Regional Consultation
“Rethinking the Role of National Development
Banks”
Johannesburg, 22 - 23 November 2006
EIB Support to Development Banks
in Africa
Lena Eriksson-Åshuvud
Regional Representation for
Southern Africa and Indian Ocean Islands
EIB in a nutshell
EIB is EU’s Development Bank, owned by the 25 member states.
Financing infrastructure and industry.
€45 bn of loans signed annually – funded mainly through bond issues –
10% outside EU25.
Activity in Africa started in 1963 under the Yaoundé convention:
LT loans, quasi-equity and equity to both private and public
counterparts
Cotonou – also guarantees.
Direct funding of large infrastructure and industry projects –
cofinancing w. local/international institutions
Funding to SMEs through financial intermediaries, inlcuding NDBs
and RDBs.
Key objective – assist in development of financial markets for the long
term.
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EIB in a nutshell
EIB is EU’s Development Bank, owned by the 25 member states.
Financing infrastructure and industry.
€45 bn of loans signed annually – funded mainly through bond issues –
10% outside EU25.
Activity in Africa started in 1963 under the Yaoundé convention:
LT loans, quasi-equity and equity to both private and public
counterparts
Cotonou – also guarantees.
Direct funding of large infrastructure and industry projects –
cofinancing w. local/international institutions
Funding to SMEs through financial intermediaries, inlcuding NDBs
and RDBs.
Key objective – assist in development of financial markets for the long
term.
3
EIB Lending to Financial Institutions in
Sub-Saharan Africa (million EUR)
350
300
250
200
150
100
50
0
National Development
Banks
Regional Development
Banks
Commercial Banks
1976-1990
1991-1999
2000-2006
4
EIB support to NDBs in Africa: 1970s & 1980s
NDBs seen as effective response to financial
(and other) market imperfections.
Support from multilateral and bilateral development
finance agencies.
EIB support aimed at two market imperfections:
 access to finance of SMEs
 provision of long term financial instruments
Loans, equity and quasi-equity
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Weak performance of NDBs in 1980s:
 Weak management, governance problems.
 Misguided directed lending policies.
 Insufficient credit and risk culture.
 Ill equipped to deal with equity operations.
Retreat from lending to NDBs since early 1990s.
6
New strategy since turn of century :
RDBs and especially commercial banks
Achievements:
 Better quality of firms financed
 Long term lending increased, especially
through RDBs
Unresolved problems:
 Access to credit of SMEs, especially start-ups
 Focus by many commercial banks on short
term lending
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Market imperfection still there
 Can be partially addressed by RDBs.
 Can suitably designed/reformed NDBs play a
useful role?
 A few encouraging examples.
 EIB is still open to considering support to
establishment of NDBs in a number of African
countries.
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Challenges
 Case specific intervention – each country
has its own challenges.
 Setting priorities & clear and realistic
definition of tasks.
 Technical assistance: useful but no
panacea.
 Governance and institutional framework commitment to proper institutions and
governance essential.
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The European Investment Bank
will continue to support partners in
development that are best equipped to
be effective in this work.
THANK YOU
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