The European Investment Bank's (EIB) loans to the African, Caribbean and Pacific (ACP) countries, signatories of the Lomé Convention, from January to September 1999, totalled EUR 203 million(1). Of this, EUR 104 million came from the Bank's own resources, raised on the international capital markets, and EUR 99 million from risk capital resources from the European Development Fund(2).
Three projects concern the participation of the Bank in investment funds, an instrument that is becoming increasingly important as increases the financing of private sector projects, particularly focussed by the EIB given the sector's potential to stimulate growth in emerging economies and to contribute to a competitive economic environment.
In Africa region, the EIB has taken an equity participation equivalent to EUR 25 million from risk capital resources in AIG African Infrastructure Fund, a new investment fund sponsored by American International Group (AIG) which will include, in addition to IFC and ADB(3), several European shareholders. The Fund will focus in Africa's best performing countries where the investment climate is favourable, economic reforms well underway and potential for growth satisfactory. It will invest in equity, quasi-equity and convertible debt instruments of infrastructure or natural resources (oil, gas, mining) development projects owned and/or operated by the private sector. The Fund is expected to have a strong catalytic and demonstrative effect, by attracting to Africa private sector companies to invest in large projects.
In West Africa, the Bank has taken an equity participation equivalent to EUR 6 million from risk capital resources in the existing West Africa Enterprise Fund (WAEF), set up to make private equity investments in the 16 countries of the Economic Community of West African States (ECOWAS). The major part of the region is going through a sustained period of economic stability, providing good opportunities to invest. The Fund will help mobilise local and international resources and will contribute to the further development of West Africa's national and regional stock exchanges, on which investees are expected to be listed within three years of the Fund's investments.
In the Caribbean, the EIB is making a contribution of EUR 2 million from risk capital resources to the Tiona Fund, a new venture capital fund promoted by the Commonwealth Development Corporation (CDC) to make equity and quasi-equity investments in private sector companies in the Caribbean. The Fund will contribute to the growth of the private sector and the development of the capital market in the region.
Besides, the following lending operations were approved:
- British Virgin Islands (BVI), EUR 5 million to the Government of BVI for part financing the first phase of the expansion of Beef Island International Airport.
- French Polynesia, EUR 10 million (of which EUR 5 million from risk capital resources) to Société de Crédit et de Développement de l'Oceanie (SOCREDO) for medium to long-term investment by SMEs in manufacturing, agro-industry, tourism, transport and related services sectors.
- Falkland Islands, EUR 1.5 million to Stanley Services Limited to contribute to finance the installation of two storage tanks that will increase the fuel storage capacity in the Islands, thus helping to meet rising demand.
- Haiti, EUR 16 million from risk capital resources to the Government of the Republic of Haiti for the rehabilitation and expansion of the potable water supply system of Pétion-Ville, a major suburb of Port-au-Prince.
- Mauritania, a total of EUR 6 million from risk capital resources, of which EUR 3 million to Générale de Banque de Mauritanie (GBM) for part-financing its medium and long-term loans to SMEs in industry (including mining and quarrying), agricultural processing, fisheries, tourism and related services. A second loan of EUR 3 million to Granites et Marbres de Mauritanie (GMM) will contribute to the acquisition of equipment required to work granite deposits in the regions of Choum and Atar in northern Mauritania.
- Mozambique, Swaziland and Republic of South Africa, a total of EUR 46 million(4), of which EUR 14 million from risk capital resources to EdM and SEB and including EUR 14.6 million under the Bank's Framework Agreement for lending in South Africa, to Mozambique Transmission Company (Motraco) for the construction of two overhead transmission lines and related substations to reinforce the supply of electric power from the South African grid to the Mozambique and Swaziland power grids, including the supply of power to the Mozal aluminium smelter under construction near Maputo.
- Mozambique, EUR 1 million from risk capital resources to Companhia Industrial do Monapo for the modernisation and expansion of an oil extraction plant, an edible oil refinery and a soap factory in Monapo, northern Mozambique.
- Senegal, a total of EUR 63 million (4), of which EUR 8 million from risk capital resources has been granted jointly to Crédit Lyonnais Sénégal (CLS), Banque Internationale pour le Commerce et l'Industrie (BICIS), Société Générale de Banques au Sénégal (SGBS) and Compagnie Bancaire d'Afrique Occidentale (CBAO) for financing medium and long-term loans to SMEs in industrial, agricultural-processing, fisheries and tourism sectors. A loan for EUR 1 million from risk capital resources has been advanced to Société Financière d'Équipment (SFE) to support operations of leasing finance in the same sectors as above. A third loan of EUR 54 million from the Bank's own resources to Industries Chimiques du Sénégal (ICS) for the relocation of phosphate extraction activities to a deposit at Tobène and the establishment of new plants to double production capacity for phosphoric acid.
- Seychelles, EUR 1 million from risk capital resources to the Government of the Seychelles to on-lend to the Public Utilities Corporation for the rehabilitation and extension of the Le Niol Water Supply system, in the North West of the island of Mahé.
- Tanzania, EUR 9 million (4) from risk capital resources to CRDB, the East African Development Bank (EADB) and Stanbic Bank Tanzania for on-lending to the private sector to finance small and medium-scale investments.
- Trinidad & Tobago, EUR 250 000 from risk capital resources to Development Finance Ltd. (DFL) to assist in the financing of a feasibility study and related costs for the establishment of a Caribbean micro-credit financing institution to serve micro enterprises in the Southern and Eastern Caribbean.
- Uganda, EUR 10 million, of which EUR 3.5 million from risk capital resources, to MTN Uganda Ltd., the second national operator in this country, for the construction of a new telecommunications network for Uganda. The network will use GSM cellular technology to provide mobile and fixed line services.
- Zimbabwe, EUR 1.5 million from risk capital resources to Munyati Mining Company Limited for investing in new capital equipment aimed at increasing production of the Sanyati copper mine.
The EIB, established in 1958 by the Treaty of Rome, finances capital investment projects which 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.The Fourth Lomé Convention was concluded in 1989 for a period of 10 years and is accompanied by two Financial Protocols, spanning 1991-1995 and 1996-2000. Under the second financial protocol, the total financial aid available amounts to EUR 14.6 billion, of which EUR 12 billion is grant aid from the EU member states, EUR 1 billion is managed by the EIB as risk capital finance, and up to EUR 1.6 billion is in the form of loans from the EIB's own resources.
(1) The conversion rates of 1 EUR = 6.55957 FRF, 0.666300 GBP, 1.03280 USD.
(2) The European Development Fund (EDF) is constituted by contributions from EU Member States. The EIB manages under mandate part of the EDF, which it uses primarily for risk capital operations.
(3) IFC = International Finance Corporation, is part of the World Bank Group; ADB = African Development Bank.
(4) This loan was already announced by the EIB in a previous press note, released on the occasion of the loan's signature.