The European Investment Bank (EIB), the European Union's long-term financing institution, is providing a EUR 6 million loan (approximately 4 billion CFA francs) from risk capital resources for two Global Loans from risk capital resources for providing medium and long-term finance to small and medium sized private sector enterprises. The borrowers in this operation are Société Générale de Banques au Burkina (SGBB) and Bank of Africa (BOA), together EUR 5m, as well as Burkina Bail for EUR 1m funding for long-term lease operations.
The EIB provides Global Loans to selected intermediary banks, who will in turn on-lend those funds to their clients. Targeted sectors of the Burkina Faso's economy are (agro-) industry, fisheries, health and education, tourism and related services. Projects may consist of start-ups, expansion, modernisation, restructuring and/or diversification of activities. Lending requests should be addressed at the intermediary banks and should be under EUR 1.5m and lower than EUR 500 000 for lease operations from Burkina Bail.
The intermediary banks will make their own credit assessment and onlend at market determined rates. This first intervention in favour of these Burkinese (see above) banks will provide long-term financing for the financial sector to match with required term financing in an economy that basically lacks long-term resources.
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. Currently, the Bank's financing in Africa, the Caribbean and the Pacific (ACP) is carried out under the provisions of the Fourth Lomé Convention, which will be replaced by the new ACP-EU Partnership Agreement, signed in Cotonou in June 2000. Under the Cotonou agreement the total financial aid available amounts to EUR 15.2 billion for 2002-2006, of which EUR 11.3 billion is grant aid from the EU member states, EUR 2.2 billion is managed by the EIB under the Investment Facility, replacing risk capital finance, and up to EUR 1.7 billion is in the form of loans from the EIB's own resources. The Investment Facility is a revolving facility (loan amortisations will be invested in new operations), aiming at supporting technically, environmentally, financially and economically sound projects in the private or the commercially run public sector.
The Republic of South Africa became an associate member of the Lomé Convention in 1997. The Bank has a separate lending mandate from the EU's Member States to provide long term financing for RSA totalling EUR 825 million over the period 2000-2006.