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Tuesday, 28 November 2017

EIB banking on new business in East Africa

Offering credit to East African banks might not be many people’s idea of traditional development aid. Yet promoting private small and medium enterprise, alongside funding for infrastructure projects that will help develop local businesses, lies at the heart of the new strategy for Africa. Dating back to the Cotonou Agreement, signed in 2000 by the EU and 78 African, Caribbean and Pacific states in Benin, the strategic goals are changing with the EU focusing much more on increasing stability and resilience by supporting economic development programmes to defuse migration pressures. The Luxembourg-based European Investment Bank (EIB) lends €700m per year to banks and financial sector firms across sub-Saharan Africa. The bank, which is jointly owned by the EU’s 28 countries, has been active in East Africa since the 1960s and has had a regional bureau in Nairobi since 2005. The EIB-backed lending has however changed over the years. In 2016, 49% of EIB-backed lending in Africa supported private sector investment by small and medium sized businesses. “There is clearly a fairly large appetite,” says Catherine Collin, the bank’s regional representative in East Africa, of the credit lines in euros, dollars or local currency that the EIB and its partners are offering to local banks. Alongside the credit, the EIB offers technical assistance programmes for banks and the local entrepreneurs who are the intended recipients of funding, alongside programmes improve financial literacy. “We were asked by EU member states to target more the training needs of final beneficiaries,” says Collin.

Source: Euractiv