The European Investment Bank (EIB), the European Union's long-term financing institution, is making available on behalf of the European Union ECU 2.5 million (1), as subscription towards the capital of EgyCap Venture Capital Fund (EgyCap), for financing equity participations or quasi-equity contributions in small and medium sized enterprises (SMEs). Emphasis will be given on EU-Egyptian joint-ventures in the industrial, agro-industrial, tourism and service sectors. The funds are drawn from risk capital EU budgetary resources under the 4th Financial Protocol between the EU and Egypt.

Sponsored by MiBank and established in cooperation with the EU Commission with the aim of fostering economic development by promoting long-term financing to the private sector, EgyCap will be a flexible and innovative instrument for SME development in Egypt. With this operation, the EIB confirms its support to the Egyptian SME's, after four global loans granted by the EIB through local banks over the past five years. The EIB's participation in EgyCap's capital together with private investors is expected to produce a significant multiplier effect, as equity investments will be leveraged by local debt resources. This operation will equally benefit SME's and the county's financial sector, which has been moving to the development of new financial instruments, after the economic structural adjustments introduced by the Egyptian Government in 1991".

The European Investment Bank (EIB) is the European Union's long-term financing institution. Established in 1958 by the Treaty of Rome, it finances capital investment projects which further EU policy objectives. It also participates in the implementation of EU co-operation policies towards third countries that have co-operation or association agreements with the Union. The Bank is a major source of EU financial support for economic development in the region, where it has advanced some ECU 3 billion since 1992 in 12 countries in the southern and eastern rims of the Mediterranean under two different schemes: bilateral Financial Protocols signed with most countries in the region, and under the "Horizontal Financial Co-operation" facility, which was part of the EU's Redirected Mediterranean policy, designed to support investment in the fields of energy, telecommunications and environment offering joint benefits for the EU and for the Mediterranean countries. The "Horizontal Facility" has been fully committed in favour of some 42 large-scale investment projects throughout the Mediterranean region. Financing in the region in the period 1997-2000 falls under the Euro-Med Partnership mandate of ECU 2 310 million.EIB lending outside the EU in 1996 amounted to ECU 2.3 billion, out of a total of ECU 23.2 billion. The Bank lends in some 120 countries having association or co-operation agreements with the EU: African, Caribbean and Pacific (ACP) countries signatories of the Lomé IV Convention; Mediterranean, Central and Eastern European, Asian and Latin American countries.Since 1992, the EIB has provided ECU 645.5 million in Egypt, both under the Fourth EU-Egypt Financial Protocol (1992-1996) and the "Horizontal Facility". The Protocol provided for Egypt ECU 310 million in EIB loans and ECU 16 million on risk capital financing.

(1) The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 30 September 1997, when ECU 1 = GBP 0.69, IEP 0.76, USD 1.113, EGP 3.7380.