European Investment Bank (EIB) signed a EUR 25 million credit line agreement today in Kampala with the East African Development Bank (EADB) for the financing of small and medium sized investment projects.
The EIB's credit line provides EADB with the resources required to provide long-term loans in EUR or USD with a variety of lending conditions to small and medium sized enterprises in East Africa. The availability of loans with an interst rate fixed for a longer term than five years is limited on the East African financial markets. The EIB's line of credit will help EADB expanding the offer of this product. Borrowers may benefit from these longer maturities and from protection against interest rate volatility
EADB is the development bank of the East African Community, owned by the governments of Kenya, Tanzania and Uganda. It was created in 1967 to promote economic development in East Africa and it providies financial assistance to enterprises in the productive sectors, trade ,education and healthcare.
Through this facility, the EIB will help EADB to expand its product range in support of investment in East Africa particularly in the private sector. EADB's primary focus is on private investment, which it supports through a range of suitable finance products including long-term loans, equity capital, leasing finance and guarantees. EADB raises the funds needed for its financing activities essentially through external credit lines and as an important issuer of bonds on the capital markets in the three Member States.
This is the EIB's first credit line to EADB in the framework of the Cotonou Agreement, under which the EIB finances investment and provides long-term finance to the financial sector. It marks an important step in the building of a strategic partnership between EIB and EADB to support economic development in East Africa.
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.