The European Investment Bank (EIB) has a global reach, with operations in more than 140 countries beyond Europe and in almost all African countries, and decades of development experience. In 2020, 71% of EIB operations beyond Europe were carried out in fragile or conflict-affected situations and least developed countries. EIB lending accounts for close to 30% of EU institutions’ official development assistance2.
The EIB has been investing in Africa since 1963, financing a wide range of projects that support sustainable economic development, including private sector initiatives to create and sustain jobs. In Africa, the EIB finances operations using its own resources, both under the external lending mandate and under the ACP-EU Partnership Agreement (Cotonou)3. In addition, the EIB lends to the private sector, both directly and via partnerships with intermediaries, through an off-balance sheet revolving fund — the ACP Investment Facility. The Bank uses the dedicated Impact Financing Envelope, under this facility, for higher-risk, higher-impact projects. The geographical spread of operations in Africa in 2020 is shown in Figure 1.
The EIB’s research provides a strong basis for its understanding of the markets where it operates. Drawing on macro and micro data, we assess barriers and investment needs given country-specific macroeconomic and institutional contexts, focusing on strategically relevant thematic areas, such as access to finance, innovation, climate change, infrastructure and inclusion. For example, the EIB Banking in Africa survey, 2021 provides insights into the latest trends in the banking sectors of sub-Saharan Africa. The findings from the survey carried out in early 2021 are presented in this volume and in a report by the SME Finance Forum, drafted in the context of the G20 Global Partnership for Financial Inclusion (SME Finance Forum, 2021, forthcoming). Jointly with peer international financial institutions, we foster knowledge sharing to deepen our understanding of countries’ needs and investment opportunities. For example, in collaboration with the World Bank and the European Bank for Reconstruction and Development (EBRD), we have launched enterprise surveys within and beyond Europe, including in North Africa. The data collected inform evidence-based research and reveal constraints on and opportunities to promote development in targeted economies. Together with the EBRD, the World Bank Group (including the International Finance Corporation, or IFC), and the development agencies of the United Kingdom and Sweden, we established the Country Diagnostic Working Group to share perspectives and experiences of preparing country diagnostics and develop cross-institutional collaboration. The EIB is also partnering with the African Development Bank and EBRD to produce a country diagnostic for Morocco.
2 European investment Bank, 2021a.
3 ACP: African, Caribbean and Pacific.
Figure 1: Geographical coverage of EIB operations in Africa, 2020
Note: The large volume of operations in Egypt reflects the fact that Egypt is the largest country in EU’s immediate Southern neighbourhood, in terms of both its population and the size of its economy.
EIB investments combine high development impact with financial sustainability (Figure 2). The EIB invests in Africa to achieve EU policy priorities and support achievement of the Sustainable Development Goals. Projects signed in Africa in 20204 are expected to contribute towards 210 million people getting vaccinated against COVID-19, 595 400 households being supplied with newly generated energy, 778 000 people benefiting from improved water supply, and farmers benefiting from 26 500 hectares of newly irrigated land and 3 076 hectares of newly planted forest. As these projected outcomes demonstrate, the Bank is helping the European Union remain a frontrunner in implementing the 2030 Agenda and supporting Africa’s Agenda 2063. As the EU bank, the EIB is fully dedicated to continuously improving the development impact of its operations.
Figure 2: Sustainable Development Goal highlights
75 570 loans to female entrepreneurs 790 000 jobs sustained in supported micro, small and medium enterprises and mid-cap companies
1 251 107 people benefiting from safe drinking water
39 000 new or rehabilitated water connections
Enough new electricity production to serve 595 400 households
4 135 households in new or refurbished social or affordable housing units
210 million people vaccinated against COVID-19
34 million covered by improved health services
55 new or renovated health facilities The EIB delivers all its investments through partnerships5. We typically do not fund more than half of a project’s total cost. The European Commission, European External Action Service and various African governments are key long-term partners for all operations in Africa. Other partners include European bilateral development finance institutions, other multilateral development banks, UN agencies, the African Union and philanthropic foundations. By working with our European, African and multilateral partners, we can maximise the positive impact of our financing to make a real difference for people across the continent.
4 European Investment Bank, 2020a.
5 European Investment Bank (2020a), p. 38.
As part of Team Europe6, the EIB stepped up financing to record levels to help African partners respond to the COVID-19 health and economic crisis during 2020. The EIB supported measures to help countries deal with the immediate health emergency and measures to address the economic fallout. Its crisis response boosted health and economic resilience, including through support for vital economic and social infrastructure. The response aimed to benefit excluded, vulnerable and disadvantaged groups, including women and young people, who have been disproportionately affected by the crisis. During the pandemic, the EIB continued to support local private sector firms, targeting micro, small and medium-sized enterprises in particular, with the support channelled through financial sector intermediaries. This has been crucial, as such companies have been hardest hit by lockdown measures and other economic impacts of COVID-19. As these small firms play key roles in African economies by helping to sustain jobs and livelihoods and, ultimately, reducing poverty, ongoing support for them from the EIB has helped to mitigate severe economic effects.
The EIB works with African financial institutions to channel finance to firms that improve lives and create job opportunities, especially for women and young people. Most of the Bank’s financial sector lending (87%) is implemented in partnership with commercial banks, aiming to benefit underserved private sector firms (Figure 3), particularly small and medium-sized enterprises (SMEs) and other underserved groups. The EIB also works with African public development banks, leveraging their capacity and local knowledge to contribute to achieving EU priorities such as mitigating and adapting to climate change. In 2020, for instance, the EIB partnered with the Development Bank of Ghana, providing much-needed long-term finance to strengthen the resilience of the Ghanaian economy via working capital and investment loans to micro firms, small and medium-sized enterprises and mid-caps active in the agribusiness, manufacturing, ICT and tourism sectors. North Africa benefited from the largest volumes of investment during 2020 (Figure 4), including credit lines to support private sector firms, investments in impact funds and support to microfinance institutions, all designed to benefit micro, small and medium businesses.
Figure 3: Public–private distribution of the EIB’s
financial sector operations, 2020 Figure 4: Regional subdivision of the EIB’s financial sector operations, 2020
The EIB operates in line with EU policies, applying high environmental and social standards and aiming to make a positive contribution to climate action, environmental sustainability and social inclusion. Under the EIB’s Climate Bank Roadmap for 2021–2025, the EIB has pledged that 50% of its financing will be dedicated to climate action and environmental sustainability, while the other 50% will not support operations that could harm the environment. All EIB lending is consistent with the principles and goals of the Paris Agreement. In 2020, 68% of the Bank’s financial sector operations had a climate component. The EIB has also contributed to establishing the framework for sustainable development finance at global level. For example, the EIB was the first institution to issue green bonds, and has contributed to developing the EU Taxonomy for sustainable green investments and
6 Team Europe is a package launched by the European Union to support partner countries in the fight against the coronavirus pandemic and its consequences. It has now become an integral part of EU programming beyond Europe. Team Europe’s objective is to combine resources from the European Union, its Member States, and financial institutions, particularly the EIB and the EBRD. More information on the Team Europe approach is available at https://eeas.europa.eu/headquarters/headquarters-homepage/76341/coronavirus-news-eu-action-team-europe-support-disinformation-repatriation-and-solidarity_en.
to implementing new regulations on non-financial disclosures that support the further development and upscaling of the climate finance sector7. This boosts the ability of financial institutions, including those in Africa, to grasp the opportunities of climate finance
To improve the impact of its activities on women and girls, the EIB adopted a Strategy on Gender Equality and Women’s Economic Empowerment and a Gender Action Plan covering its lending, blending and advising work within and beyond the European Union. SheInvest8 is an initiative launched in 2019 that has so far mobilised over €1 billion of gender-responsive investments in Africa, boosting gender equality and female economic empowerment across the continent. Given the success of SheInvest, in 2021 the EIB committed to double to
€2 billion its gender-responsive investments across Africa in cooperation with African partners9. The Bank’s increased focus on operations promoting digitalisation in Africa also creates business opportunities for young people, women and rural populations by connecting them to essential services, financing and customers.