Germany: EIB hands out first ever loan for refugee housing to promotional bank ILB

The German Federal State of Brandenburg is the first region to receive a European Investment Bank (EIB) loan dedicated to helping European countries to better face the challenges of the current refugee issue. Signing an agreement with the State’s investment bank, Investitionsbank des Landes Brandenburg (ILB), the EIB today committed to providing up to EUR 120 million for the refurbishment and construction of refugee accommodation in different parts of the Federal State. Overall, the project is expected to deliver housing for many of the asylum seekers arriving in Brandenburg until 2018.

“Financially supporting European countries to help them deal with the emergency situation is a clear responsibility of the EU bank,” said EIB Vice-President Ambroise Fayolle. “Today’s loan agreement will help urban and rural districts in Brandenburg to provide accommodation for thousands of people who have been forced to flee their countries. The EIB is ready to support similar operations elsewhere in the European Union in the coming months.”

The loan will enable the State of Brandenburg and the ILB to reduce the costs of their own investment in the refugee sector –investment which is made independently of the EIB Framework Loan and comes in the form of grants from the regional Ministry of Labour, Social Affairs, Health, Women and the Family, and loans (ILB). The individual schemes are being implemented by local authorities or related services, for instance municipal social housing companies. Around 100 individual schemes throughout Brandenburg are expected to indirectly benefit from the Framework Loan by the end of 2015.

ILB’s CEO Tillmann Stenger commented: "As the region’s promotional bank, we have responded rapidly to the challenges of the current refugee crisis: as early as February this year we launched our interest-free ‘Brandenburg Municipal Loan for Refugee Facilities’ product. The EUR 120 million loan contract signed today has now kicked off the joint EIB/ILB project ‘Brandenburg Refugee Housing’. Together with the EIB, in the past 20 years we have supported public and private sector investment in Brandenburg worth around EUR 8 billion. The EIB funds for refugee aid will now be used to provide community housing, composite housing, temporary and emergency accommodation.”

The region of Brandenburg has experienced a sharp increase in the arrival of refugees this year. In 2014 the State had to accommodate some 6,000 asylum seekers, whereas in 2015 more than 30,000 new arrivals are expected. With a per capita GDP of less than 90% of the EU average Brandenburg is one of Germany's least developed rural regions. Consequently, the influx of such a large number of refugees poses a particular challenge to the region.

According to EIB analysis the projects financed by the loan are likely to bring about significant positive effects in Brandenburg: the improved integration of refugees will foster contact with the local population; and in addition, the projects are expected to have a substantial impact on the local labour market. Finally, communities can envisage using the facilities created under the project such as office space, student accommodation, homes for the elderly or educational centres, should they no longer be needed in the future.