On 1 and 2 October 2003, EIB President Mr Philippe Maystadt and Mr Philippe de Fontaine Vive, Vice-President in charge of financing operations in the Mediterranean Partner Countries (MPCs), held a series of discussions at the highest level with the Egyptian authorities and officially inaugurated the Bank's regional office for the Near East in the presence of the Prime Minister, Dr Atef Ebeid.

The talks will afford an opportunity to take stock of what FEMIP (Facility for Euro-Mediterranean Investment and Partnership) has achieved in the 11 months since its launch in Barcelona on 18 October 2002.

Speaking on the occasion, President Maystadt described the results attained by FEMIP as fully meeting the hopes placed in it both by the Union and by the Mediterranean Partner Countries. In 11 months, despite a very difficult environment, we have built up a substantial pipeline of loans, 60% of which are directly earmarked for financing private businesses - FEMIP's priority objective. This means that SMEs will receive more than EUR 400 million in long-term and risk capital financing, while EUR 740 million will go to larger firms. In this connection, I should like to mention the IDKU gas terminal, an example of international cooperation between British Gas, Petronas, Gaz de France and Egyptian gas sector operators. To date, therefore, FEMIP's priority focus on private sector operations is well established. I have no doubt that this promising picture, together with the Partner Countries' full involvement in the Facility, are factors that will be taken into account at the forthcoming December meeting of the European Council, which is likely to reaffirm the importance that it attaches to effective cooperation in the mutual interest of Europe and its Mediterranean Partners.

FEMIP: 11 months of activity

Created to support modernisation of the economies of the Mediterranean Partner Countries, in 11 months FEMIP has already provided more than EUR 1.65 billion in new loans, with the volume set to reach EUR 1.8 billion in 2003.

This financing clearly reflects the Facility's top priority, with more than one third of operations directly promoting the growth of private businesses - whether through foreign direct investment (in Turkey and Tunisia), joint ventures resulting from cooperation between MPC promoters (Algeria) or financing for SMEs (Egypt, Syria, Tunisia, creation of a regional venture capital fund). At the same time, FEMIP has placed emphasis on transport infrastructure projects underpinning private sector development in Morocco, Algeria, Egypt, Lebanon and Syria; power and water supply and distribution in Egypt, Morocco and Tunisia; improvement of health infrastructure in Syria and Tunisia; and remodelling of education systems in Jordan and Turkey. Lastly, FEMIP has endeavoured to assist populations stricken by natural disasters by making available or pledging EUR 350 million for reconstruction after the earthquakes of 1999 in Turkey and May 2003 in Algeria.

In total, FEMIP has committed more than EUR 1.8 billion in new financing, 60% of this earmarked for the development of local businesses (SMEs or large industry) and the remaining 40% for socio-economic infrastructure (health, education, environment, etc). This portfolio of operations underscores the EIB's close cooperation with the European Commission and the multilateral and bilateral financial institutions operating in the region: some 20% of projects will be cofinanced with the World Bank, the African Development Bank or Arab Funds.

Commenting on these results, Vice-President de Fontaine Vive stressed that: FEMIP's successful launch owes a great deal to the close involvement of our Mediterranean partners in the conception and monitoring of projects and to their implementation of reforms needed to create a propitious environment for private investment. In this connection, I note that the work of the Facility's Ministerial Committee - due to meet next in Naples on 10-11 November - is benefiting from a very active input from our partners, affording an opportunity for a constructive exchange of views and for charting directly operational policies. Such participation by the shapers of economic reform in the Mediterranean is essential if, together, we are to meet the challenge of establishing the Euro-Mediterranean customs union by the year 2010. On this point, it is gratifying to observe that, through the diversity of what it can offer financially, FEMIP is providing the partner countries with the products that these economies need to modernise: very long-term loans, risk capital and technical assistance. The Egyptian authorities fully share this view, as is clear from our discussions and the support they have lent in setting up our regional Office in Cairo.

Thus, in response to the conclusions of the second meeting of the Facility's Ministerial Committee held in Istanbul on 3 April 2003, the Facility's range of financial products is being deployed to foster the development of private enterprises by:

  • increasing the volume of long-term loans granted to businesses directly or to banks for on-lending to SMEs;
  • creating new products or new financial arrangements designed to make it easier for businesses to obtain credit, such as leasing and guarantee funds (from risk capital), equity and quasi-equity funding (participating, conditional and subordinated loans);
  • providing technical assistance to project promoters and the banking sector, in particular to improve credit risk management and hence SME loan prospects.

Inauguration of the EIB Office in Cairo

The EIB delegation also officially inaugurated the Bank's Cairo regional office, which has been operational since July. Headed by Mr Luigi Marcon and with a constituency spanning the whole of the Near East, the office's mission, in addition to liaising with the MPC authorities of the region, is to optimise the process of project identification and monitoring. Another task is to facilitate the implementation of technical assistance both for projects and financial institutions in the beneficiary countries.

As well as keeping in close touch with local conditions and strengthening its presence in the region, FEMIP has been building up its teams at the EIB's headquarters in Luxembourg: it has set up a special division to assist private sector development along with a unit to handle operations in Turkey, a country which, though a candidate for EU membership, continues to be eligible for financing from the Facility.

The European Investment Bank has had operational links with Egypt since 1978 and has channelled financing of more than EUR 2.45 billion to this country. This has been concentrated on support for infrastructure, environmental schemes and private sector businesses - encompassing both large corporates stemming from cooperation between local and European operators and SMEs financed in partnership with the Egyptian banking sector. In 2002, the EIB provided EUR 225 million in Egypt for extension of the Cairo metro and the first phase of the Nubariya power plant as well as in equity funding for Egyptian SMEs. In 2003, the Bank lent EUR 150 million to finance the second phase of the Nubariya power plant.