The European Investment Bank (EIB), the European Union (EU) long-term financing institution, has lent ECU 274 million (1) so far in 1998 to African, Caribbean and Pacific (ACP) countries signatories of the Lomé Convention. Almost all of the loans concerned, which are financed either from resources that the Bank raises on the international capital markets (own resources) or from risk capital resources from the European Development Fund (2), have been signed following the ratification of the Lomé IV second financial protocol and its coming into force on 1 June.
Under this protocol, which extends to the year 2000, the total financial aid available amounts to ECU 14.6 billion, of which ECU 12 billion is grant aid from the EU member states, ECU 1 billion is managed by the EIB as risk capital finance, and up to ECU 1.6 billion is in the form of loans from the EIB's own resources.
Breakdown by country of EIB loans in the ACP by end-September 1998 is as follows:
- Burkina Faso, ECU 1 million from risk capital resources to FILSAH S.A. for the construction of an "open end" cotton spinning-mill at Bobo-Dioulasso.
- Dominica, ECU 3 million from risk capital resources to the Agricultural, Industrial and Development Bank (AID Bank) for the financing of small and medium sized investments in the industrial, agro-industrial, tourism, transport and related services sectors by means of on-lending or acquiring quasi-equity participations.
- Dominican Republic, ECU 6 million from risk capital resources to ADEMI Bank (Banco de Desarrollo ADEMI, S.A.) for medium to long-term financing for projects undertaken by SMEs.
- Ethiopia, ECU 41 million from risk capital resources to the Federal Democratic Republic of Ethiopia for on-lending to the Ethiopian Electric Power Corporation. The loan will partly finance the construction of a hydropower plant with an installed capacity of 192 MW on the Gilgel Gibe river.
- Fiji, ECU 250.000 to the Republic of Fiji for financing an environmental impact study on the project to create a tourism resort complex in Natadola Bay, that includes the construction of hotels, a marina and sports facilities.
- Kenya, ECU 10 million from risk capital resources to the Republic of Kenya. The funds will be channelled, through the Central Bank of Kenya, to selected commercial Banks for financing private-sector small and medium-scale investments in the manufacturing, agro-industrial, horticultural, tourism and mining sectors and related services, by means of on-lending or acquiring equity participations.
- Lesotho, ECU 44 million to the Lesotho Highlands Development Authority (LHDA) to fund Phase 1 B of the Lesotho Highlands Water Project. The project will allow to give value to water, a natural resource that Lesotho has in abundance, exporting it to South Africa; in addition it will provide local job opportunities for thousands of Lesotho nationals.
- Mali, Mauritania and Senegal, ECU 30 million from risk capital resources to Société de Gestion de l'Energie de Manantali (SOGEM) for financing part of the development of the hydroelectric system of the Manantali dam, which includes the installation of a hydroelectric power station and the construction of a total of 1.460 km of transmission lines in the three countries engaged in the project.
- Mauritania, a total of ECU 6 million from risk capital resources, including ECU 5 million to Société d'Assainissement, de Travaux, de Transport et de Maintenance (ATTM), a subsidiary of Société Nationale Industrielle et Minière, to finance the acquisition of the road-construction plant and equipment required to cater for future growth of its activities in Mauritania; and ECU 1 million to the company MIP FRIGO to finance a fish treatment plant that will allow an increase in exports of fresh and frozen fish, mainly to European markets.
- Mauritius, ECU 10 million to Centrale Thermique de Belle-Vue Ltd. for the construction of a base-load power plant using coal and bagasse, to supply process steam and electricity to a sugar factory as well as electricity to the island's public network.
- Mayotte, ECU 2 million from risk capital resources to Electricité de Mayotte for the construction of a new power station (Badamiers 2) next to the existing Badamiers thermal power station, together with the related transmission and supply networks.
- Mozambique, ECU 57 million (of which ECU 19 million from risk capital) to MOZAL for the construction and operation of a 245 kt/y primary aluminium smelter on a greenfield site near Maputo. The project is based on imported raw materials and the output is destined for export, taking advantage of abundant low cost electric power resources in the region and Maputo's harbour facilities.
- Namibia, ECU 2 million from risk capital resources to Reunion Mining Plc. for carrying out a feasibility study to establish the technical, financial and economic viability of the commercial development of the Skorpion zinc ore deposit in Southern Namibia.
- Samoa, ECU 2 million from risk capital resources to the Development Bank of Western Samoa for supporting investment carried out by SMEs as well as productive infrastructure, either by on-lending or acquiring equity and quasi-equity participations.
- Tanzania, ECU 14.8 million from risk capital resources, of which ECU 12.8 million to the United Republic of Tanzania for on-lending to the Directorates of Civil Aviation and of Aerodromes to contribute to the financing of the renewal of air navigation and communication facilities, power supply and fire fighting equipment at Dar-es-Salaam and Kilimanjaro Airports; and ECU 2 million to contribute to the financing of the Fedha Fund Limited, a private equity fund to provide risk capital to Tanzanian companies.
- Trinidad & Tobago, ECU 10 million (of which ECU 2 million from risk capital resources) to Development Finance Ltd. for financing investments by SMEs in the industrial, agro-industrial, tourism, transport and communications sectors as well as revenue generating infrastructures. Risk capital funds are to be applied to the finance of equity or quasi-equity assistance.
- Zambia, a total of ECU 32 million from risk capital resources to the Government of Zambia for on-lending to Zambia Electricity Supply Corporation Ltd. (ZESCO). ECU 16 million will contribute to finance the rehabilitation of the Victoria Falls hydro-electric power plant and an equal amount will be invested in the refurbishment of the Kariba North Bank hydro-electric power station.
- Zimbabwe, ECU 3.2 million from risk capital resources to Maranatha Ferrochrome Company Limited (MFC) for the acquisition and erection of a high carbon ferrochrome smelter near Kadoma; the raw material will come from the country's vast chromite resources mined by mostly small-scale miners, and the output is destined for export. ECU 0.4 million is in the form of an indirect equity participation to strengthen the local shareholding in MFC.
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. The Fourth Lomé Convention was concluded in 1989 for a period of 10 years and is accompanied by two Financial Protocols, spanning 1991-1995 and 1996-2000.
(1) The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on 29.09.98 when 1 ECU =1.96 DEM, 6.59 FRF, 0.69 GBP, 0.79 IEP, 1.6783 USD.
(2) The European Development Fund (EDF) is constituted by contributions from EU Member States. The EIB manages under mandate part of the EDF, which it uses primarily for risk capital operations.