Today the European Investment Bank (EIB), the European Union’s development finance institution, signed a framework guarantee agreement with BGFIBANK SA to share the risk on loans or guarantees granted by BGFIBANK to private or public commercial enterprises.

BGFIBANK, which has received earlier EIB credit lines in Gabon, is the first bank selected for the proposed operation. However, other banks from countries of the Central African Economic and Monetary Community (CEMAC) may become eligible in the future.

This framework guarantee agreement is complementary to the credit lines put in place by the EIB in many Central African countries to provide long-term investment finance to private sector small and medium-sized enterprises. Today, in the light of the abundant liquidity available in the region, the proposed operation will assist banks to use such liquidity to participate in the financing of major projects foreseen for the coming years, while complying with the prudential ratios of the Central African Banking Commission (COBAC). The operation will thereby help to tap local resources, strengthen the financial institutions participating in the scheme and develop the private sector in the region.

To be eligible for an EIB guarantee, potential projects will have to satisfy certain criteria. Amongst others, an eligible project should require MLT financing with a term of a minimum 3 and maximum 10 years, and be economically and financially sound, environmental friendly and socially responsible.

Note to the Editor

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 with third countries that have co-operation or association agreements with the Union. Currently, the Bank’s financing in Africa, the Caribbean and the Pacific (ACP) is carried out under the provisions of the ACP-EU Partnership Agreement, signed in Cotonou in June 2000.

The Cotonou Agreement was signed for a 20-year period with successive financial protocols defining the aggregate amount of Community aid to the ACP States for each period.

The first protocol covers the period 2003-2007 and comprises EUR 13.5 billion contributed by the EU Member States (EUR 11.3 billion grant channelled through the European Commission, as well as the EUR 2.03 billion Investment Facility (IF) and a EUR 187 million interest rate subsidy allocation, both managed by the Bank) and up to EUR 1.7 billion from the Bank’s own resources.

The second financial protocol covers the period 2008-2013 and will become available upon ratification of the revised Cotonou Agreement that was signed in Port Moresby (Papua New Guinea) in June 2006. Contributions by the Member States total EUR 22 billion, of which EUR 20.5 billion is grant aid from the EU Member States and a further EUR 1.5 billion is managed by the EIB under the Investment Facility for loans, interest subsidies and technical assistance. In addition, up to EUR 2 billion is available in the form of loans from the EIB's own resources.

The Investment Facility is a revolving facility (reflows will be invested in new operations), aimed at supporting technically, environmentally, financially and economically sound projects in the private or the commercially run public sector.

In parallel, a EUR 20 million OCT Investment Facility was set up in accordance with the Council Decision of 27 November 2001 on the association of Overseas Countries and Territories (OCTs) with the European Community with a similar aim for the 20 OCTs situated in the Caribbean, the Pacific, and the north and south Atlantic Oceans that are eligible for European Community financial assistance. This is supplemented by up to EUR 20 million from the Bank’s own resources.