en-
much of the 4.4 million popula-
suring that the new ACAD Finance adopts
tion still depends on Food Aid best industry practice as a microfinance
for their daily existence. With for- institution with the highest possible lev-
eign aid packages being reduced els of management, governance and com-
and economic growth shifting pliance.
into reverse, the Palestinian Ter-
tural development and create jobs across
ritories are in need of financial
the Palestinian Territories. Financing both ends of the
support packages that offer a economic spectrum
sustainable outlook for devel-
opment. Empowering Palestine’s female The microfinance operation comes only
entrepreneurs two years after we invested in Palestine’s
first high-tech start-up venture capital fund
This is the first microfinance loan that – Sadara Ventures. The EIB’s involvement in
A
griculture holds the key to the we have made in Palestine and ACAD both high-tech and agriculture operations
fight against poverty and food seems a worthy intermediary for the provides a strong signal for the future in
security in Palestine. In Sep- funds. ACAD has been registered as an terms of investment, trade and job crea-
tember 2013 the EIB finalised a USD 1m agricultural non-governmental organisa- tion. We are prepared to support a wide
microfinance equity investment in sup- tion since 1993 but in 2013 it made the range of economic activities in Palestine,
port of the Arab Center for Agriculture transition to a financial institution, pro- underpinning the EU goals of sustainable
Development (ACAD). The Bank’s finance, viding credit to farmers and other rural growth and development in the Mediter-
which represents 18% of ACAD’s capital, micro-entrepreneurs. ranean. p
will be complemented with funding from
ACAD itself, Solidarité Internationale pour
le Développement et l’Investissement (SI-
DI), Grameen Crédit Agricole Microfinance Nethmia Salameh, from Tulkarem City, received an ACAD loan of around EUR 1 520.
Foundation and Triple Jump. This will allow her to buy additional sheep to increase her cheese production:
“I am 54 years old. I am breeding sheep and I have great experience in that field
Together, the institutions are making an
as my parents worked in this area as well. With this loan I would like to increase
investment of USD 5.3m which will be
the number of sheep I have. Ideally, I would like to purchase five more sheep
used to finance sustainable development
which would allow me to increase my income and would greatly help me with
in rural areas. Small and micro-entrepre-
paying my son’s university fees.”
neurs will gain access to financing solu-
tions, enabling them to invest in agricul-
18 EIB INFO 4 – 2013E I B I N AC TION
Working together on
access to water in Malawi
How do you make sure
that the benefits of new
infrastructure reach those
who need them most? An
innovative EIB project in
Malawi shows how impor-
This project has
tant the know-how and
brought safe
commitment of communi- drinking water
ties and NGOs, combined to over 700 000
with private sector exper- people.
tise, can be to achieving
inclusive outcomes.
T
he public water boards of Lilongwe – unaffordable for most poor households. unauthorised connections and encourag-
and Blantyre, the largest cities in It’s also hard for the cash-strapped water ing the payment of arrears.
the southern African nation, used boards to invest in the informal settle-
to be in a really bad state. Treated water ments that make up much of Blantyre and The sanitation component of the project
reached only about 70% of their nearly 1.5 Lilongwe. Billing is difficult, non-payment also depends on community involvement.
million inhabitants. And with a high pro- common and the risk of water pipes being The construction of latrines and adop-
portion of the water supplied going un- tapped illegally is high. tion of simple hygiene practices rely on
paid-for through leaks, illegal connections the committed involvement of local lead-
and payment arrears, the water boards This is why the project formed a partner- ers and activists who see this as a way in
were financially unsustainable. ship with two NGOs, Wateraid and Water which they can do something to reduce
for All, to scale up community-led solu- the health risks they face. Speaking to a
The Malawi Peri-Urban Water and Sanita- tions to improving water supply and sani- visiting reporter from the Guardian, moth-
tion project has been critical in helping to tation. As part of the project, these NGOs er of eight Lucy Kaombe, from the Ngona
turn this situation around. Co-financed by have worked with grassroots organisations WUA in Lilongwe, said water-borne dis-
a subsidised loan from the EIB and a grant to set up community-run Water Users’ As- eases had been much reduced in the dis-
from the EU Water Facility, this EUR 32 mil- sociations (WUAs). Each WUA may run doz- trict. The city had previously suffered out-
lion project has reduced losses and brought ens of water kiosks – secure water access breaks of cholera.
safe drinking water to over 700 000 addi- points where people can collect water,
tional people in the cities and a 24-hour close to their homes, for a small cash fee. This project shows the importance of co-
supply to 400 000 more people in Blantyre. operation. Communities need low cost in-
puts for sanitation and a supply of water
Community action makes inclusion that is safe, affordable, and reliable. This is
Access is about more than supply possible where EIB-EU support comes in. But with-
out communities taking action to promote
But how do you make sure that the poor- For the communities, their WUAs are a way improved sanitation and create WUAs as
est neighbourhoods also benefit from a of taking action, collectively, to ensure that a viable partner for the water boards, this
project like this? One major barrier to ac- they get access to safe water. They are ac- support could not be effective and sus-
cess to water is the up-front cost of estab- countable to members and foster a sense tainable in reaching the people who need
lishing an individual metered connection of shared responsibility, discouraging it most. p
EIB INFO 4 – 2013 19EI B IN AC TION
Nepal powers ahead on the path to
sustainable development
operate as a base load power plant. In
For the EIB to implement its activities outside the EU it is required to sign addition, demand for electricity has been
a Framework Agreement with national governments. After signing one growing at 10% annually, resulting in a
such agreement with the Government of Nepal in 2012, the EIB signed marked supply gap which the population
is meeting through the use of polluting
its first loan with the southern Asian state in support of the production
and expensive diesel generators.
of sustainable energy.
Tanahu will generate significant econom-
ic benefits by providing a clean and re-
liable supply of electricity and will help
N
epal, with its mountainous geog- In May 2013, the EIB signed a EUR 55m to reduce the adverse impacts of climate
raphy, is particularly vulnerable loan to the Republic of Nepal to finance change by replacing more polluting en-
to the impacts of climate change, the construction and operation of the Tan- ergy sources.
making it a perfect candidate for mitiga- ahu hydropower plant. The plant, with an
tion and adaptation projects. In recent installed capacity of a 140 MWe, will be
years, the government has been working built on the Upper Seti River, in the cen- Nepal’s network of rivers offers
to introduce initiatives and institutional tral part of Nepal. significant opportunity for hydropower
reforms designed to build resilience into
development.
its climate-sensitive economy, which has At the signature in Kathmandu, EIB Vice-
suffered at the hands of rising tempera- President Álvarez, responsible for opera-
tures and drought. The EIB is at hand to tions in Asia, commented that our ”first
accompany these initiatives with much- loan to Nepal will eventually provide clean The project also includes a programme
needed finance. power to the country, allowing households of rural electrification to supply power to
to enjoy electric light, children to read after 17 villages in the vicinity of the plant. A
Whilst Nepal’s topography poses environ- dark, hospitals and schools to function and community development programme will
mental challenges, it also offers opportuni- entrepreneurs to invest and create jobs.” For be implemented for people living in the
ties. National access to electricity currently Finance Secretary Krishna Hari Baskota “this area, addressing education, health, gender
stands at only 40% of the 27 million popu- venture will help Nepal to achieve sustain- development, social inclusion, economic
lation, but the country’s perennial network able and inclusive economic development.” development and livelihood activities. p
of rivers offers significant opportunities
for hydropower development. Maximis- The Tanahu hydropower plant will contrib-
ing Nepal’s hydro potential would not only ute to meeting peak electricity demand in
increase access to sustainable energy, but Nepal during the dry winter season when The EIB began lending in Asia and
would also have a positive impact on na- shortages are more acute, with Kathman- Latin America in 1993 under a man-
tional living conditions and economic de- du residents facing blackouts for up to 18 date from the European Union to
velopment. hours daily. For the rest of the year it will support EU development and coop-
eration programmes and instru-
ments in these regions.
The Bank’s activities in the region
prioritise projects which contrib-
ute to climate change mitigation
and adaptation, the development
of social and economic infrastruc-
ture and the growth of the local pri-
vate sector. All projects that the Bank
backs must also have the potential
to contribute to the country’s eco-
nomic development.
20 EIB INFO 4 – 2013E I B I N AC TION
Sustainable transport thanks to
Quito’s first metro line
Municipal authorities in
Quito (2.3 million inhabit-
ants) have started construc-
tion of the city’s first metro
line. The project will boost
air quality and alleviate con-
gestion in the high-altitude
Ecuadorean capital.
L
ocated 2 800 metres above sea lev- ject’s effectiveness. Public transport ser- co-financed by the International Bank for
el and surrounded by the Andes vices will be reorganised to integrate the Reconstruction and Development (IBRD),
mountains, Ecuador’s capital city is metro into the existing transport network. the Inter-American Development Bank
experiencing major traffic congestion and Six of the 15 planned stations will have (IDB), the Corporación Andina de Fomen-
the demand for public transportation is integrated access to the Metrobus-Q net- to (CAF) and the local government. This
increasing. To tackle these challenges, the work. According to studies by experts in cooperation both maximises the financial
government of Ecuador and the munici- the Community of Madrid, nine out of potential and offers technical advantages.
pality of Quito have decided to construct every ten inhabitants will have access to
the city’s first metro line. A EUR 200m EIB the integrated system within four blocks Environmental and social considerations –
loan is supporting this ambitious project. of their home or place of work. integrated into all EIB projects and those
of our financing partners - ensured that a
“The line will have a major impact on per- The project’s economic benefits are ex- thorough analysis was carried out during
sonal mobility, equitable urban develop- pected to outweigh the initial investment the planning of the metro project to safe-
ment and environmental protection” says costs twofold. Savings will come principal- guard the historic district of Quito, one of
city mayor, Augusto Barrera. “In the history ly from reduced travel times and vehicle the best preserved in Latin America and a
of Quito, there will be a before and after operating costs. Quito Metro Line One will UNESCO World Heritage site. It will even-
the metro”. link the principal points of departure and tually be turned into a pedestrian zone.
arrival of transit passengers in Quito, and
The new line will start operating in 2017. will service an area in which some 760 000 Construction of the first two stations at La
It will initially carry up to 23 000 people jobs are located. Some 400 000 passengers Magdalena and El Labrador has already
an hour in each direction, easing traffic are expected to travel daily on the line, started. Tendering is underway for the rest
congestion in Quito and its suburbs. Fuel which will connect the north and south of the works: the remaining 13 stations, the
consumption and greenhouse gas emis- of Quito. Once operational, the project is construction of a depot and maintenance
sions are expected to decline thanks to estimated to create about 800 new jobs: workshops, a depot access tunnel, 22 km
an expected shift from private vehicles to drivers, operation and maintenance per- of subway line tunnel, shafts and an end-
metro, with savings of 30 000 tonnes of sonnel, supervisors, administrative and of-line facility.
CO2 emissions that would otherwise be technical employees, managers.
produced by motorised vehicles. This is the EIB’s first operation with the
Government of Ecuador and its second
Safeguarding history in the country since a EUR 40m loan to
Quality of life Telefónica Ecuador in 2006. p
The project also includes the acquisition
The city will encourage residents to leave of 18 trains to operate on the line, and has
their cars at home to maximise the pro- an estimated cost of EUR 1.3bn. It is being
EIB INFO 4 – 2013 21You can also read
