EIB-EU agreement for investments in Africa, the Caribbean and the Pacific
Four billion Euros to support local economies: primarily green transition and agriculture
The EIB, the European Investment Bank and the European Commission have signed agreements for 4 billion euros to support businesses in African, Caribbean and Pacific countries up to 2027. The agreement consists of two parts: the first is a guarantee agreement under the European Fund for Sustainable Development Plus (EFSD+). It will enable the EIB to disburse up to €3.5 billion in loans on favorable terms to create jobs and opportunities, especially for women and young people, and support the green and digital transitions in EU partner countries, in line with Global Gateway.
An example of how the resources will be used is the agreement signed last week by the EIB and local banks Cedb, Nmb and KCB-Tanzania at the EU-Tanzania Business Forum: the credit lines backed by the guarantee will release 270 million euros for the three local Tanzanian banks that will finance projects for the benefit above all of women and the blue economy.
Another example is the Green African Agricultural Value Chain Facility: it provides financing to sub-Saharan African intermediaries for the granting of loans to small and medium-sized enterprises operating in the agri-food value chains. The average size of the credit lines granted to local banks varies from about 10 to 25 million Euros.
The second part of the agreement just signed, on the other hand, concerns an EU contribution of 500 million euros to the ACP trust fund, set up and managed by the EIB, to allow high-impact operations that would otherwise not be possible. The fund will support, for example, small renewable energy power plants in off-grid areas that will enable autonomous electricity supply, improve people's living conditions and reduce dependence on fossil fuels and rising fuel prices power.
Today's guarantee agreement was signed under the European Fund for Sustainable Development Plus (EFSD+) which raises financial resources for sustainable and inclusive economic development from the private sector. It supports investments in partner countries to promote the creation of decent jobs, strengthen public and private infrastructure, promote renewable energy and sustainable agriculture and support the digital economy.
The instrument has a guarantee capacity of 40 billion Euros and the investment programs are implemented through two main paths:
- In partnership with the EIB, the EU provides a €26.7 billion guarantee for financing to support investments in sectors such as clean energy, green infrastructure and health: today's agreement is an addition to get greater overall impact.
- Under the open architecture of the EFSD+, the EU is providing guarantee coverage of up to €13 billion until 2027: this will be used by a number of implementing partners, with the aim of mobilizing private investment in support of countries partner for the achievement of the SDGs, i.e. the Sustainable Development Goals. In December 2022, the EFSD+ Operational Council gave a positive opinion on €6.05 billion of financial guarantees to support 40 investment programs in sub-Saharan Africa, Latin America and Asia Pacific, which represent the first award under the EFSD+ open architecture programme.
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