EIB support for private sector investment in Africa 1 st Africa Finance Conference Bonn, 5 November 2013 Heike Rüttgers, ACP-IF Department 1
EIB signatures 2012 (in EUR) 07/11/2013 2
EIB Project Approval Process Financing Request Mandate Letter Concept Approval Pre-Appraisal Eligibility Feasibility Management Committee Comprehensive Appraisal + Key Terms Loan Signature Credit Approval * Board Approval Negotiation Loan Documentation * Optional in Project Finance Operations 3
EIB Lending Products Outside the EU Direct Loan - Country Risk - Commercial Risk * Guaranteed Loan - Country Risk - Guarantor Credit Risk Intermediated Loan - Country Risk - Intermediary Credit Risk EIB Guarantor Bank Corporate [ECA] Financial Intermediary Borrower Borrower Borrower * Sub-investment grade only in Subsaharan Africa 4
Financial Instruments EIB Own Resources Funds raised on the capital markets (EU Member States guarantee) Senior loans Intermediated loans Interest rate subsidies Technical assistance Widely traded currencies Junior or subordinated loans Investment Facility Quasi-equity funding Equity funding Guarantees Local currencies 5
EU blending mechanisms for Africa EIB Cotonou subsidy envelope EU-Africa Infrastructure Trust Fund (ITF) for Subsaharan Africa Neighbourhood Investment Facility (NIF) for Northern Africa Infrastructure Investment Programme for South Africa (IIPSA) (under Development and Cooperation Instrument DCI) Global Energy Efficiency and Renewable Energy Fund (GEEREF) 6
Interest rate subsidies Available to increase concessionality for: Public infrastructure projects in Least Developed Countries, post-conflict and post-natural disaster countries, countries with debt-sustainability programmes Public and private 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 7
Technical assistance TA grant funding covering the whole project cycle Project-related Strategic initiatives Capacity building: Infrastructure projects Focus on project preparation and implementation - enhancing project quality and success rate - increasing the efficiency of EIB s investment activities - complementing other EIB products 8
Project: Bujagali Hydroelectric, Uganda USD 136 m IF loan, co-financed with IFC, commercial banks, AfDB, FMO, Proparco, DEG/KfW, inaugurated October 2012 250-megawatt run-of-river power-generating facility to address severe shortage of electricity in Uganda, including 100 km of transmission lines least-cost generation option and improved air quality tariff reduction of over 50% contributes to improved education, health and water supply in nearby villages, as well as local jobs reduces greenhouse gas emissions by replacing electricity generated by diesel and fuel oil generators social improvement programmes such as livelihood restoration and agriculture enhancement 9
Project: Ohorongo Cement, Namibia EUR 82m OR loan, co-financed with DEG and DBSA Namibia s first cement factory, inaugurated February 2011 Annual production capacity of 700,000 tonnes to meet urgent infrastructure needs Reduced dependence on imports, boosting economic growth Best available technology 30% less electrical consumption than traditional cement plants and minimal pollution Creation of 300 local jobs and training of staff Ohorongo Otavi Community trust activities and projects e.g. donation of hospital equipment, renovation of health clinic Set up by Schwenk Zement, a medium-sized German company with over 160 years experience operating cement plants their first production facility in a developing country 10
Project: Philips Lighting Maseru, Lesotho USD 5m IF loan and interest rate subsidy (IRS) manufacturing plant to produce energy saving bulbs for the Southern African market suitable recycling facilities being put in place reducing carbon emissions, creating 500 local jobs, including 10% for people with disabilities attracting FDI in the energy sector diversifying economy away from wavering textile industry IRS used for social improvements for workers and families onsite health clinic, children s schooling 11
Enhancing communications for regional benefit Case study: Seychelles Submarine Cable EUR 8 m EIB loan for the installation and operation of the first submarine fibre optic cable for international connections to the Seychelles dramatically improving telecommunications and internet access, reducing the emigration of skilled workers Fostering modern e-services in healthcare and education, for the benefit of the whole region international transmission capacity estimated at being 7 times cheaper than current prices for satellite-based links EUR 4m EU-Africa Infrastructure Trust Fund grant to support shareholding by the Seychelles government equity dividend to be used for social development e.g. free internet access for schools, libraries, hospitals 12
http://www.eib.org/acp 13