The European Investment Bank (EIB), the European Union's long-term financing institution, is providing a EUR 50 million loan from own resources for financing small and medium sized private sector projects in South Africa. The loan aims at the manufacturing, agro-industry, tourism and mining sectors and will be operated by the Industrial Development Corporation of South Africa Ltd (IDC).
Through this Global Loan, a credit line made available to a bank or financial institution, which on lends the proceeds for smaller projects meeting the Bank's criteria, the EIB aims at reaching companies focussing on export capabilities. The Global Loan favours job creation and development of entrepreneurial skills in South Africa as well as empowerment. In line with South African priorities the Bank will favour high value added projects.
The borrower is the Industrial Development Corporation of South Africa Ltd, the government owned development finance institution for South Africa. This operation is the fourth EIB-IDC operation and IDC can be termed one of the EIB's pre-eminent financing partners in South Africa.
The loan will provide term financing in the South African economy, which is currently lacking and will support the Government's long-term development plans and support South Africa's long-term perspective from the outside.
The EIB, established in 1958 by the Treaty of Rome, finances capital investment projects that 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.
European Investment Bank support for RSA is being provided following an invitation from the Council of the European Union to the Bank to participate in project financing in South Africa, in support of the economic development of the country after the establishment of democratic government.
In June 1995 the Bank was authorised to grant long-term loans for a total amount of up to 300 million EUR for a period of two years. In April 1997 the mandate was extended to mid - 2000 for a further EUR 375 million and in June 2000 for a further period (2000-2006) for an amount of EUR 825 million, bringing the total facilities for South Africa over the period to EUR 1.5 billion.
The Bank's own resources are raised on the international capital markets. In addition the EIB manages part of the European Development Fund (EDF), constituted by contributions from EU Member States, under mandate, which it uses primarily for risk capital operations.