A Memorandum of Understanding establishing a EU-Africa Infrastructure Partnership was signed in Brussels today by EU Commissioner Louis Michel and EIB-President Philippe Maystadt. This new initiative, part of the recently agreed EU Strategy for Africa, will provide EU financial support for trans-border infrastructure projects that link African countries and regions and close gaps in regional infrastructure networks. The focus will be on projects in the energy, water, transport and communications sectors.

During a first phase (2006-07), the EU-Africa Infrastructure Partnership Trust Fund will benefit from EUR 60 million in European Commission grants, primarily for interest rate subsidies on an anticipated EUR 220-260 million of EIB lending EC grant funds are expected to play the role of catalyst for projects with demonstrable economic returns to Africa, but where the prospects for high financial returns are less certain and/or where the risks involved are perceived as an issue. Synergies will be further enahanced by the possibility for EU Member States national development finance institutions to participate. The second phase, from 2008 onwards, should benefit from substantially increased EC grant resources.

The Trust fund will be able to blend EC grants with EIB own resources as well as loans from the EIB-managed Investment Facility; the latter focuses on financing the private sector and the commercially-managed public sector. The interest rate subsidies provided by the Partnership will also assist financing proposals that respect HIPC (Highly Indebted Poor Countries) criteria for debt sustainability. Certain types of guarantees, and technical assistance for project identification and preparation, can also be financed via the Partnership.

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 2.037 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.