European Investment Bank confirms $97 million support for East African entrepreneurs in 2016
European Union lending arm, the European Investment Bank has confirmed that it lent $97 million to support investment by companies across East Africa in 2016.
Catherine Collin, Regional Representative of the European Investment Bank in East Africa and Robert Schofield, responsible for European Investment Bank lending for small and medium sized companies throughout East Africa and elsewhere on the continent, highlighted the crucial role of entrepreneurs to create jobs, improve lives and ensure sustainable long-term economic growth.
They confirmed that 49 per cent of EIB backed lending in Africa last year supported private sector investment by small and medium sized businesses.
They emphasized the EIB’s close cooperation with banks across the region, business associations, regulators and government departments to ensure the maximum impact and benefit to the real economy via the EIB’s credit lines.
During 2016 the European Investment Bank signed new lending programmes totalling $97 million with partner banks and financial institutions across East Africa. This included $21 million agreed with HFC to support investment by medium sized companies in Kenya, a total of $30.5 million signed with KCB for lending across East Africa in Rwanda, Tanzania and Uganda, a $15.8 million credit line agreed with EXIM Tanzania and a $29.5 million lending programme agreed with Bank of Kigali in Rwanda that will support investment by 46 local firms.
Expected new lending totaling $263 million in partnership with banks across East Africa was also announced. The expected launch later this year of the first sector specific credit lines to be supported in the region was also confirmed. These will focus support for new agricultural and climate related investment in Kenya and is expected to be used alongside grant support from the European Union.
Since 2010 the European Investment Bank has signed contracts worth a total of $717 million for new credit lines with local banks across East Africa that includes both direct transactions and streamlined lending under a dedicated regional lending programme, the Private Enterprise Financing Facility.
This lending has been complemented by a detailed technical assistance programme, supported by the European Union, that has contributed to successful implementation and ensuring maximise benefits from the overall programme. Technical assistance includes strengthening skills such as environmental, social and money-laundering assessment by regional banks and improving assessment of the economic impact of projects financed through the scheme.
Following the success of the first Private Enterprise Financing Facility programme this was extended through a second scheme launched less than 18 months ago. Reflecting strong demand and effective lending by local financial partners the EIB expects to launch a third Private Enterprise Financing Facility, to enable credit lines totaling $263 million, later this year.
Three additional credit lines, totaling $206 million for SME lending across East Africa, in Kenya, Tanzania, Uganda and Rwanda, as well as the Democratic Republic of the Congo and Mauritius have already been approved by the Board of the European Investment Bank and are expected to be signed in the coming months.
Last year the European Investment Bank provided more than $28 billion to support investment by small and medium sized companies around the world. The EIB’s experience gained working with local banking partners in East Africa has guided more recent lending elsewhere in Africa.
Working in partnership with local banks and financial institutions EIB backed lending reflects local business investment needs and existing knowledge of local clients.
Prior to agreeing a new lending programme the EIB carries out detailed due diligence to fully understand the local bank’s strategy, approach to risk management and corporate governance, and detailed financial performance.
This examines the commitment of partner banks to support private sector growth and analysis of how SMEs can access much needed local or foreign currency. The EIB only disburses money once eligible SME loan proposals are submitted and reviewed.
The European Investment Bank has supported transformational investment across Africa for more than 50 years and operated in Kenya since 1976. Over the last decade the EIB has provided more than $ 23.1 billion for long-term investment across Africa.