1. The European Investment Bank (EIB): Lending to Financial Institutions for SME Financing
Association of Development Financing Institutions in the Pacific (ADFIP)
30th Annual Meeting
Nadi, 23 November 2016
Katrin Bock, Business Analyst - EIB Pacific Regional Office
European Investment Bank

2. EIB: the Bank of the European Union
Established in 1958 by the Treaty of Rome. The shareholders of the Bank are the EU's Member States.
The largest multilateral lender and borrower in the world (Balance sheet total of EUR 570bn).
The Bank raises its resources by borrowing on the capital markets.
It passes on its favourable borrowing terms (thanks to its AAA rating) to its customers.
Some 440 projects are financed each year, in over 160 countries, with a EUR 77.5bn in new loans signed in 2015 (of which EUR 7.8bn were outside of the EU).
The EIB's headquarters are in Luxembourg and it has around 40 local offices.
The Bank has around 2,800 financial specialists, engineers, sector economists and social and environmental experts.
European Investment Bank

3. EIB lending priorities in Africa, Caribbean and Pacific
Focus on the private sector
Supporting the EU’s development agenda, contributing to poverty reduction and the achievement of the UN Sustainable Development Goals.
Specific focus will be made on local private sector development - by promoting access to finance for the private sector and funding critical social and economic infrastructure.
Climate action (renewable energy, energy efficiency as well as climate adaptation and mitigation) and projects with high social and environmental impact.
European Investment Bank

4. How does the EIB support Private Sector Funding?
SMEs + microfinance
Mid-cap enterprises
Large corporates
SPVs & project finance
Direct loans 1
Loans intermediated by a bank 2
Loans guaranteed by a bank 3
Microfinance, SME and Mid-cap credit lines to local banks
Guarantee provided by the EIB to a local bank
(only in specific cases)
Equity investments mostly through Private Equity funds
European Investment Bank

5. Specific products for in Africa, Caribbean & Pacific
In the ACP countries, the EIB can offer special financing products tailored to meet local market needs:
Interest rate subsidies: for projects with high social or environmental impact
Technical assistance grants for project preparation and implementation
Financing for high risk, low return projects that will have a high social impact
Guarantees
Junior and subordinated loans, on an exceptional basis
Local currency loans in some countries
European Investment Bank

6. European Investment BankC
EIB Activities in the Pacific
Project Example: Environmental Lines of Credit in New Caledonia and French Polynesia
EIB Financing
EUR 8 m
Banque de Tahiti
EUR 10 m
SOCREDO
EUR 5 m
BCI
Helios Bay, New Caledonia – 2.1 MWp
grid-connected solar photovoltaic plant
Description
Provision of subsidised financing resources for investments in renewable energy & energy efficiency
Objectives
Supports Small and Medium-sized Enterprises (SMEs) in pursuing environmentally sustainable businesses
European Investment Bank

7. Risk-sharing Instruments Loans to Financial Intermediaries
IFE Instruments
Social Impact Funds
Risk-sharing Instruments
venture capital / private equity / social impact funds
managers explicitly pursue social impact goals
focus on employment, working conditions, vulnerable populations, access to healthcare, energy, education, etc.
first loss guarantees to facilitate risk-sharing operations with local financial intermediaries
supporting SMEs and small projects
help leverage senior guarantee tranches from EIB and other IFIs / DFIs
Loans to Financial Intermediaries
Direct Financing
local currency loans in economically deprived countries
beneficiaries: smallholder farmers, micro-enterprises and SMEs
intermediaries: commercial banks, credit cooperatives, microfinance institutions etc.
strengthened with technical assistance and advisory services
debt (and possibly equity) instruments with high developmental impact
promoted by sound, experienced investors
focus on underserved sectors such as agriculture, private health and education
European Investment Bank

8. The Caribbean and Pacific Impact Finance Facility (CPIFF)
LENDING FACILITY 40 m EUR
Senior debt
3- 7 years with 1-2 year grace period
Unsecured
Local currency, EUR and USD
Fixed interest rate
Financial intermediaries
Microfinance institutions
Downscaling banks
Wholesale funder of MFIs
Tailored capacity building
TECHNICAL ASSISTANCE FACILITY
Eligible clients with loans < EUR 50,000:
Micro and small enterprises
Low income households with small scale impact projects
Financial education
Mentoring
European Investment Bank

9. Example: ACP Smallholder Farming
A joint initiative of EIB and IFAD to support smallholder farming activities in ACP countries
Building on pilot projects carried out by IFAD, with the objective of providing medium to long-term local and foreign currency funding (currently very scarce)
5-8 countries targeted, including Malawi, Mozambique, Ethiopia, Nigeria, Rwanda
Amount: up to EUR 50m
Support to up to 100,000 smallholder farmers over
European Investment Bank

10. Recommendations SME Financing Study
Partnerships with smaller, locally or indigenously owned banks
Simplified processes and procedures for EIB facilities
Continuing technical assistance to ADFIP
More risk share options across the Pacific (e.g. a regional credit guarantee)
Provision of post-disaster relief funding regionally
Increased support to microfinance regionally
Support for deeper access to finance using mobile banking, internet banking, or agency banking models
Use of EIB's ACP Smallholder Finance Facility on a Pacific regional basis
Support programmes or incentives for lending to:
rural or remote areas
agricultural or agri-processing sector
micro or small businesses
Indigenously-owned businesses
European Investment Bank

11. Contacts:
European Investment Bank Pacific Regional Office Level 25, 88 Phillip Street SYDNEY NSW 2000 Australia
Adam Bruun
Head of Regional Office
tel +(61 2)
Katrin Bock
Business Analyst
tel +(61 2)
Thank you very much for listening – if the moderator will allow it then I’d be very happy to take any questions from the floor.