The EIB has signed a 50 million financing facility for Nigerian small & medium sized enterprises with five local banks. The EIB, the European Union's long-term lending institution, provides support to the Nigerian private sector through the implementation of this Global Loan available under the Cotonou Agreement's Investment Facility.

Under the Nigeria SME Facility the five selected partner banks can access refinancing for eligible projects. The objective is to provide access to stable long-term finance in both EUR and USD for the five banks in order to promote investment activities in Nigeria. Each of the banks continues to bear the credit risk associated with the projects. Final beneficiaries of the Global Loan will be small and medium sized companies in the productive and human capital sectors with foreign currency and/or export-oriented activities.

The loan agreement was signed successively with Access Bank plc, Diamondbank Ltd., Guaranty Trust Bank plc, Investment Banking & Trust Company Ltd., and Zenith International Bank Ltd. Further potential intermediary banks have been identified and could eventually join the current group of five.

The funds will be made available on a first-come-first-serve basis. Such a scheme will install competition between participating banks; the use of several intermediaries improves chances that EIB's favourable lending conditions will be transferred to the local beneficiaries.

This operation is the first Global Loan operation in Nigeria since 2001 and comes at a time when steps to diversify the economy, privatise public enterprises, and reduce the State's involvement in the economy have improved the environment for private economic activities.

The Investment Facility focuses on the private sector and so has the objective to improve access of companies to term finance and reinforce the financial sector in the ACP countries. Global loan credit lines strengthen the ability of banks to finance investment projects by providing funding that would otherwise not be available for the targeted investment projects. The intermediary banks and institutions act independently and use their own decision making criteria and pricing in allocating the funds to individual entrepreneurs.

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.

Financing in Africa, the Caribbean and the Pacific (ACP) is carried out under the provisions of the Investment Facility, set up by the 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 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 amortizations 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.