Alfredo Abad - EIB


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Alfredo Abad - EIB

  1. 1. AgriBusiness Forum 2011 “Finance for Agri-Food Growth” Johannesburg, South AfricaAlfredo Abad 18 October 2011European Investment Bank 1
  2. 2. Presentation Structure EIB mandate and activities  The Cotonou Agreement and the Investment Facility EIB’s involvement in the agro-industry sector Types of funding available  Principal instruments  Project requirementsEuropean Investment Bank 2
  3. 3. EIB: European Union’s long term financing institution Purpose: Policy-driven bank, EIB implements EU policy Provide long term lending to promote European objectives Investment in 2010:  EUR 63.0bn inside EU  EUR 9.8bn outside EU The Bank works in EU and nearly 150 other countries. Biggest group of countries are the ACP – African, Caribbean & Pacific countries. EIB working in some of them for over 45 years, and has channelled some EUR 13 billion to investment  EUR 5.1 billion since 2003 (67% to private sector)  Plus EUR 2.1bn in South Africa since 1995 (at 30/09/2011)European Investment Bank 3
  4. 4. Direct and indirect operations The EIB has two modes of intervention  Direct financing – for large projects, typically a project cost of at least EUR 15-20 million with a minimum financing requirement from the EIB of EUR 5-10 million  Indirect financing, through financial intermediaries – any project smaller than the above limits EIB aims to have financial intermediaries active throughout the ACP countriesEuropean Investment Bank 4
  5. 5. Agriculture & associated activities EIB fully involved since 1963 Has financed some 99 direct investments in 33 ACP coutries totalling EUR 581 million Indirectly, more than 800 projects through intermediaries in 34 ACP coutries which amounts to EUR 1.3 billionEuropean Investment Bank 5
  6. 6. Agriculture & associated activities Some are large scale schemes, where the EIB has dealt with the promoters to provide DIRECT finance e.g.  EUR 12m for sugar estate improvements in Chad in 2005  EUR 28m for sugar refineries in Mauritius in 2009  EUR 12m for shrimp farming in Madagascar in 2006  EUR 8m for improving for banana cultivation and packing in Cameroon in 2008  EUR 7m for Maragra sugar project in Mozambique in 1999  EUR 5m for expansion of eucalyptus and pine plantation in Uganda in 2008  EUR 14 m for Sucoma sugar project in Malawi in 2000European Investment Bank 6
  7. 7. The Sugar Company of Chad (CST) The modernisation and extension of a sugar complex consisting of a sugar valley, 30km east of Sahr in southern Chad. Consists of:  An innovative guarantee for a loan to CST to finance modernisation of its sugar complex;  An interest subsidy to finance the project’s substantial environmental and social investments. Amount signed - EUR 11.8m IRS – EUR 1.8m Co-financiers: Proparco, DEG Max term – 14 yearsEuropean Investment Bank 7
  8. 8. Maragra Sugar Project - Mozambique The project consists of the rehabilitation and modernisation of a sugar mill and a 6200 ha irrigated sugar cane plantation. Amount signed – EUR 7m Co-financiers: IFC, DEG, DBSA Promotor: Illovo Sugar Max term – 12 yearsEuropean Investment Bank 8
  9. 9. Maragra Sugar Project - Mozambique Advantages / value added:  Substantial contribution to the development of a Less Developed Country  Has had a major impact on the economic activity in and around Manhica and Palmeira, the two towns closest to Maragra, where there is a renewed vibrancy among the people, due to the substantial sugar related revenue that now flows into the communities through salaries and wages, and from support services supplied by local entrepreneurs.  Economic benefits are also derived from significant savings in foreign exchange through import substitution  Created direct employment of which permanent 1,791 and seasonal 3,696, which exceed the 3,100 people expected at the appraisal.  Substantial indirect benefits would be generated through multiplier effects in the transport, marketing and ancillary sectors of the economy.European Investment Bank 9
  10. 10. Project requirements Projects should be:  Technically sound  Financially viable  Show a positive impact on the economy – social and developement impact assessment  Comply with environmental protection requirements  If in public sector, follow open tendering principles (competition to cut costs and protect the consumer) Significant financial contribution from promoter Co-financiers (EIB maximum 50% of project cost)European Investment Bank 10
  11. 11. What EIB can offer Financing for up to 50% of the total investment cost  Up to 70% for certain environment and energy investments Long term maturities to match project needs Competitive conditions with flexible structures Flexibility in security packagesEuropean Investment Bank 11
  12. 12. Contact Alfredo Abad, Head of Mission for Southern Africa and Indian Ocean +27 12 425 0460European Investment Bank 12