The European Investment Bank today formally launched a new EUR 2.2 billion Investment Facility to promote the private sector and fight poverty in the African Caribbean and Pacific States. The Investment Facility was officially inaugurated by EIB President Philippe Maystadt at a ceremony in Luxembourg attended by President Abdulaye Wade of Senegal, Finance Minister David Mwiraria of Kenya, EU Commissioner Pedro Solbes, and representatives of the 78 African Caribbean and Pacific States.

The Investment Facility has been established within the Framework of the Cotonou Agreement on co-operation and development assistance negotiated between the 78 ACP States and the European Union. The Facility will be managed by the EIB as a fund, in parallel with a renewed commitment by the Bank to provide an additional EUR 1.7 billion in long-term loans from its own resources over the next five years. Funds for the Investment Facility come from the resources of the EU Member states.

The Facility will support ACP private sector and commercially run public sector projects with loans, guarantees and a series of risk sharing instruments. The private sector is seen as the motor and catalyst for poverty reduction and its ultimate eradication. The Facility is intended to become a self-financing revolving fund.

The establishment of the Facility coincides with the EIB's 40th anniversary of activity in Africa, extended later to the Caribbean and Pacific states, under a series of agreements - the Yaoundé and Lomé Conventions - through which the EIB has channelled some EUR 9 billion into investment in the ACPs. The Cotonou Agreement lays the basis for the next 20 years of co-operation between the ACPs and the EU, and gives a special focus to sharing the responsibilities and building a partnership for development.

To manage the business generated by the new Facility, the EIB also announced the opening of three new regional offices in Dakar, Nairobi and Pretoria. They will offer permanent presence in Western, Eastern and Southern Africa and service the respective business communities in the surrounding group of countries. In the light of the experience gained, the possibility of opening other offices, notably in the Caribbean and the Pacific, will be examined.

In his remarks, EIB President Philippe Maystadt said: The Cotonou Agreement gives new impetus to greater flexibility and efficiency in deploying aid with a strategy of ACP ownership of economic and social development. The involvement of the private sector will play a crucial role as the catalyst for a fuller ACP participation in the world-wide trading system. Encouraging private participation will raise standards of living and create new job opportunities. The ambitious objectives of the Cotonou Agreement present the EIB with new challenges by highlighting the importance of ensuring both the sustainability and profitability of projects the EIB finances through the Investment Facility. Such a challenge is appropriate for a bank with 45 years of experience financing projects.

The EIB has already built up considerable experience in the private sector in the ACP, as some 45% of our investments are now already in private sector projects.

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 EIB first began financing in the Africa 40 years ago, extending its activities into the Caribbean and Pacific areas 30 years ago.

The Cotonou Agreement between the European Union and 78 ACP States was drawn up in July 2000 with the core objective to reduce and eradicate poverty in ACP states. It was officially enacted on 1 April 2003, following the ratification of the ACP and EU partners. Cotonou follows a long tradition of trade and development aid partnerships between Europe and its former dependent countries, now grouped in the ACP group of states, under the Yaoundé and later Lomé Conventions. From 1963 until the beginning of this year when the Lomé IV convention was replaced with the Cotonou Agreement, the EIB has channelled over EUR 9 billion into investment in the ACP countries.