The European Investment Bank (EIB), the financing institution of the European Union (EU), is opening a line of credit of EUR 70 million (1) from the Bank's own resources, for the bi-lateral European Development Finance Institutions (EDFI) (2) of the EU Member States. This operation will support the EDFI's lending activities to private-sector enterprises in the African, Caribbean and Pacific (ACP) countries signatories of the Lomé Convention, the Overseas Countries and Territories (OCT), as well as in the Republic of South Africa (RSA). The finance contracts for this operation were signed in Luxembourg today.
The scheme is expected to have a catalytic effect in encouraging the EDFI institutions to invest their own resources in projects alongside funds from the EIB. Stimulation of private sector investment will increase employment and export earnings, and forms part of the EU's co-operation programmes in the post-Lomé period to support economic growth. In support of this policy, the EIB is to give priority to private sector projects under the future Investment Facility.
The EDFI are a group of European development banks specialising in providing long-term finance, by way of equity or loans, to private-sector enterprises in developing countries. They have established an association with a permanent secretariat in Brussels. This operation with EDFI is set up against the background of the concerted policy of the EU Member States and the EU Commission to strengthen collaboration and co-operation between the various actors in the European Union's development programme. The line of credit just approved is the third EIB operation providing finance to EDFI institutions for their activities in the ACP and OCT countries. The line of credit will be, for the first time, open to operations in the RSA, thus allowing EDFI institutions to have access to Rands for their lending activities in this country.
The EIB, established in 1958 by the Treaty of Rome, finances capital investment projects which further the European Union (EU) policy objectives. It also participates in the implementation of the EU's co-operation policy towards third countries that have co-operation or association agreements with the Union.
At present, the Bank's financing is carried out under the provisions of the Fourth Lomé Convention, which was concluded in 1989 for a period of 10 years and is accompanied by two Financial Protocols, spanning 1991-1995 and 1996-2000. Under the second financial protocol, the total financial aid available amounts to EUR 14.6 billion, of which EUR 12 billion is grant aid from the EU member states, EUR 1 billion is managed by the EIB as risk capital finance, and up to EUR 1.6 billion is in the form of loans from the EIB's own resources. The Republic of South Africa became an associate member of the Lomé Convention in 1997.
The EIB is currently working in close collaboration with the EU's Member States and the European Commission, in defining the criteria for management and operation of the newly created Investment Facility, set up by the New ACP-EU Partnership Agreement, recently signed in Cotonou, that will replace the Lomé Convention.
(1) EUR 1 = 0.666300 GBP, 4.01325 EGP, 1.16675 USD
(2) EDFI members are: Banco BPI (BPI) Portugal, CDC Capital Partners (CDC) United Kingdom, Compañía Española de Financiación del Desarrollo (COFIDES) Spain, Deutsche Investitions-und Entwicklungsgesellschaft (DEG) Germany, Finanzierungsgarantie-Gesellschaft mit beschränkter Haftung (FGG) Austria, Finnish Fund for Industrial Co-operation (FINNFUND) Finland, Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO) The Netherlands, Industrialization Fund for Developing Countries (IFU) Denmark, Société de Promotion et de Participation pour la Coopération Economique (PROPARCO) France, Société Belge d'Investissement International - Belgische Maatschappij voor Internationale Investering (SBI/BMI) Belgium, Società Italiana per le Imprese all'Estero (SIMEST) Italy and Swedfund International (SWEDFUND) Sweden.