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Thursday, 18 July 2013

EIB’s ACP Investment Facility: €3.4 bn in ten years

In 2013, European Investment Bank’s ACP Investment Facility celebrates ten years of existence. Since 2003, 3.4 billion EUR have been lent to 205 projects in African, Caribbean and Pacific (ACP) countries and the EU’s Overseas Countries and Territories (OCTs) – mostly for the development of the private sector. This year (2013), the EU agreed to make available an additional 500 million for the Facility.
The ACP Investment Facility (IF) was created under the Cotonou agreement, with the primary focus on private sector development. It is a 20 years revolving fund and risk barrier instrument (when the funds are repaid, they are re-used for new operations). Around 85% of the financing in the last ten years went to private sector projects, while the other 15% was allocated to development of infrastructure. The activities under the  Facility have as final purpose the reduction of poverty, and stimulation of sustainable growth, in line with the “Agenda for Change” of the European Commission. The idea behind it is that the private sector plays a crucial role in development and economic growth- given that 90% of the jobs in the ACP region are created in privately-owned business.
The Facility usually offers long-term funding, with market-based terms (the interest rates are usually not subsidized) – which ensures than the EIB does not crowd out any other (local) financing institution. The projects elected have to fulfill the objectives under the Cotonou agreement, and also ensure high environmental and social standards (the contribution to the local community represents an important aspect).
2013 also marks 50 years of existence of the European Investment Bank (EIB) - EU’s long-term lending bank. The Bank finances investment projects in the ACP and OCT regions, under the ACP-EC Partnership Agreement (Cotonou Accord) and the Overseas Association Decision. Lending to the ACP and OCTs makes up 10 per cent of its activities. Financing is provided from the European Development Fund, EU member states’ budgets and also from EIB own resources.


However, on the occasion of EIB’s celebration, the Chair of the ACP Committee of Ambassadors Samuel Outlule (Botswana) stressed the high cost of accessing EIB funds and called for a stronger EIB presence - for example in the Pacific, where funds have been especially slow to be disbursed.
Moreover, ACP Secretary General Alhaji Muhammad Mumuni echoed the need to review the amount of lending provided to the 79 members of the ACP Group. A recent study would have estimated the financing gap for infrastructure and trade finance in Sub Saharan Africa alone as more than EUR 250 billion each year: “Clearly, we have to identify and mobilise more resources if we are to realise the growth and development that we have targeted for the ACP Group,” stated the Secretary General.

Source: EIB, ACP Group