European Investment Bankin the Agricultural sector in Africa – challenges and opportunities

Counter Balance: Challenging the European Investment Bank

Counter Balance's mission is to make the EIB an open and progressive institution delivering on EU development goals and promoting sustainable development to empower people affected by its work.

Desislava Stoyanova, Brussels 2nd February 2009

The EIB as an example for political regulation under neoliberalism

Counter Balance members:•Les Amis de la Terre (France)

•urgewald ,Weed (Germany)

•Campagna per la Reforma de la Banca Mondiale (Italy)

•BothENDS (Netherlands)

•Breton Woods Project (UK)

•Bankwatch Network (Central and Eastern Europe)

The EIB – Basic facts

Set up in 1958 under the Treaty of Rome

House bank of the EU; independent status

Owned by 27 EU member states

Active in more than 130 countries all over the world

Headquarters – Luxembourg with increasing number of regional offices (5 in ACP; Warsaw and Bucharest in CEE region)

Transport, energy, water, industry, banking, R&D, oil, mining and gas, telecommunication

Other important data:

• Subscribed capital – 164 808 million Euro

• Borrowing and floating bonds on capital markets; AAA rating

•Approved loans in 2007 – 56 455 million Euro, of which 756 million for ACP countries

The EIB – Basic facts

Projects approved by the EIB in 2006

European Union85%

Partner Countries15%

EIB Activities Outside the Union

External Lending Mandate (2007-2013) - 27.8 billion euro of Community guarantees compared to 20.7 for the period 2000-2006

In the ACP countries:Objective: 'reducing and eventually eradicating poverty consistent with the objective of sustainable development and the gradual integration of ACP countries into the world economy’

The Cotonou agreement (2000) governs EIB loans to the 79 African, Caribbean and Pacific (ACP)

- manages the Cotonou Investment Facility (IF), a risk-bearing Instrument established in June 2003. (2003-2008) for private sector (2.2 bln EDF/EU + 1.7 bln EIB)and 187 mln € EDF/EU interest rates subsidies

(2009-2013) 1.1 bn € EDF/EU + 2.0 bn. EIBand 400 mln. € EDF/EU interest rates subsidies and TA

- EU-Africa Infrastructure Partnership (220-260 mln)

- ACP-EU Water Partnership

EIB Activities Outside the Union

EIB as the EU policy bank

EU consensus on development – call for “synergies” of EIB’s lending

ECJ judgement, November 2008 (case C-155/07 ):- TITLE XX of the EC Treaty, which deals with

“DEVELOPMENT COOPERATION” :

“1. Community policy in the sphere of development cooperation, which shall be complementary to the policies pursued by the Member States, shall foster:

— the sustainable economic and social development of the developing countries, and more particularly the most disadvantaged among them,

— the smooth and gradual integration of the developing countries into the world economy,

— the campaign against poverty in the developing countries.”

Outside the EU EIB lending is based on EU external cooperation and development policies.

Development: Africa, Pacific and Caribbean (ACP); Republic of South Africa

Lending under these mandates focuses on:- Private sector development - Infrastructure development - Security of energy supply - Environmental sustainabilityMainly for European companies...

The EIB’s lending priorities outside the EU

EIB in practice: support for the Agricultural sector in Africa

1,000,000MorambaAquaculture

Madagascar1999

Construction of shrimp farm and packing facility at Baly Bay on north-western coast

7,000,000AquamasAquaculture

Madagascar2000

Finance for replanting of existing citrusGroves

8,800,000Belize CitrusSector Operation

Belize2000

Construction of plant-breeding andpropagation facilities in Thika, east of Nairobi

4,400,000Kenya GeraniumsKenya2001

Modernisation and strengthening of the competitiveness of three banana plantations in western Cameroon

8,000,000Plan Bananes2002-2006

Cameroon2002

Production and export of roses2,000,000Fabulous FlowersBorswana2004

Expansion of shrimp farm in Mahajamba delta on north-west coast

5,000,000Aqualma IIIMadagascar2005

Extension of seafood preparation, freezing and packing plant

2,500,000Seph-NouadhibouMauritania2005

Rehabilitation of approximately 3 750 hectares of poor quality tropical hardwood plantation and replacement of ageing Equipment

3,500,000KolombangaraForestry Project

Solomon Islands2006

DescriptionIn euroProject CountryYear

EIB in practice: support for the Agricultural sector in Africa

-Private sector development? – How to develop the African private sector and which private sector in agriculture

-Global loans – financing SMEs through financial intermediaries Where does the money go? Which financial institutions needed for supporting family agriculture and rural development

-Financing for large infrastructure projects and agriculture?Support for de-financialise agriculture and not export-oriented

Can the Bank show initiative?

Can the EIB use other instruments to show true pro-development approach?

-Support the development of the local market – infrastructure not export-oriented

-Support small companies and cooperatives

-Provide lending on concessional terms with a higher grant component

- not to support European private sector

Counter Balance: Challenging the European Investment Bank

www.counterbalance-eib.org

Email: info@counterbalance-eib.org

Thank you!