Since the first of January 2000, the European Investment Bank's (EIB) loans to the African, Caribbean and Pacific (ACP) countries signatories of the Lomé Convention, to the Overseas Countries and Territories (OCTs) and to the Republic of South Africa, totalled EUR 277 million(1). Of this, EUR 166 million came from the Bank's own resources, raised on the international capital markets, and EUR 111 million from risk capital resources from the European Development Fund(2).

Lending activities in the area were implemented in the framework of the Lomé IV Convention, which is due to expire end-2000. 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. Financing in South Africa is provided under a separate bi-lateral Framework Agreement, the Third of which was signed in June 2000, providing for EUR 825 million loans for 2000 - 2006.

The following lending operations have been signed so far this year:

  • Africa region: The EIB has taken an equity participation equivalent to EUR 25 million from risk capital resources in AIG African Infrastructure Fund, a new investment fund sponsored by American International Group (AIG) which will include, in addition to IFC and ADB(3), several European shareholders. The Fund will focus on Africa's best performing countries where the investment climate is favourable, economic reforms well underway and the potential for growth satisfactory. It will invest in equity, quasi-equity and convertible debt instruments in infrastructure or natural resources (oil, gas, mining) development projects owned and/or operated by the private sector. The Fund is expected to have a strong catalytic and demonstrative effect, by attracting to Africa private sector companies to invest in large projects.
  • West Africa: The EIB has taken an equity participation of EUR 800 000 from risk capital resources in the capital of the West African Development Bank (BOAD) to contribute to the bank's latest capital increase.
  • Caribbean region: EUR 10 million from risk capital resources as the EIB's participation in the Caribbean Investment Fund (CIF), a venture capital fund created to promote private sector enterprise in the region by means of equity and quasi-equity investments. CIF is being promoted by Caricom, a regional organisation of sixteen countries of the Caribbean. Besides EIB, investors in the CIF include the Caribbean Development Bank, the Multilateral Investment Fund and the Interamerican Investment Corporation.
  • Benin: EUR 20 million from risk capital resources for the Office des Postes et Télécommunications du Bénin (OPTB) towards financing the development of its national and international telecommunications network, including its share in the SAT-3 international submarine cable system.
  • Dominican Republic: EUR 9 million from risk capital resources to the Government of the Dominican Republic to on-lend to the Corporación Dominicana de Electricidad (CDE) for part financing the rehabilitation of the electricity transmission system after the damage caused by Hurricane George in September 1998.
  • Jamaica: EUR 25 million to the Port Authority of Jamaica to finance the expansion of the container terminal in the Port of Kingston, necessary to meet the expanding need of the container transhipment business. The project will contribute to the country's economy through the generation of foreign exchange earnings and employment creation.
  • Madagascar: EUR 7 million from risk capital resources to Aquaculture des Mascareignes (AQUAMAS), a fully private company, to part-finance the construction of a shrimp farm and processing plant in the Bay of Baly on the north west coast. The project will further develop shrimp aquaculture, a sector in which Madagascar has a comparative advantage and which has become an important source of foreign exchange.
  • Malawi: EUR 14 million (of which EUR 7.5 million from risk capital resources) to the Sugar Corporation of Malawi (SUCOMA), a private company, to finance infrastructure (soil levelling, irrigation) and sugar cane production by smallholders, as well as for upgrading the company's sugar mill at Nchalo in order to cope with the increased cane production.
  • Mauritania: EUR 1.7 million from risk capital resources to Mauritanie Leasing for refinancing part of its leasing activities. These operations will complement the range of financing instruments available to the private SME sector in Mauritania.
  • New Caledonia: EUR 2 million to Agence Française de Développement (AFD) for on-lending to ENERCAL to part finance the expansion of the power transmissions system on the island of La Grande Terre, the main island of New Caledonia. ENERCAL is a semi-public company active in electricity generation, transmission and distribution in a number of the islands of this French Territory.
  • Rwanda: EUR 11 million from risk capital resources to the Republic of Rwanda to assist in the financing of the renewal and installation of communication, navigation, power supply, fire-fighting equipment and the resurfacing of the runway at the Kigali international airport. The works will ensure safety in line with international standards. The project will be implemented by the Régie des Aéroports du Rwanda, with the assistance of a consultant specialising in the establishment and implementation of Air Traffic Services and Airport Civil Engineering.
  • Seychelles: EUR 2 million from risk capital resources to the Development Bank of Seychelles for the financing of small and medium-sized enterprises (SMEs) in the industrial, agro-industrial, fisheries, tourism, transport and related services sectors. The loan aims to promote private sector investments and the development of SMEs.
  • South Africa: EUR 125 million for three projects. EUR 50 million to TELKOM SA Ltd to part finance the company's extension of its optical fibre national transmission network, including some 5 700 km of optical fibre cables on the long distance backbone throughout the country. EUR 25 million to Indian Ocean Fertilizer (Pty) Ltd, for the expansion of a sulphuric and phosphoric acid production facility at Richards Bay; the project provides an input in the production of fertilisers. EUR 50 million to Development Bank of Southern Africa (DBSA) for financing small and medium-scale projects in water, sanitation, solid waste and other municipal infrastructure at various locations throughout South Africa, which will lead to a significant improvement in meeting the basic needs of the population.
  • Swaziland: A total of EUR 25 million (of which EUR 17.5 million from risk capital resources), of which EUR 15 million to the Royal Swaziland Sugar Corporation (RSSC) for the expansion and upgrading of a sugar cane plantation and a sugar mill in Simunye, northeast of the country; the sugar sector is of utmost economic importance for Swaziland, employing about 16% of the active population directly, and more in related agro-industrial enterprises. A second loan of EUR 10 million to Swaziland Industrial Development Company (SIDC) for the financing of small and medium-scale enterprises in the industrial, agro-industrial, mining, tourism, transport and related services.

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.


(1) The conversion rates used by the EIB for statistical purposes during the current quarter are those obtaining on when 1 EUR = 6.56 FRF, 0.63 GBP, 0.96 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.

(3) IFC = International Finance Corporation, is part of the World Bank Group; ADB = African Development Bank.