Europaudvalget 2017
KOM (2017) 0767
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EUROPEAN
COMMISSION
Brussels, 15.12.2017
SWD(2017) 460 final
COMMISSION STAFF WORKING DOCUMENT
Accompanying the document
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND
THE COUNCIL
ON 2016 EIB EXTERNAL ACTIVITY WITH EU BUDGETARY GUARANTEE
{COM(2017) 767 final}
EN
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1.
I
NTRODUCTION AND OVERVIEW
This Staff Working Document ("SWD") reviews the implementation of the current European
Investment Bank ("EIB") external mandate at project, sector, country and regional levels in
2016 as well as the contribution of EIB financing operations to the fulfilment of external
policy objectives, taking into account the operational objectives of the EIB. Article 11(2) of
Decision 466/2014/EU of the European Parliament and of the Council of 16 April 2014
provides that for the purposes of the Commission's reporting, the EIB shall provide the
Commission with yearly reports on EIB financing operations carried out under that Decision
including all necessary elements allowing the Commission to report. Therefore, facts and
figures mentioned in the document are mainly based on information provided by the EIB.
2
EIB
CORPORATE RESPONSIBILITY
Corporate Social Responsibility is an important part of EIB strategy, policies and activities.
The EIB continues to reaffirm its commitment to Environmental, Social and Governance
(ESG) standards throughout its financing operations as well as its internal activities including
through its sustainability and environmental reporting. For instance, the EIB Group 2016
sustainability report will be published in accordance with the GRI Standards comprehensive
option in line with best practice.
The EIB Group’s commitment to measure and manage its footprint
is consistent with its
environmental and social policies, principles and standards for the projects it finances.
Understanding its carbon footprint also allows the EIB to identify and implement measures to
reduce emissions resulting from its internal activities. The EIB Group carbon footprint report
prepared in accordance with the GHG Protocol Corporate standard provides a comprehensive
picture of the GHG emissions resulting from its internal activities and provides the appropriate
environmental indicators required by the GRI content index in respect of the sustainability
report.
The EIB promotes EU policies through its financial and other support of sustainable
investment projects. The growing importance given to environmental and social considerations
is underlined through regular review and revision of its environmental and social requirements
and operational practices throughout the Bank reflected in its priority lending objectives.
The environmental and social policies, principles and standards of the Bank derive from and
reflect the evolving EU approach towards the promotion of environmental sustainability and
social well-being, in the broader context of sustainable development. They are developed,
maintained and disseminated by the Bank’s Environment
Climate & Social Office, ECSO. In
particular human rights, gender, conflict sensitivity, biodiversity and ecosystems
considerations as well as climate change standards are integrated into the lending policies and
practices of the Bank.
2.1
Human rights
The EIB is legally bound to the provisions of the Charter of Fundamental Rights of the
European Union, including the commitment to upholding human rights. Human rights
considerations feature also in the EIB Statement of Environmental and Social Principles and
Standards which provides that the EIB “restricts its financing to projects that respect human
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rights”. This is achieved partly by excluding specific types of projects or activities from EIB
lending, and partly by comprehensive due diligence processes.
The Bank’s Environmental and Social Standards, revised and effective since 1st January 2014,
further advanced the Bank’s commitment by effectively integrating human rights in their scope
and by promoting human-rights-responsive due diligence processes. They draw guidance from
the EU Charter for Fundamental Rights, the EU Strategic Framework and Action Plan on
Human Rights and Democracy (2012), the UN Guiding Principles for Business and Human
Rights (2011), the Renewed EU Strategy 2011-2014 for Corporate Social Responsibility and
the OECD Guidelines for Multinational Enterprises (2008), as well as from the evolution of
best practice in this domain.
2.2
Gender
Gender equality is firmly established as a core value and objective of EU development
cooperation and external action. It leads to more just, fair and prosperous societies. It
contributes to faster economic growth, higher income per capita, more efficient and effective
businesses, more sustainable management of natural resources, social cohesion, peace-building
and, overall, more stable societies.
Understanding the significant costs generated by discrimination, the barriers to full
participation in the economy and how best to harness women and men’s potential is
fundamental to contributing to ELM key objectives, including: local private sector
development, social and economic infrastructure and climate change mitigation and
adaptation. Recent events, such as the migration and refugee crises in the Western Balkans and
Southern Neighbourhood, have inherent gender dimensions. These have highlighted the need
to invest in women’s economic empowerment as a viable strategy for building more resilient
economies.
The EIB has committed to supporting the achievement of SDG 5; to “achieve gender equality
and empower
all women and girls” by 2030. The EIB Group Strategy on Gender Equality and
Women’s Empowerment was endorsed in December 2016. It concentrates on three priority
areas:
The protection of women’s rights through the application of the Bank’s social
standards and in the requirements of its clients and promoters. A mandatory and
systematic assessment of gender-related risks and the protection of the rights of
women, men, girls and boys will be an integral part of the application of the EIB
Environmental and Social Standards. This will seek to highlight the vulnerabilities and
risks that are gender and/or age specific and to identify ways to effectively mitigate or
remedy against them.
Increasing their operations’ positive impact on gender equality, by working
with
willing and interested project promoters to incorporate a gender perspective into the
design, implementation and operation of projects.
Working with clients actively investing in women’s economic empowerment, such as
efforts to increase access to employment (e.g. through investment in the care economy)
and to credit/financial services, as well as support for female entrepreneurship.
Conflict sensitivity
2.3
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Conflict weakens democracy, human rights and the rule of law, which are core values of the
European
Union (EU). The Lisbon Treaty directs the EU to “preserve peace, prevent conflicts
and strengthen international security.”
Insecurity is also a primary development challenge. One and a half billion people live in areas
affected by fragility, conflict or very high levels of criminal violence. Conflict and fragility
have multiple, long and short term impacts on development, both in the countries experiencing
it and on its neighbours, as clearly illustrated by the recent refugee and migrant crisis. Indeed,
migration and conflict are tightly intertwined, with mass displacement often being a result, and
at times a trigger, of conflict.
Adopting a conflict sensitive approach is of relevance for EIB operations. Violent conflicts and
fragility carry substantial operational, financial, security and reputational risks for EIB-
financed projects.
In 2015, EIB developed an institutional approach to conflict sensitivity with the aim to
improve the understanding of potential interaction of EIB lending and violent conflict and
provide guidance on how to make EIB activities more conflict sensitive. The EIB’s approach
to conflict sensitivity seeks to contribute to systematic: (i) flagging and mitigating institutional
risks to EIB and specific operational risks to EIB investments in targeted conflict affected
situations; (ii) avoiding doing harm or aggravating conflict, and (iii) whenever possible and
depending on context, seeking to indirectly contribute to conflict prevention, recovery and
peacebuilding efforts through its project investments. The approach is aligned with relevant
EU policies as well as international good practice.
The developed approach was progressively piloted in 2016 and will be refined further in 2017.
The EIB's intention is to selectively integrate the conflict sensitive approach in relevant EIB
operations keeping in mind that for the EIB, given its current portfolio allocation, this will
concern a small number of operations every year, predominantly non-EU. While most
additional analysis and expertise will be obtained through cooperation with other EU
institutions, some of it will require further strengthening of EIB in-house expertise and access
to external expertise on context, sector or issues specific needs.
2.4
Biodiversity
In line with its EU and international commitments and its own standards and requirement on
biodiversity, the EIB is in the process of developing a comprehensive and mainstreamed
approach, system and processes to biodiversity risk screening and management.
Together with its Multilateral Development Bank (MDB) peers, the EIB has committed to
track biodiversity-related financing in their operations and to publish the first related report by
end of 2018. EIB is coordinating the work with the other MDBs and in consultation with its
peers and the OECD, is currently working to develop and apply a methodology for reporting
and tracking biodiversity-related lending. The methodology being developed will look
specifically at lessons learned and in particular at the definition of climate adaptation financing
and tracking. EIB is also part of a working group led by the OECD DAC ENVIRONET Task
team, looking at refining the biodiversity and anti-desertification Rio marker definitions.
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EIB has also been working with its Micro Financial Institutions (MFI) peers, the Cross-Sector
Biodiversity Initiative, NGOs and IGOs on developing good practice guidelines for
biodiversity baseline studies and biodiversity-inclusive impact assessment and management.
2.5
Climate change
The EIB Climate Standards require that the EIB's financing as a whole is aligned with EU
climate policy. Specifically, and as outlined in its global 2015 Climate Strategy, the EIB has
committed to:
Making its lending portfolio more climate-friendly by promoting climate change
mitigation projects in various sectors and promoting the adoption of energy efficient
solutions in the projects financed.
Mainstreaming climate risk considerations generally into the project cycle and
promoting adaptation projects or projects with adaptation components and measures, in
the interests of long term sustainability.
Assessing and reporting the carbon footprint of EIB financed investment projects, the
annual aggregate GHG emissions and savings
published in the EIB’s Annual Report
for each year’s finance contract signatures.
Including Climate Action in the Key Performance Indicators for the Corporate
Operational Plan with currently an annual percentage target for lending of > 25% based
on a consistent set of definitions regarding climate action investments and activities,
harmonised with other MDBs.
Reflecting the value of carbon
both financial and economic
in its financing
decision-making requirements and processes.
Increasing transparency and accountability, advocacy and working with other
institutions, including MFIs, Banks and Financial Institutions (BFIs) (“mutual
reliance”), NGOs, the European Commission and the academic community on climate-
related matters: in particular adapting standards, polices and reporting to align with the
Paris Agreement, wherein it is agreed that “finance flows should be consistent with a
pathway towards low greenhouse gas emissions and climate-resilient
development”.
2.6
Transparency, governance and accountability
2.6.1 EIB Group Transparency Policy
On 6 March 2015, the EIB Group adopted a new
EIB Group Transparency Policy
1
following a
public consultation
2
process to which civil society organisations, EU and international
institutions, the private sector, consultants, academia and members of the public participated.
Compared to the previous one, the new policy brings improvements to its structure and clarity.
It has been further aligned with applicable EU legislation, as interpreted by the case law of the
Court of Justice of the European Union regarding transparency and access to information. As
with the previous EIB Transparency Policy, the new policy continues to apply the
1
2
http://www.eib.org/infocentre/publications/all/eib-group-transparency-policy.htm
http://www.eib.org/about/partners/cso/consultations/item/public-consultation-on-eibs-transparency-policy-2014.htm
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“presumption of disclosure” principle to all information held by the EIB, with well-defined
exceptions based on applicable EU legislation and case-law. The Bank publishes an annual
report on the implementation of its Transparency Policy.
2.6.2 International Aid Transparency Initiative ("IATI")
The EIB has continued to regularly publish data and information on its operations outside the
EU based on the IATI reporting standard. The EIB updates its IATI data on a monthly basis
and remains among the top publishers in terms of the frequency and timeliness of publication.
2.6.3 Transparency and monitoring of investment projects
Projects financed by the EIB are published on its website at least three weeks before they are
considered for approval by the EIB Board of Directors. On 2 January 2014, the EIB officially
launched its
Environmental Public Register of documents,
3
which has been established under
the EC Regulation 1367/2006 regarding public access to environmental information of
Community institutions and bodies. The Register contains key project-related environmental
and social information/documents held by the Bank such as the Environmental and Social Data
Sheets (ESDS) of all concerned projects approved since 2012, including those financed under
the ELM, and is continuously updated. All documents are linked with the corresponding
project summaries to put them into context.
The EIB monitors the projects it finances throughout their life cycle, with financial monitoring
from the loan signature through the project implementation and operation phase until the end
of the contractual relation with the project, i.e. final repayment. Physical monitoring of the
project continues after completion, to follow up on results and outcomes after one year and
then after three further years of operation. If deemed necessary, the physical monitoring can
continue for longer. When projects financed under the new ELM reach completion, the EIB is
preparing to make, where possible, relevant Project Completion Reports (PCRs) available to
the public, excluding confidential information. In addition, monitoring information provided
by project promoters is also being made publicly available when promoters agree. Finally, the
EIB has started publishing on the Public Register so-called Environmental and Social
Completion Sheets (ESCS) that provide the Bank’s assessment of project-related
environmental and social aspects at project completion stage for all the investment projects it
finances, including those financed under the ELM.
2.7
Compliance
Compliance is integral to the Bank’s professional and business approach. The independent EIB
Compliance function promotes high standards of integrity and ensures that they are applied to
all of the Bank’s activities, as outlined in their integrity
policy and compliance charter. The
Bank adheres to the Basel Committee on Banking Supervision’s definition of compliance risk
as “risk of legal or regulatory sanctions, material financial loss, or loss to reputation” to which
an EIB Group member may be exposed, arising from a failure to comply with applicable laws,
rules and regulations. Reputational and compliance risk as well as mitigation of such risk are
critical for the EIB.
3
http://www.eib.org/register
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The EIB Group is committed to high standards of anti-money laundering (AML) and
combating the financing of terrorism (CFT) in line with the principles and standards of
applicable EU legislation, best banking practices and applicable market standards including,
where relevant, other international financial institutions’ standards.
A comprehensive EIB Group AML-CFT Framework, approved on 15 July 2014 was revised
on 12 October 2016 and the updated version is published on the EIB website. It contains key
principles regulating AML-CFT and related integrity aspects in EIB Group activities and is in
line with the principles of relevant EU legislation as amended and supplemented from time to
time . The EIB Group AML-CFT Framework aims at preventing the EIB Group, its governing
bodies, staff and counterparties from being associated with or used for money laundering,
financing of terrorism or other criminal activities.
The EIB is committed that its policies and procedures avoid the misuse of EIB Group
operations for purposes of tax fraud, tax evasion, tax avoidance, aggressive tax planning and
harmful tax practices have to be updated to take account of best standards and practices as well
as the recent evolution of EU policies. Having regard to the above, the EIB has reviewed and
further enhanced its due diligence processes with the aim that the risk-based tax assessment
identifies potential tax avoidance schemes in line with the OECD Base Erosion and Profit
Shifting action plan (BEPS) and EU Anti-Tax Avoidance Package (ATAP). This addresses
considerations raised by EIB stakeholders, including the EIB Board of Directors, European
Commission, European Parliament and Civil Society Organisations. Further developments will
be needed to draw the consequences of the publication of the EU list of non-cooperative
jurisdictions for tax purposes once agreed by the Council.
In terms of monitoring, the Compliance function deals with the on-going monitoring of
compliance risk in operations/ business relationship to detect possible ML, FT or related
integrity risks throughout the life of the business relationship. In line with EIB Group AML-
CFT Framework and the applicable standards and principles of the 4th AML Directive, the
compliance monitoring plan includes on-going monitoring not only of counterparties with
which the EIB enters into business relationship, but also, where applicable, their beneficial
owners, key persons and shareholders. On-going monitoring activities also include sanctions
screening, monitoring of Politically Exposed Persons and alerts on adverse media, or
monitoring of transactions via Compliance clearance for certain types of payments.
In addition to Compliance of operations, the Compliance function also strongly supports a
corporate culture based on ethical values and professional conduct for its staff and governing
bodies.
3.
O
VERALL CONTRIBUTION TO
U
NION POLICY OBJECTIVES
The objective of EIB operations under the Mandate is to support relevant external policy
objectives of the Union. In particular, Decision 466/2014/EU maintains specific policy goals to
be addressed through EIB external operations in all regions covered by the Union budgetary
guarantee:
(i)
(ii)
local private sector development,
social and economic infrastructure development,
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(iii)
climate change mitigation and adaptation,
Additional underlying objectives include the contribution to the general principles guiding
Union external action, as referred to in Article 21 TEU and regional integration among partner
countries, including economic integration between pre-accession countries, neighbourhood
countries and the Union (Article 3(3) of Decision 466/2014/EU). The EIB is required to also
undertake financing operations in eligible countries within areas covered by the general
objectives by supporting foreign direct investments that promote economic integration with the
Union.
The ELM Mid-Term Review proposed to introduce a new general objective on migration into
theELM. The reporting on this new objective will take place once the corresponding
amendment has been adopted.
Chart 1: Contribution to Mandate objectives of EIB financing operations (all resources) on ELM
Regions (% and amount contribution)
60%
50%
% of total amount signed
40%
30%
20%
10%
500
0%
Local private sector
development
Econ & Social
Infrastructure
Climate Action
Regional
Integration
-
1.921
1.824
3.383
3.457
% of total amount signed
4.500
4.000
3.500
3.000
2.500
2.000
1.500
1.000
Amount contribution (EUR m)
Note: A single project may contribute to more than one Mandate objective. The objectives on Climate Change and Regional
Integration are cross cutting objectives applying to all projects and therefore cannot be added to the two others. Signature
volume for Local private sector development and Economic & Social infrastructure can be added to give total signatures
volume.
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Comment on chart 1: Of the total signed amount in the ELM regions in 2016, EUR 3.4 bn
(49%) will support local private sector development, principally through improving access to
finance for small and medium-sized enterprises (SMEs), microenterprises and mid-cap
companies (35 projects). EUR 3.4 bn (51%) will contribute to social and economic
infrastructure development (43 projects). All EIB operations outside the EU support one or
both of these objectives. As such the climate change mitigation and adaptation objective,
although a primary objective of the ELM, is tracked and reported as cross-cutting objective.
EUR 1.9 bn (28%) of lending signed in 2016 will support the cross-cutting objective of climate
change mitigation and adaptation. This support is spread over a large number of individual
projects this year (50), taking into account the contribution to this objective made by many
operations that are focused on multiple sectors (for example, credit lines where a small
proportion of lending is estimated to support investments in renewable energy or energy
efficiency measures by SMEs).
Similarly, EUR 1.8 bn (27%), will support the cross-cutting regional integration objective (21
projects), both through infrastructure development and through support of local private sector
access to finance.
3.1.
Local private sector development, in particular support to SMEs
3.1.1. EIB's SME support framework
The 2030 Development Agenda cannot be achieved without the growth of a vibrant private
sector to provide decent employment and incomes to the majority of people in our societies,
and to provide many of the basic services that we need. The private sector is also an essential
part of the partnerships that need to be fostered to make this vision a reality.
Yet people trying to establish and grow a business in emerging and developing countries face
many constraints, not least in terms of access to appropriate finance. The most severe
difficulties are faced by the poorest in society who often lack access to the most basic financial
services such as formal opportunities for saving, getting insurance or borrowing the financial
capital they need to establish, conduct and expand their business activities.
More established businesses also face constraints that inhibit investment and expansion and
put the jobs of their employees at risk. In these contexts, small and medium-sized enterprises
and even mid-cap companies face greater financing challenges than large firms and this
problem is greatly exacerbated in countries with an underdeveloped financial sector, where
banks themselves face enhanced funding constraints and find it hard to meet the financing
needs of most companies. Another gap is in the provision of risk-absorbing equity finance that
can be critical in achieving a breakthrough for companies with a high potential for growth and
job creation.
3.1.2. Local private sector development in 2016
Under the mandate objective of supporting local private sector development, outside the EU,
the EIB uses a number of different instruments. In 2016, the EIB provided EUR 3.5bn through
22 credit lines for local financial intermediaries to enable them to go further in addressing the
finance needs of small and medium-sized enterprises and mid-cap companies. There were also
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4 loans for private sector-implemented infrastructure and R&D projects that also contributed to
local private sector development. Among the new projects in 2016, there were no microfinance
or private equity projects in the regions covered by the ELM.
Chart 2: Contribution of new projects to local private sector development by type of operation
Number of new projects:
Lending volume:
196
4
Credit
lines for
SMEs and
mid-caps
Infrastruc
ture and
R&D
26
EUR 3 702m
22
3506
Note: Lending volumes are prorated by degree of contribution to the local private sector development objective. Many
operations also contribute to the cross-cutting climate and regional integration objectives.
Credit lines for private enterprise
Credit lines are an important instrument for strengthening the capacity of financial sectors in
developing and emerging countries to provide finance for local companies. It particularly
enhances access to longer-term funding for smaller businesses, helping to create and sustain
jobs. In underdeveloped financial systems, even medium-sized and mid-cap companies can
face financing constraints because of information asymmetries such as a lack of credit history.
The new credit lines for SMEs and mid-caps provided in 2016 will allow local intermediary
banks to make almost 9 600 loans, averaging around EUR 369 700 each. Of these, nearly 8
600 are expected to go to SMEs with an estimated average size of just 23 employees. This
funding will also enable local banks to extend the duration of the loans they offer to SMEs and
mid-caps, with the average loan tenor (weighted by loan size) expected to be 4.3 years, a
substantial increase on the loan durations typical for developing contexts. In fact, it is
estimated that the loan tenor provided will be on average 132% higher than the local market
norm, and will match the economic life of the SME investments financed in the great majority
of cases. In the end, it is expected that these 22 credit lines will help sustain some 544 700 jobs
in final beneficiary companies.
Credit lines are not just a means of extending credit, through intermediaries, to SMEs and mid-
caps; they also have more indirect impacts on access to finance by supporting the development
of local financial sectors that have to capacity to serve previously underserved sectors of the
economy. Six of the new credit lines in 2016 are rated “good” or “excellent” in terms of
support to banks operating in very shallow markets where credit to the private sector is less
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than 33% of GDP. Four provide support to second tier banks (smaller banks with a lower
credit rating than the leading banks in a country), helping to improve competition and client
services in local markets. Six have a specific focus on increasing access to finance for
underserved markets such as women or rural businesses.
Table 1: Supporting local private sector development
overview of key expected results
SME/mid-cap
credit lines
Expected outputs
Total loans (EUR m)
Total loans #
Average loan size (EUR)
Average loan tenor (years)
3 542
9 580
369 700
4.3
Expected outcomes
Jobs sustained (total)
In SMEs
In mid-caps
In other
544 700
198 600
343 900
2 200
Table 2: Credit lines for private enterprise
expected results by region and firm size
Expected outputs
Number of projects
Total loans (EURm)
Total loans #
Average loan size (EUR
‘000s)
Average loan tenor (years)
ALA
2
200
807
248
4.0
EAST
4
595
1 326
449
2.8
MED
5
867
798
1 086
4.6
PA
11
1 880
6 694
281
4.6
SMEs
-
2 478
8 558
290
4.1
Mid-caps Other
-
1 048
1 007
1 041
3.9
-
15
15
1 000
10.0
Infrastructure and R&D
Some EIB loans for larger industrial or infrastructure projects also support private sector
development through direct lending to private sector actors, or through intermediated lending
to companies for specific infrastructure improvements. Four such projects in 2016 include one
investing in grain transportation and storage in Ukraine and two projects focused on smaller
renewable energy projects in the Maldives and Turkey. Sector specific indicators for these
projects are reported in the following section. One new operation will fund research and
development by the ICL company, involving research collaboration spanning research sites in
Germany, the Netherlands and Israel, that is expected to achieve economic and environmental
improvements in the fertilizer industry. The project will create 1 480 person-years of
employment.
The results achieved:
The completed (fully allocated) credit lines include 4 in Turkey, 1 in Azerbaijan and 1 in
Brazil. In total, EUR 1.2bn was lent through 1 883 loans that went predominantly to small and
medium-sized enterprises. In total, these loans thereby supported companies employing 136
600 people. 59% of these jobs were actually in mid-caps which usually receive larger loans
and where each loan supports a larger number of employees. The average tenor of the loans
provided to final beneficiaries (weighted by loan size) was 5.1 years. This is considerably
higher than these companies are typically able to obtain in local markets. It is slightly longer
than the average tenor reported for completed credit lines last year, reflecting the fact that the
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credit lines completed this year are in emerging economies with relatively developed financial
sectors.
Table 3: Ex post results for six completed credit lines
Results achieved
Total loans (EURm)
Total loans #
Average loan size EUR ‘000s
Average investment size (EUR
‘000s
Average loan tenor (years)
Jobs sustained
All SMEs
478
876
546
974
4.4
56 283
Micro
54
139
386
314
5.6
476
Small
122
336
363
642
3.8
8 766
Medium
302
402
752
1 487
4.5
47 041
Mid-caps
247
130
1 900
5 220
5.3
80 319
All
1 203
1 883
639
1 522
5.1
136 602
These aggregate results are largely in line with expectations. The total number of jobs
sustained expected at appraisal was 156 000, a 12% difference. In terms of the targeting of
different sizes of firms, for one of the operations in particular there was a tendency to over-
estimate lending to smaller firms. Average tenor duration was slightly underestimated at
appraisal in many cases. This kind of data from actual loan allocations can be used to inform
future results estimations at appraisal.
Box 1: Completed project - Supporting rural SMEs in Armenia
The Armenian economy has seen strong growth and decline in poverty in recent years, but
there is a need to diversify the economy and strengthen the SME sector, particularly in
relatively underdeveloped rural areas. Yet SMEs suffer from limited access to finance,
reflecting they fact that local banks themselves do not have direct access to capital markets
and are largely reliant on short-term funding sources.
The Armenia Apex Loan, signed in 2014, has helped to address this situation, providing long-
term finance for local banks through the Central Bank of Armenia. This funding was fully
allocated by the end of 2016, reaching 113 companies employing a reported 6357 people (56
employees on average), and overwhelmingly in the agriculture, food processing and
accommodation and catering sectors. With an average maturity of over 5 years, the loans
provided are much more advantageous for financing productive investments than the terms
typically available for SMEs. It is estimated that these loans may help create just over 2 000
additional jobs.
To enhance the effectiveness of the project and increase the lasting benefits, the EIB was able
to mobilise EUR 500 000 from the Eastern Partnership Technical Assistance Trust Funds for
capacity-building. Local intermediary banks received training on how to develop products
that meet the needs of agricultural and tourism SMEs, how to assess environmental and
climate risks of agricultural investments, and on complying with EIB selection criteria.
Training on financial literacy was provided to final beneficiary SMEs.
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The Araks-2 cooperative employs around 24 people, utilising local milk production to
manufacture a range of cheeses. They used 5-year EIB-funded loans totalling EUR 95 000 to
acquire a new pasteurizer, casting forms and inputs, allowing them to step-up production.
Looking forward, they plan to invest to triple production capacity and expand the export
share of sales to at least 35%.
A loan of EUR 180 000 with a 7 year duration financed the renovation of Hotel Alpina in the
popular tourist town of Tsakhkadzor, and enabled the purchase of the hotel minibus. With 35
employees, the hotel has already achieved a 20% increase in the number of guests.
3.2.
Development of social and economic infrastructure
3.2.1. EIB's social and economic infrastructure framework
Developing the infrastructure needed to provide essential services and support economic
growth is a key pillar of the development process. Whether considering water and sanitation
systems, public transport and roads, energy systems or health care facilities, they are dealing
with vital building blocks of social, economic, and sustainable development. And because
infrastructure are often public goods with positive spill-overs for society, the environment and
the economy, public financing often has a vital role to play.
In 2016, the EIB invested a total approved amount of EUR 3.6bn in 33 new infrastructure
projects in the ELM regions. Transport projects were a particular focus with 12 projects
representing over EUR 2.1bn in lending, and expected to benefit around 1.2 million passengers
every day. But EIB projects also covered a wide range of sectors. Alongside energy
investments and projects in the water and sanitation sector, there are also significant
investments in mixed urban infrastructure, the renovation of education facilities, hospital
construction and other areas.
Chart 3: Contribution of new projects to strategic infrastructure objective by sector
Number of new projects:
Lending volume:
33
EUR 3 583m
Note: Lending volumes are prorated by degree of contribution to strategic infrastructure objective. Many operations also
contribute to the cross-cutting climate and regional integration objectives.
Direct employment impact
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In total, new infrastructure projects in 2016 are expected to create 143 000 person-years of
temporary employment during construction phases. The operation of the completed
infrastructure is expected to create the equivalent of 10 000 full-time jobs. The temporary
employment effect is largest in the transport and water sectors. The largest numbers of
permanent jobs associated with completed infrastructure are in the education and urban
development sectors which reflects the numbers of staff that will use new and renovated
facilities for education and other public services. Among other sectors, Transport has the most
notable direct permanent employment impact.
Table 4: Infrastructure projects - direct employment impact
Employment during construction
(person-years)
73 268
-
10 930
18 400
16 400
11 240
10 500
2 150
270
143 158
Employment during operation
(full-time equivalent)
1 630
-
85
1 700
5 670
0
40
887
0
10 012
Transport
Water and sanitation
Energy
Urban development
Education
Health
Waste management
Agriculture
Telecommunications
Total
N.b. Totals do not cover operations for which no figures could be estimated at appraisal.
Energy
With six new projects receiving EUR 493m in EIB lending, the energy sector is less of a focus
than last year. There are less large-scale energy generation projects and a larger focus on
smaller schemes involving generation from renewable sources of energy. In fact, the only
generation capacity from fossil fuels will be modern diesel generators installed in the Maldives
as a part of a new system involving solar-voltaic generation to replace older and less efficient,
purely diesel-based generation (Box 2). The largest energy generation projects are in Turkey:
the Fina Enerji wind power project (Box 3) and a credit line with Isbank that will target
specifically renewable energy and energy efficiency schemes expected to generate enough
energy to serve some 105 000 households. In total, new projects in 2016 will result in energy
generated for the equivalent of around 338 000 households.
Box 2: Reducing diesel dependence in the Maldives
Power generation represents a challenge for the Maldives, as an archipelago of 26 atolls. The
country has relied substantially on old and inefficient diesel generators. As recently as 2012,
oil imports made up 35% of GDP. A EUR 45m EIB loan is supporting a project to help
change this situation by installing at least 50 MW of solar-diesel hybrid energy systems, with
about 25 MW of roof-top and ground mounted solar PV panels and about 27 MW of more
efficient diesel generator capacity, as well as the rehabilitation of about 430 km of
distribution lines and the installation of lithium-ion batteries and control system equipment.
This will allow about 37 MW of obsolete diesel generator capacity to be retired.
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The project will supply enough energy to meet the needs of about 110 000 households and
will enable some 14 500 new connections to the network. It will save the country an
estimated EUR 13.6m a year in reduced fuel imports and will also have an impact in terms of
lower emissions of CO
2
and other pollutants. During operation, the project will result in
estimated GHG emissions of 76 kt CO2-eq/year. However relative to predicted emissions
without the project, it is expected to result in a reduction of 34 kt CO
2
-eq/year.
Box 3: Expanding wind power capacity in Turkey
Turkey is experiencing rapidly-growing demand for electricity and has excellent renewable
resource potential. Renewable energy sources only account for about 25% of total electricity
supply, 20% of which is hydropower. The government has set a target of increasing the
contribution of renewable to 30% by 2023. The EIB is contributing to this goal with a EUR
33m loan to Fina Enerji to construct three wind farms located in different regions of Turkey,
with a total capacity of 106 MW. The funding has allowed the project to go ahead more
quickly than would otherwise have been possible. It will produce enough electricity to supply
the equivalent of 123 000 households And, with zero estimated absolute emissions, is
expected toachieve an emissions reduction relative to the alternative power generation mix in
the country of 148 ktCO2-eq/year.
Energy networks are the main focus of two new projects in 2016. Together it is expected that
new projects will install 3 239km of power lines and connect 743 000 new customers to
electricity networks. One project expected to have impacts at a particularly large scale is the
Neoenergia Electricity Distribution 2 project which will connect 728 000 new households and
businesses in the State of Bahia in Brazil, including 68 337 in rural areas under the Luz para
todos programme. The bank is also financing the Ungheni-Chisinau Gas Pipeline which will
connect gas consumers in the Moldovan capital to gas supply from Romania, helping to
diversify and ensure security of supply.
Table 5: Addressing infrastructure needs
overview of key expected results
Expected outputs
Generation capacity
From renewables
Energy
New/upgraded substation
capacity
New/upgraded power lines
373 MW
346 MW
1 440 MVA
3 200 km
Expected outcomes
Annual electricity production
960 GWh
Households potentially served 338 000
Annual energy transported
New households connected
7 900 GWh
743 200
Additional vehicles benefiting,
41 100
per day
Transport
Length of road built/upgraded
863 lane
km
Time savings (hours/year)
7.9 million
Annual vehicle operating cost
EUR 4.5m
savings
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New/upgraded urban transport
route (bus/tram/metro)
59 km
Additional passengers
benefiting, per day
Passenger time savings
(hours/year)
Additional rail cargo carried
(tonnes/year)
1.2 million
New/upgraded urban stations or
34
stops
Vehicles or rolling stock
purchased
Railway track built or upgraded
New/upgraded railway stations
176
323 km
12
42 million
22 million
New/upgraded water mains/pipes 94 km
Water &
sanitation
and solid
waste
New/upgraded wastewater
treatment capacity (person-eq.)
1.9 million
Population benefiting from
improved sanitation services
1.5 million
New/upgraded sewer/storm pipes 563 km
New sanitary landfill capacity
(m
3
)
550 000 m
3
Population served by new
sanitary landfill
Additional cellular data users
469 000
Telecoms
Population covered by new 4G
network
Beds in new/rehabilitated
hospitals
67%
64 900
5 341
Patients treated per year in new
150 000
or rehabilitated hospitals
Health,
New places in new or
education
rehabilitated higher education
and urban
facilities
development
54 814
Additional students enrolled
37 054
Pop. benefitting from other
new/ upgraded urban
infrastructure
4.0 million
Transport
EIB lending to the transport sector outside the EU increased over the previous year in terms of
both the number of new projects and the volume of lending. Urban public transport and
railways accounted for around half of this lending by volume. Major projects include the first
metro line in the city of Lucknow, India (Box 4), a framework loan for urban public transport
investments in Ukraine, a further extension of the metro system in Istanbul, which builds on
previous EIB investments in that system, and additional rolling stock for the metro system in
Cairo. EIB lending will also support the upgrading of 323km of railway lines in Ukraine and
Moldova to allow for increased capacity and reduced travel times, and helping to prevent
increases in road traffic. Together, these metro and rail projects will benefit some 1.2 million
passengers every day, save 42 million hours of travel time every year, and enable 22 million
tons of cargo to be carried.
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New road sector projects include three projects to improve trade connections within and
between Georgia and Armenia along parts of the extended Trans-European Transport Network
(Box 12).The bank is also supporting road modernisation in Bosnia Herzegovina. One project
is notable for the significant impact it is expected to have on congestion in the city of Bizerte
in Tunisia. The two parts of the city, which straddles the mouth of Lake Bizerte, are currently
linked by a single lifting bridge. The project will construct a new bypass with a 2.1km long
bridge across the lake. It is expected to save 6.5 million hours of travel time and to be used by
26 000 vehicles per day.
Box 4: Transport-led sustainable development in Lucknow, India
Urban public transport is a key driver of environmentally sustainable social and economic
development. But when populations in cities grow too quickly, it can present a barrier to
mobility and significantly impact people’s quality of life by restricting access to public
services as well as safety due to overcrowding of the existing transport infrastructure.
In 2016, the EIB signed a new EUR 200m loan in India to finance the first metro line in
Lucknow, the more than three million-inhabitant
capital of India’s most populous state, Uttar
Pradesh. The project is the first phase of a two-phase plan to construct a 34km-long metro line
and the first step towards increasing the modal share of public transport within the city from
currently 10% to 27% by 2030. The current project will build the first 23km line which will
run from the airport in the south of the city, through dense residential areas, the city centre and
to the north, serving 22 stations along the route and serving 13 500 passengers per hour per
direction, or around 300 000 a day.
The project will form the backbone of the city’s mobility network
by providing public
transport that is reliable, safe, fast and affordable. The metro will also substantially improve
the urban environment by facilitating the densification of development, and additionally will
contribute to climate change mitigation through reductions in greenhouse gas emissions.
Water, sanitation and waste
There were two new water and sanitation projects in 2016, involving EUR 129m EIB lending,
and a further EUR 15m targeting solid waste management. Two wastewater treatment projects
in Panama and Tunisia will serve a total population of about 1.5 million, as well as
contributing to a reduction in pollution of the water of Panama bay and the Mediterranean sea
(Box 5). Another new project in the sector will support a number of water supply, wastewater
treatment and solid waste management schemes in the Kyrgyz Republic. Whilst most of these
schemes are still to be determined, it is expected that they will include the rehabilitation of
landfill sites, to allow nearly half a million people to be served by improved sanitary landfill
facilities. Another such framework loan will support schemes to improve solid waste
management in Morocco.
Box 2: Reducing pollution of the Mediterranean Sea
The overall objective of the DEPOLMED initiative in Tunisia is to combat the pollution of
the Mediterranean Sea, whilst bringing benefits to local communities. It involves a EUR
140m investment program aimed at rehabilitation and expansion of sewerage networks and
water treatment installations along the coastal zones of Tunisia. Working with the Agence
Française de Développement, the EIB is contributing EUR 70m. The initiative also benefits
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from a grant from the EU Neighbouring Investment Facility of EUR 10.4m.
By improving the environment, as well as the effectiveness of the public sanitation service
provided by ONAS, the programme aims at improving the living conditions of those living in
the coastal zones of the Mediterranean, both in Tunisia and beyond. The project is expected
to have positive impacts on all the sectors affected by pollution
especially fishery and
tourism
and will allow for the connection of 60 000 additional persons to the sewerage
network, while improving services for close to 1.2 million people who are already connected.
In addition, there will be a positive impact in terms of climate change mitigation as the
treatment of wastewater will result in a reduction in emissions of methane and will reduce
reliance on already stressed water resources.
Telecommunications
In Tunisia, the EIB is funding a major roll-out of the 3G and 4G networks. It is expected to
install 2520 3G sites and 1557 4G sites to benefit a large proportion of the population,
including an expected 1.2 million additional cellular data subscribers.
Health, education and urban development
Three new projects support urban reconstruction or development schemes that will cover a
range of different infrastructure sectors. Responding to the terrible earthquake that struck
western parts of Ecuador in April 2016, one EUR 159m project will finance the repair and re-
establishment of damaged infrastructure such as roads, water and electricity systems,
telecommunications and municipal buildings (Box 6). Similarly, EUR 100m will support the
repair of infrastructure damaged by recent floods in Tbilisi, the capital of Georgia. A third
project will provide support to local authorities throughout Georgia to upgrade local
infrastructure and improve service delivery for local residents.
Box 3: Rebuilding after the Earthquake in Ecuador
On the 16 April 2016, an earthquake struck that ravaged large parts of western Ecuador.
Widespread damage was caused across Manabi province, with buildings and infrastructure
collapsing. Almost 700 people died, more than 6 000 were injured and over 100 000 were
displaced. Livelihoods in these areas were severely affected with businesses having to close or
temporarily lay off workers. The tourism industry was also severely affected as many hotels
collapsed or were severely damaged.
Funds available for early reconstruction are very limited in Ecuador due to the country’s
economic problems. The EIB responded to the Ecuador government’s call for support with a
EUR 162m loan (actually provided in USD) that will cover 100% coverage of cost of eligible
sub-projects. These will reconstruct or upgrade basic infrastructure such as water and sewerage
systems, roads and social and administrative facilities, bringing benefits to an estimated 1.5
million people in the project areas. A grant from the EU Latin America Investment Facility
will be blended with the EIB loan to finance technical assistance to improve governance and
to develop the institutional and technical capacities of the local authorities with regard to the
design, procurement, implementation and monitoring of the projects. Throughout there will be
close co-operation with other key donors such as the WB, IDB and the UN.
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In the education sector, the Technical and Technological Institutes programme will build 13
new technical institutes in different regions of Ecuador, and will also remodel 8 existing
school campuses to equip them to deliver post-secondary technical training. In Ukraine, a
project will focus on renovating higher education facilities, both improving facilities for
students and significant energy efficiency improvements (Box 7). In the health sector, the bank
is supporting the construction of two new hospitals in Turkey.
Box 4:
Renovating Ukraine’s Universities
Ukraine has the highest per-capita energy consumption rate in Europe and part of the reason
lies in the low energy-efficiency of many buildings. At the same time, the country needs to
investment in education and skills to enhance economic competitiveness and long-term
economic prospects. The Ukraine Higher Education project will respond to both these
challenges, increasing energy efficiency through the refurbishment of teaching, research and
supporting facilities in several universities using the latest energy-saving technologies. The
intervention should help reduce running costs, improve the quality of teaching, and enhance
the quality of learning spaces and research facilities. It will help the universities to make
progress towards the standards of the European Higher Education Area and the European
Research Area, and thus replicates EU actions to increase investment in research and
education facilities to achieve the EU 2020 strategy objectives.
With a first phase targeting 147 buildings with a combined floor surface of 820 000m2
planned to be built or renovated. Works will create some 14 200 person-years of
employment. The EIB loan of EUR 120m represents almost three quarters of the total project
cost, providing financial resources for the project that would be difficult for the Ukrainian
authorities to raise on their own, given the difficult situation in the country. The project
benefited from a first grant from the Eastern Partnership Technical Assistance Trust Fund to
finance energy audits. It will also benefit from a grant from the Neighbourhood Investment
Facility (NIF) to provide technical assistance for further preparation and implementation
support.
Agriculture
Aside from one credit line which focuses on agriculture sector SMEs and mid-caps in Georgia,
the EIB is also supporting a project in Ukraine focused on upgrading possibilities for the
storage and transport of grain and oils seeds. This will include constructing storage elevators at
river terminals on the Dnipro river, the renovation of a shipyard and the construction of vessels
for river transport of agricultural produce. By encouraging a modal shift from road to river
transport, the project will support climate change mitigation, and by improving capacity to
cope with climate variability it will also contribute to adaptation to climate change
Completed infrastructure and industry projects
The three infrastructure projects completed under the ReM framework include the Ka Xu
concentrated solar power project in South Africa (Box 8) and the CA CCFL II solar
photovoltaic project in Honduras. The latter has successfully installed 81MW capacity, so far
producing 145GWh of electricity per year at a considerably lower cost than the alternative of
diesel-powered generation. The Armenia Water sector project focused on the repair of
essential water and sewage treatment systems in small towns around the country (Box 9).
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The two other ReM Framework projects competed in 2016, one is an upgrade to plastic
production facilities Petkim, chemical industry firm in Turkey, which has supported local
private sector development and jobs, including by increasing the domestic supply of inputs to
local downstream manufacturing industries. In line with the Pre-Accession Facility for Turkey,
the other project was also focuses on local private sector development, enabling the Arcelik
company to carry out research and development on more energy efficient home appliances
based on advanced materials, innovative technologies equipped with smart connectivity
features
Box 5: Completed project
– South Africa’s first concentrated solar power plant
With 360,000 parabolic trough mirrors and 2.5 hours storage capacity, the 100 MW Ka Xu
CSP power plant is the largest in the Southern hemisphere. It is already helping to address the
rapidly growing need for more clean energy in a country suffering from aging coal-fired
power stations and with a commitment to reduce carbon emissions. With production being
ramped up since early 2015, the plant had reached 100% of the eventual expected output by
the end of 2016, and will provide enough output to power at least 75 000 households.
Working through local banks, the EIB was able to provide not only long-term financial
resources, but local currency funding to reduce the risks for the project.
Box 6: Restoring water supplies in Armenia
With the fall
of communism, Armenia’s drinking water system fell into a state of disrepair and
has required considerable new investments. When the Armenia Water Sector project was
conceived, Armenians still typically only benefited from around 14 hours of water supply each
day, existing facilities risked spreading bacterial infections and sewage was routinely
discharged into lakes and rivers without treatment.
Against this background, the Armenia Water and Sewerage Company called for financial and
technical assistance
to improve the country’s water system and in 2012 the EIB approved EUR
6.5m loan for works which were completed in 2014, with co-funding from the EBRD and the
Neighbourhood Investment Facility. The programme of works covered the rehabilitation and
upgrading of the water supply, sewerage and wastewater treatment facilities in 17 small towns
around the country. This included the rehabilitation of the water distribution network, namely
the replacement of old pipes and installation of new pumping mains and distribution pipes; as
well as, the protection of spring sources with creation of sanitary zones, rehabilitation and
construction of boreholes, wells, pumping stations, reservoirs and chlorination facilities; and
finally, the construction of new waste water treatment plants and rehabilitation of existing
sewers in the towns of Dilijan and Jermuk.
3.3.
Climate change mitigation and adaptation
3.3.1. EIB's Climate action framework
The EIB supports the Union’s aim of promoting low-carbon
and climate-resilient growth
globally, engaging its technical expertise and financial strength to promote sustainable
development in line with its sustainability framework. It thus encourages low-carbon and
climate resilient growth in the EIB mandate regions as well as in all other geographic areas of
activity (not reported here).
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As both the cause and effects of climate change are global, extending and expanding climate
finance beyond the borders of the EU is a vital part of EU external and development policy. As
the bank of the
EU, and as the worlds’ largest single provider of climate finance in volume
terms, the EIB plays a central role in these efforts, particularly after the ground breaking global
agreement made in Paris in 2015 which came into force at the UNFCCC conference in
November 2016. The Bank already has a strong track record in mobilising financial resources,
which it offers to support countries both inside and outside the EU, supporting their Nationally
Determined Contributions, national mitigation and adaptation plans and strategies, and low
carbon energy and transport policies.
3.3.2. EIB's Climate action in 2016
Of the new project lending signed for the ELM regions in 2016, EUR 1.9bn will contribute to
the cross-cutting policy objective of climate change mitigation and adaptation. This will be
achieved through a large number of projects across almost all sectors. All of these projects also
contribute to either local private sector development or the development of social and
economic infrastructure.
In many cases, only part of a project contributes to the climate change objective and only a
proportion of that project’s lending total is therefore reported as contributing towards the
objective. Analysis of the results of past EIB projects has revealed that many projects make a
small contribution to action on climate change even if this is not the main objective of the
project. Such small contributions add up to make a significant difference. A typical example is
a credit line for SMEs in which some investment projects by beneficiary businesses involve
achieving greater energy efficiency in buildings or installing small-scale renewable energy
generation capacity, such as solar panels. Accordingly, some 50 of the new projects in 2016
contribute to the Climate Action objective. This includes 21 credit lines. The Bank applied in
2016 an estimate of 2% as the likely climate content that will be found in future allocations
under credit lines signed in 2016
4
.
Overall, by far the largest sector within Climate Action is from lower carbon transport,
accounting for 64%, with renewable energy and energy efficiency contributing a further 21%
of new non-EU climate action lending in 2016. Mitigation such as methane avoidance in waste
and wastewater sector also continues to play an important role, while adaptation contributed
3.5%.
4
The 2% is based on an ex-post analysis of earlier credit lines, namely of the activities financed at allocation level
(financial intermediaries’ on-lending
to final beneficiaries) under similar non-dedicated credit lines in
2013-2015 of all EIB operations (including EU and non EU).
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Chart 4: Climate Action in ELM region (EUR mn)
1,910
Box 10: Mainstreaming Climate Action: the ELM region portfolio carbon footprint
The EIB Carbon Footprint Exercise (CFE) estimates and reports Greenhouse Gas (GHG)
emissions from projects (not only climate action projects) where, in one standard year of
operations:
- absolute emissions (actual emissions from the project) exceed 100 000 t CO
2
-eq/year;
and/or
- relative emissions (estimated emissions increases or avoidance compared to the expected
alternative) exceed 20 000 t CO
2
-eq/year.
Absolute emissions refer to the direct emissions of the project itself (Scope 1 emissions) plus
emissions from generation of the power supply used by the project (Scope 2 emissions). Scope
3 emissions (other indirect emissions) are not normally included in project data; however, they
are included for physical infrastructure links such as roads, railways and metros. Relative
emissions are estimated by comparing the absolute emissions with the emissions from a
baseline identified as the expected alternative.
Whilst relative emissions are important for comparing technologies and projects, at the heart of
the EIB’s footprinting approach are the absolute emissions from each project, as these are what
will ultimately affect our climate. Individual project GHG data is assessed at appraisal, and
reported on the Bank’s Environmental and Social Data Sheets
(ESDS). For the purposes of
aggregated annual reporting, project emissions are prorated to the volume of EIB funding of
each project that year, thus avoiding possible double counting with the reporting of other IFIs.
In 2016, 17 of the projects in the ELM regions (including signed operations and large
allocations approved during the year) were included in the 2016 Carbon Footprint Exercise.
They represent total EIB signatures or allocation approvals of EUR 0.9bn. The related total
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absolute GHG emissions and sequestered GHGs are estimated as -0.2Mt CO
2
-eq/year (the
negative figure being due to a number of large forestry projects which will sequester CO
2
)
5
.
The related reduction in emissions due to the 2016 financing of the projects included in the
analysis is estimated at 0.6Mt CO
2
/year.
All climate action data and GHG figures will be subject to EIB's 2017 Sustainability Audit
(EIB Sustainability Report 2016).
Box 11: Mainstreaming Climate Action: Climate Risk Screening
In line with EIB’s commitment to the
European Parliament to systematically screen all new
ELM operations for climate change risk in order to address project vulnerabilities, the EIB has
continued to advance its work on Climate Risk Screening of ELM projects in 2016.
A triage of all 2016 ELM projects
was carried out by EIB’s Environment, Climate and Social
Office (ECSO). The projects are grouped into three categories enabling targeted action:
1. Low climate risk, plus Framework loans and credit lines
2. Projects under appraisal or within next 12 months: Medium- to high risk
3. Projects with expected appraisal 12 months or later
Firstly, projects considered low climate change risk, as well as intermediated loans where the
underlying subprojects are still unknown (e.g. credit lines and framework loans), are addressed
by researching and sharing country level information on climate change impacts. This
information is highlighted to the project teams for discussion with the promoters and clients:
plus larger subprojects under Framework loans are treated as stand-alone operations with
separate climate risk screening. Some low risk projects are also identified for further follow up
by project teams if they could have opportunities to benefit from climate change or to seize
low cost interventions to make projects more climate-resilient.
Secondly, the operations with potential medium and high climate risks are controlled for
whether a climate risk assessment has already been carried out by the promoter or another co-
financier, such as another MDB or IFI. Thirdly, the remaining projects identified as not yet
having a climate risk assessment, are grouped in two categories according to their expected
appraisal programme. Projects with an expected appraisal within the next twelve months are
screened with either
a commercial online climate screening tool, by EIB’s own experts, or by
external consultants. This is an amendment to EIB’s approach made during 2016. This new
approach enables an early dialogue on projects with expected medium- and high-risk
sensitivity to climate change, which may require changes to the project scope to address
identified climate change risks and vulnerabilities.
The results of the triage phase in 2016 are highlighted below. Out of the 133 ELM operations
created in the management information system:
1.
Framework Loans, Credit lines and low climate risk: 56 projects
country risk
information approach.
5
The overall aggregate figure of -0.2MtCO
2
-eq/year is derived from total emissions of 0.1MtCO
2
-eq/year and
sequestration of 0.3MtCO
2
-eq/year.
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2.
Medium- to high climate change risk: 43 projects
climate risk assessment by
promoter, other IFI or EIB team.
3.
Projects with expected appraisal 12 months or later and cancelled projects: 34
projects
for future follow up.
Project teams are being engaged and informed by the ECSO Climate team and specialised
consultants during and after this triage phase, with the aim to communicate potential climate
vulnerabilities of the projects and understand how these potential vulnerabilities are possibly
already being tackled, or could be tackled, by the promoter with the aim to ensure that the
residual risk is low.
Along with current manual screenings for climate risk, the EIB has advanced its work on
mainstreaming and integrating climate risk within internal procedures and management
information systems, building the foundation for a Bank wide climate risk management
system. The climate risk management system will cover not only ELM but the full EIB project
portfolio for climate risk: as set out in, EIB’s Climate Strategy, where the planned action is for
all EIB operations to be screened for climate risk by 2020.
3.4.
Regional integration among partner countries
3.4.1. EIB's Regional integration framework
Improving links amongst partner countries, and between partner countries and the Union, is a
cross-cutting
objective of the EIB’s action outside the Union. EIB projects can contribute to
regional integration by facilitating the physical movement of goods and labour, but also by
fostering international collaboration in the private sector, and supporting the convergence of
neighbouring countries’ economies towards the Union.
In that context, the EIB is to undertake financing operations in beneficiary countries that
support foreign direct investments from EU companies which promote economic integration
with the Union and technology and knowledge transfer.
As a horizontal priority, EIB support for regional integration often is realised through its
lending in support for other objectives such as infrastructure or private sector support. For
example, the EIB also promotes access to markets and development of value chains, including
operations specially focused on the EU’s Deep and Comprehensive Free Trade Agreement
("DCFTA") policy framework.
3.4.2. EIB's Regional integration action in 2016
The EIB signed 15 new projects in 2016 that contribute to regional integration. The total
approved EIB finance for these projects was EUR 1.6bn. These projects cover transport links,
support to convergence through local private sector development and an energy
interconnection.
Chart 5: Contribution of new projects to the regional integration objective, by sector
Number of new projects:
Lending volume:
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15
EUR 1 560m
Note: Lending volumes for multi-sector projects are prorated by sector where allocation by sector is defined at appraisal. The
regional integration objective is cross-cutting: all projects also contribute to the private sector development or social and
economic infrastructure objectives.
Credit lines and R&D
The majority of EIB lending for new regional integration projects in 2016, EUR 1bn is for
credit lines supporting access to long-term finance for SMEs and mid-caps, thereby aiding
economic convergence with the EU. Six of these are in Turkey and one is in Bosnia and
Herzegovina. A further credit line is targeting specifically SMEs in the agricultural and food
sector value chain in Georgia, and is here counted under agriculture. Together, these credit
lines are expected to enable financing for some 3 500 SMEs and mid-caps that employ some
280 000 people. One new operation will fund collaboration in research and development
between Germany, the Netherlands and the ICL company in Israel. The research is expected to
achieve economic and environmental improvements in the fertilizer industry. The project will
create 1 480 person-years of employment.
Transport, energy and agriculture
Four transport projects include rail modernisation projects in Ukraine and Moldova that will
expand capacity for passenger and cargo services and help to facilitate trade across the region
and with the EU. Two road projects developing the East-West Highway in Georgia and the
Armenia M6 Interstate road will be similarly important in linking the region to markets in
Europe and elsewhere (Box 12). In the energy sector, the Ungheni-Chisinau Gas Pipeline will
connect gas consumers in the Moldovan capital to gas supply from Romania, helping to
diversify and ensure security of supply. Finally, the Nibulon Cereal production and transport
project (here counted under agriculture) will not only support grain storage facilities but invest
in river transport infrastructure, improving links between the Ukrainian agricultural sector and
wider markets.
Box 12: Connecting Georgia and Armenia
Three inter-linked projects in Georgia and Armenia will upgrade strategic road links on the
extended Trans-European Transport Network (TEN-T), supporting the growth of trade and
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regional integration. One will develop the East-West Highway in Georgia, located along the
historic Silk Road that facilitated trade and cultural exchange between Europe and Asia. The
road corridor is also located on a modern-day Silk Road, the European Route E-60, the
second largest road corridor in Europe spanning from France to the Kyrgyz Republic, and an
important route for regional and international trade. Alongside the World Bank, the EIB is
financing a key section of the E-60 that currently presents a main bottleneck to trade. A loan
of nearly EUR 50 million will provide the needed finance to renew 24 structures, including
the bridges, tunnels and retaining walls. To support road safety, the design of the tunnels was
guided by the EC Tunnel Safety Directive and a road safety audit was undertaken that
follows the principles of the EU Road Safety Directive.
At the same time, the EIB is financing a programme of projects to construct and rehabilitate
around 250km of priority sections of Georgia’s road network to further enhance
connectivity. In addition, the bank is financing the rehabilitation of the M6 Interstate road in
Armenia which is also part of the extended TEN-T network. As the key transit road
connecting central Armenia to Georgia, it is also complementary to the projects in Georgia in
fostering trade links and regional interconnections. The East-West Highway and the M6
Interstate road projects together are expected to upgrade 236km of road lane, benefitting 10
325 vehicles a day.
3.5.
EIB additionality
The EIB is not expected to merely duplicate what the market is already able to provide. Its
interventions provide more support than just standard loans. For example, the EIB’s loans may
be of longer tenor than is usual in the market, or may be combined with technical advice where
project promoters lack of experience or institutional capacity. The EIB may also use higher
risk instruments. Furthermore, the EIB’s role goes beyond lending and includes the ability to
attract finance from other development institutions or private players, blending loans with
grants and providing advisory services.
The ReM framework measures that “additionality” (Pillar 3), the difference between the EIB
contribution to an investment project and standard market finance, in three dimensions: the
adequacy of financial resources for the needs of projects; the EIB’s technical contribution; and
the impact in terms of raising standards and facilitating contributions from other sources. The
overall EIB additionality is rated on a scale of 1-Low, 2-Moderate, 3-Significant and 4-High,
taking into account the three dimensions above.
Using a refined methodology in 2016, the overall EIB contribution to 7 of 54 projects in the
ELM regions have been rated as “4
-
high” and to 39 as “3
-
significant” (see Chart
6). The
overall ratings were highest on average in the Eastern Neighbourhood where the contribution
in terms of technical advice was particularly strong.
25
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Chart 6: Additionality (Pillar 3) ratings
new projects
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
7
0
11
25
13
4 - High
39
38
29
8
0
Pillar 3 rating
4
1
Financial
Contribution
12
0
Financial
Facilitation
Advice
3 - Significant
19
2 - Moderate
1 - Low
10
Note: Pillar three assesses the additionality of EIB involvement. The P3 rating aggregates the three sub-components: financial
Instrument, standards and assurance and technical and sector contribution.
Responding to financing needs
The Results Measurement Framework tracks the contribution made by the financial conditions
offered by the EIB. This includes blending with grants (subsidies), the provision of financing
in local currencies, and the length of the loan tenor period relative to the local market
alternative, and the economic life of the investment financed.
The tenor periods offered were rated very highly across financial instrument types, matching
the economic life of the investments financed in the great majority of cases. Relative to
alternatives in local markets, the extension of tenor was substantial for both infrastructure
projects and credit lines, particularly the former which typically involve very long-term
investment. Blending EIB loans with investment grants or interest rate subsidies is also an
important contribution. The EIB was able to provide such subsidies for 9 projects, nearly all
for infrastructure development, with 7 in the Eastern Neighbourhood.
Catalytic effect
The financial facilitation role of the EIB involvement in the ELM regions was rated on average
to be moderate to significant
– the EIB’s role in innovative financing and in helping to attract
private sector finance tends to be stronger in the ACP region were local financial markets are
often less well-developed. Nonetheless, 29 ELM projects were rated significant in terms of
attracting private sector finance, while 7 ELM projects were rated significant for innovative
financing, including for example the Ukraine DCFTA Support Facility which is the first EIB
trade finance facility in the Eastern Neighbourhood.
A good example of EIB’s role in raising standards is the Georgian Agri-food
Value Chains
credit line which will support SMEs in agriculture and food processing. EIB involvement is
ensuring higher standards both with regard to the eligibility of financial intermediaries and the
environmental and social screening of SMEs’ investment projects. A technical assistance
component is also likely to contribute significantly to the adaptation of EU standards in the
sector. Overall, EIB financing for new projects in 2016 will equal 42% of the total amount
invested in projects, a multiplier of 2.38.
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Providing advice
The EIB contributes technically to projects both in terms of advice on financial design and
structuring, and in terms of advice by EIB sector experts on elements of the projects
themselves. In many cases, additionally, a high technical contribution is achieved through a
specific grant-funded technical assistance component that EIB is able to help secure. In 2016,
the Eastern Neighbourhood benefitted particularly from both financial and technical advice. In
terms of instruments, the EIB technical contribution was higher for infrastructure projects than
credit lines.
Table 6: EIB Technical and Financial Contribution to the project
average values for
different instrument types
Loans for
infrastructure
Number of projects
EIB contribution - overall rating
Overall rating
(1)
Financial contribution
Subsidy (%)
Subsidy (rating)
Local currency funding (rating)
Extension of tenor (%)
Extension of tenor (rating)
Match with economic life (%)
Match with economic life (rating)
Overall rating
Innovative financing
Financial
facilitation
Attracting private sector financiers
Working with public sector partners
Raising standards
Overall rating
Advice
Financial advice & structuring
Technical contribution & advice
32
3.1
3.2
2.2
1.7
1.1
162
3.3
90
3.7
2.4
1.4
2.2
2.4
3.1
2.8
2.2
2.9
23.1
3.1
1.8
1.5
1.9
10.1
Credit lines for
SMEs and mid-
caps
22
2.9
3.0
0.2
1.1
1.1
133
3.5
95
3.9
2.5
1.5
2.5
Weighted average tenor provided (years)
EIB contribution ratings for individual projects: 4= high; 3 = significant; 2 = moderate; 1 = low. The above table shows simple
average ratings (or % values where appropriate) across projects. For rating indicators, shading is used for visual clarity only,
based on average rating groups ≤1.4 (palest); 1.5 –
2.4 (pale); 2.5
– 3.4 (dark); ≥3.5 (darkest).
Box 13: Technical assistance in action
Armenia M6 Interstate Road
The EIB mobilised a Technical Assistance grant from the
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Eastern Partnership Technical Assistance Trust Fund to fund the feasibility and design
studies, as well as the Environmental Impact Assessment.
DAMU Green loan for SMES and Mid-caps, Kazakhstan
The EIB will provide DAMU
with technical assistance for capacity-building, helping DAMU and the financial
intermediaries to implement the bank’s eligibility
criteria concerning climate
change/environmental protection measurement methodologies, as well as environmental,
social and procurement standards.
Bizerte Bridge, Tunisia
EIB advisory services supported project preparation and the
bank’s projects department
is providing technical support to implementation.
4.
A
CTUAL AND
E
XPECTED
R
ESULTS
F
RAMEWORK
(R
E
M)
OF
EIB
OPERATIONS
:
R
ESULTS
M
EASUREMENT
The ReM framework provides an assessment of the EIB financing operations throughout their
lifecycle. It helps to select sound projects which are in line with Union priorities based on
concrete results, and where the EIB involvement will add value. At appraisal, results indicators
are identified, with baselines and targets that capture expected economic, social, and
environmental outcomes of the operation. Performance against those benchmarks is monitored
throughout the project life and reported at two major milestones: For direct investments,
results are reported at project completion and again 3 years after completion. For intermediated
operations results are reported at the end of the allocation period (credit lines) or at the end of
the investment period (funds). Equity fund results are reported again at the end of life of the
fund.
To the extent possible, ReM indicators have been harmonised with those of other IFIs, EDFIs
and EU development agencies to simplify client reporting requirements for co-financed
operations. The EIB continues to be actively engaged in working with these partners to further
improve coordination and harmonisation of results indicators. Pillar ratings are based on a
four-point scale (4-excellent, 3-good, 2-acceptable, 1-marginal)
6
. At project appraisal stage,
clear, sector-specific, standardised and measurable indicators are identified and projects are
rated according to three ‘pillars’.
6
Pillar 3 ratings for additionality are slightly different: 4-high, 3-significant, 2-moderate, 1-low.
28
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Chart 7: ReM Framework
The “new projects” reported in the section on project results are
those for which the first
financing contract was signed in 2016. For each of these projects, the full approved financing
volume and the expected results associated with this expected lending are reported. This
covers both the amount “signed” in 2016 and
any approved balance planned to be signed under
future contracts.
To avoid double counting of project results, the results associated with follow-up contracts
signed under projects that have already been reported in previous reports (because earlier
financing contracts were signed under them in previous years) are not reported above.
However, for the sake of transparency, a break-down of 2016 lending volumes, including the
volume of such follow-up contracts, is given in Table 7.
This methodology is different from that used in the reports before 2014. For that reason
lending volumes and project counts may not always be strictly comparable.
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Table 7.1: 2016 lending volumes (EUR m)
New projects (first signed in 2016)
Funding
approved
ALA
EAST
MED
PA
South Africa
Local private sector
development
Development of
social and economic
infrastructure
Climate change
mitigation and
adaptation
Regional integration
Total
1188
2 026
1 396
2 674
3 702
3 583
Contracts
signed in
2016
943
1 616
1 336
1 933
2 829
2 999
Volume to
be signed
250
413
69
746
884
593
Older projects
Total
(first signed
contracts
before 2016)
signed in 2016
Contracts signed
in 2016
41
1
249
722
554
458
984
1 616
1 585
2 655
3 383
3 457
1 874
1 555
323
367
1 921
1 560
7 284
1 324
5 828
240
1 477
501
1 012
1 824
6 840
Table 7.2: Total investment cost for new projects first signed in 2016
Total Investment
Cost (in EUR m)
3,042
4,244
2,836
6,844
16,966
ALA
EAST
MED
PA
South Africa
Total
Under the ReM Framework, projects are rated at the time of Board approval according to three
pillars:
Pillar 1 checks eligibility under EIB mandates and rates the contribution to the EU and
country priorities.
Pillar 2 rates the quality and soundness of the operation, based on the expected results.
Pillar 3 rates expected EIB financial and non-financial additionality, beyond the market
alternative.
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Ratings are based on a series of objectively measureable indicators and guidelines, while a
process of quality control ensures that all ratings are checked for consistency across
operations.
Chart 8: ReM ratings by pillar for new operations signed in 2016
Pillar 1
In 2016, all new projects were rated at least “good” under Pillar 1, signifying that they are in
line with Mandate objectives and make a high contribution to either national development
objectives or those of the EU, and a moderate contribution to the other. 19 were rated
“excellent” for making a high contribution to both EU priorities and national development
objectives.
Pillar 2
The Pillar 2 rating is based on project soundness, financial and economic sustainability and
environmental and social sustainability in the case of directly financed projects. For
intermediated operations, the rating is based on the expected results, weighted by risk
considerations as measured by the soundness of the intermediary and the quality of the
operating environment. 50 projects were rated “good” under Pillar 2, with an average
economic rate of return (ERR) of 10% to 15% in the case of infrastructure projects. 4 projects
received an “acceptable” rating, often because of high risk
environments that impact on the
probability of achieving planned results. These include projects in Ukraine and Kyrgyz
Republic.
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Chart 9: Pillar 2 ratings by sector
Environmental and social impacts are also assessed under Pillar 2, for infrastructure and
industrial private sector projects. The rating is based on both the nature of the impacts and the
magnitude of risks. This thus includes an underlying assessment of the robustness of
arrangements to mitigate risks. Projects are rated on a scale of:
1. Marginal: Not Acceptable, for environmental and/or social reasons
not suitable for EIB
financing.
2. Acceptable: Acceptable with major negative residual environmental and/or social impacts.
3. Good: Acceptable with minor negative residual environmental and/or social impacts.
4. Excellent: Acceptable with positive or neutral residual environmental and/or social
impacts.
Chart 10: Average environmental and social ratings by sector
Ratings for the assessed projects in the ELM regions ranged from “2” (4 projects) to “3” (19
projects). Sector average ratings were similar across most sectors at around 3. The two hospital
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projects are notable for having only a “2 – Acceptable” rating link
to the fact that construction
is taking place on greenfield sites.
Pillar 3
ratings are presented in the chapter on additionality.
5.
COOPERATION WITH THE COMMISSION
5.1 The ELM mid-term review
Article 19 of the ELM Decision stipulates that by end 2016, the EC, in cooperation with the
EIB, shall submit to the EP and the Council a mid-term report evaluating implementation of
the ELM in the first years, accompanied, where appropriate, by a proposal for its amendment.
In early 2016, the Commission appointed an external consultant to carry out the evaluation.
The EIB was involved and invited by the Commission to participate as an observer to the
Steering Committee responsible for leading the evaluation. In addition, a broad range of
departments of the Bank were interviewed by and provided information to the consultants
throughout their information gathering and analysis. Further, as required by the ELM decision,
EIB provided the Commission with a detailed report on its own contribution to the ELM mid -
term review.
The next steps are working to review the guarantee agreement and if necessary the recovery
agreement, as well as update the Regional Technical Operational Guidelines (RTOGs).
5.2 The EIB implementing the EU Global Strategy and the New European consensus for
Development
5.2.1 The EIB and the EU global Strategy
The EU Global Strategy (EUGS), adopted in June 2016, provides a vision for Europe’s
engagement with the world. The EUGS explicitly recognises that the EU’s objectives beyond
its borders can be best met through enhanced coordination and joint action between
“the EU,
Member States and the EIB”.
5.2.2 The EIB implementing the New Consensus for Development
Following a public consultation, to which the EIB contributed, the Commission tabled a
proposal for a new European Consensus on Development on 22 November 2016. The new
Consensus seeks to incorporate and adapt to the 2030 Agenda and all 17 Sustainable
Development Goals (SDGs), balancing the economic, social, environmental dimensions of
sustainable development. It is structured around the five core themes of the 2030 Agenda:
People, Planet, Prosperity, Peace and Partnership.
The Commission proposal foresees that the new Consensus will provide the framework for a
common approach to development policy shared by and applied by the EU and its Member
States. Agenda 2030 will be implemented through shared analysis, common strategies, joint
programming, joint action and improved reporting to increase the credibility, effectiveness and
impact of EU and Member States development cooperation.
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The revision of EU development policy to incorporate the 2030 Agenda provides an
unprecedented opportunity for the EU to redefine how it works together, ensuring better
coordination of the full range of EU expertise and resources to the benefit of all countries. The
2030 Agenda is well aligned with the EIB mandate and core areas of activity. Indeed, as
outlined in the current report, EIB is actively contributing on a number of priorities identified
in the proposal for a new Consensus notably development and the SDGs, but also climate
action, migration and mobility, sustainable growth and jobs, trade and economic prosperity.
Pursuant to Article 209 (3) TFEU, the EIB has a Treaty-based obligation to support EU
development policy, rendering the Bank the natural partner of the EU institutions and EU
Member States in the delivery thereof. The new comprehensive approach is fully in line with
EIB’s core expertise and mandate, and the EU Bank will contribute, through its instruments
and products to the implementation of this renewed development policy. The objective is to
ensure coherence and complementarity at EU level, to allow for enhanced efficiency and
performance of EU funding.
5.3 EIB external offices and decentralised cooperation with EC and EEAS
5.3.1 External offices
Figure 1: EIB external offices in the regions covered by the ELM guarantee
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The EIB has several external offices in the regions covered by the ELM guarantee. This helps
to make the Bank more visible and more responsive at local level, enabling greater contact
with potential and existing borrowers, as well as with a broad range of public, local authority
and business stakeholders.
The EIB and EEAS have taken forward the principle of co-location of EIB offices within EU
Delegations. New EIB external offices have been located in Delegations. The office in Beijing,
previously opened, was formally inaugurated on 30 May 2016, during EIB President Werner
Hoyer’s official visit to China. The opening of their office in Beijing, which covers China and
Mongolia, is a reflection of EIB commitment to strengthen their presence in the two countries,
and the goal of the office is to promote the Bank’s mission and support its activities in line
with the objectives of the EIB Group.
In addition, in the first quarter of 2017, the office in New Delhi, India will be inaugurated.
5.3.2 Regional cooperation with EC and EEAS
The EIB continued to strengthen its coordination with DG NEAR, DG DEVCO and the EU
Delegations, as requested in the ELM mid-term review evaluation report. Joint EIB/EC
initiatives ensured greater visibility of EU support throughout the region and enhanced
cooperation along the EIB project and EC programming cycles. The inclusion of
communication components in the new delegation agreements signed between EIB and the EC
to implement programme such as the DCFTA East initiative in Ukraine, Moldova and Georgia
are facilitating much closer cooperation and coordination on communication and visibility
events and products.
These efforts were supported by the instigation of more systematic consultations between DG
NEAR, EEAS and the EIB on a regional basis. This includes regular meetings between the
Brussels office and officials in the EC and EEAS as well as more regular ad hoc meetings
between directors of the two institutions. Of particular
note is the organisation of “regional
days” where DG NEAR, line DGs and EEAS meet with EIB on a specific region. A one-and-
a-half day meeting focused on the Eastern Neighbourhood was held in Luxembourg in
September and the DG NEAR/EIB Regional Day Neighbourhood South was held in October.
The EIB also participated in the DG NEAR IFI Workshop in November 2016, and is actively
participating in the DG NEAR led initiative to boost activities in energy efficiency in all its
regions (Western Balkans, Eastern and Southern Neighbourhood). These Brussels and
Luxembourg meetings complement the regular EIB meeting and events with local EU
Delegations, like the DG NEAR / EIB Ukraine Day in Kiev.
5.4 Commission and EIB partnerships in the regions covered by the external lending
mandate
Cooperation between the Commission and the EIB is daily and pervasive throughout much of
the EIB activities. A substantial part of operational cooperation and coordination between the
Commission and the EIB, involving also other IFIs and European Bilateral Financing
Institutions, takes place within the various regional blending mechanisms set up by the
Commission including the Western Balkans Investment Framework ("WBIF"),
Neighbourhood Investment Facility, Asia Investment Facility ("AIF"), Latin America
Investment Facility and Investment Facility for Central Asia ("IFCA").
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The figure below presents the EIB lending outside the EU.
Figure 3: EIB financing outside the EU in 2016
5.4.1 Pre-accession countries
5.4.1.1 Turkey
EIB operations signed in 2016 and key realisation
Operating in Turkey since the 1960s, the EIB is the largest international financier in Turkey,
with current annual lending volumes of the order of +/-
EUR 2bn. Part of the EIB’s lending in
Turkey is backed by the guarantee provided by the EU under the External Lending Mandate.
Turkey continues to be the largest recipient country of EIB funds outside the Union.
2016 lending amounted to EUR 2.2bn, of which slightly above 10% was under the ELM.
Support for SMEs & Midcaps contributed most to EIB lending in Turkey in 2016 amounting
to EUR 1.6bn, which demonstrates EIB’s active support to the country’s main job providing
sector. In 2016, EIB continued to provide financing in support of essential infrastructure
sectors, including sustainable urban transport (EUR 250m), energy (EUR 230m), health (EUR
170m) and transport (EUR 70m). The Bank signed its first PPP operation in the health sector
in Turkey in 2016 to support the Gaziantep hospital campus near the Syrian Border (see Box
13).
EIB lending under the own risk Pre-Accession Facility increased strongly in 2016. This
development is to a large extent due to an increased volume of SME related lending to the
Turkish banking sector. Similar to 2015, 2016 was a strong year for disbursements to SMEs &
Midcaps by their financial intermediaries: about EUR 1.2bn were disbursed under SME&
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Midcap credit lines in favour of production expansion and modernization investment by
Turkish SMEs and Midcaps.
The EIB closely cooperates with the European Investment Fund (EIF) in Turkey. The EIF has
been active in Turkey since 2005, supporting private equity funds investing in Turkey and
providing guarantees and securitisation
for example through the management of the Greater
Anatolia Guarantee Facility. In 2016, EIF committed EUR 128m in equity and EUR 102m in
guarantee operations, which aim to mobilise EUR 2.2bn and EUR 174m respectively. In 2016,
the Turkish Growth Innovation Fund advised by the EIF completed its first three investments
and the
first guarantee transactions under the EU’s COSME and Erasmus+ Master Student
Loan Guarantee Facility in Turkey were signed.
Trends for 2017
In 2016, significant efforts were made to develop EIB lending prospects for 2017 and beyond,
particularly in large flagship infrastructure projects, many of which are projects of EU interest.
The Bank is currently appraising flagship energy projects in Turkey for gas storage and
pipeline infrastructure (TANAP) which aims to transport natural gas from Azerbaijan to
European markets. The Bank is also evaluating the opportunity to co-finance with the EC the
railway connection to the Bulgarian border, which would modernise and develop the railway
connection from Istanbul to the Bulgarian border and would complete the missing link
between Turkey’s rail and TEN-T
(Corridor IV). Once materialized, these financings will
significantly increase the share of the ELM backed financing in overall EIB lending operations
in the country.
For 2017, innovative financing will be a particular area of focus for the EIB. The EIB
financing to support innovative enterprises in Turkey will be combined with an EIF Guarantee
under the InnovFin programme and will be implemented in the context of EIB’s participation
to covered bond issues of their private banking partners.
Finally, the EIB Group is in close contact with Turkish authorities, the Commission and the
EU Delegation in Ankara, on defining the following operations contributing to the EU’s
Refugee Crisis agenda:
Financing of waste water and solid waste infrastructure investments of municipalities
along the Syrian border through the EIB’s banking intermediary in the municipal sector
(ILBANK) (cf. box below).
Support for Microenterprises and SMEs located in these cities, e.g. to expand
production capacity and create employment opportunities.
Inter-institutional cooperation
To date, EIB lending combined with the IPA funds made available for Turkey has significantly
contributed to strengthening the impact of the EU support. In the 2014-2020, IPA 2
programming period, the EIB is actively seeking to intensify further its cooperation with the
EU, particularly with the EU Delegation and local managing authorities in the environmental
sector and urban transport.
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After a long preparatory phase, the EIB helped to bring JASPERS to Turkey. Following the
first kick-off meeting in the fall of 2015 for the environmental sectors, experts have been
working with the Ministry of Environment and the EU Delegation (4 visits in 2016) on a
portfolio of 6 projects with the aim of speeding up absorption of some EUR 150 m IPA 2
funds in the water, wastewater and solid waste sectors. Discussions are ongoing to expand
JASPERS to the transport sector. The climate change (renewable and energy efficiency) is also
a potential field where EIB-EU blending mechanisms could be developed in Turkey.
Moreover, the EIF is working on designing and managing new financial instruments under
IPA 2, mostly in supporting equity investments for regional competitiveness, better access to
education and to inclusive finance as well as supporting agricultural investments.
In 2016, dedicated refugees facilities have gained momentum: the EIB Group had intensified
cooperation with the EC and the EUD in Ankara to manage grants from the EU Trust Fund
(EUTF or the MADAD Fund) and the Facility for Refugees in Turkey (FRiT).
Box 15: EIB’s response to the refugee crisis in Turkey
The EIB Group’s operational response to the Syrian refugee crisis in Turkey is composed of
two streams: (i) financing waste and water municipal infrastructure investments alongside the
Syrian border through EIB’s banking intermediary in the municipal sector, ILBANK. The EIB
will implement the Municipal Resilience Facility I (MRF I) under the EUTF whereby it will
manage EUR 70m grants for Technical Assistance (project preparation, supervision) and
investments (project implementation) to realise 8-10 projects located in Southern Eastern
provinces of Turkey, heavily affected by the Syrian Refugees influx. Similarly, the EIB will
implement the Municipal Resilience Facility II (MRF II of EUR 50m grants), scaling up MRF
I to a larger pipeline of water and wastewater and solid waste projects under FRiT. (ii) support
for Microenterprises and SMEs located in these cities. The EIB Group proposal -Greater
Anatolia Guarantee Facility for Resilience (GAGFR) - will support Micro-enterprises and
SMEs through EIB SME loans and EIF guarantees, and increase occupational and
entrepreneurship skills of the refugee community. EUR 25m grants are allocated for this
project to the EIF under FRiT.
5.4.1.2 Western Balkans
EIB Operations signed in 2016 and key realisation
The EIB is among the leading international financiers in the Western Balkans, having been
active in the region since 1977. In 2016, new signatures in the region amounted to EUR 427m,
bringing the total amount financed over the past 10 years to EUR 7.2bn. The 2016 split of
operations was at EUR 196m in Serbia, EUR 130m in Bosnia and Herzegovina, EUR 56m in
Montenegro and EUR 45m in the former Yugoslav Republic of Macedonia respectively. These
interventions support the EU’s objective of helping the countries on their paths towards
accession and rapid integration into the Union.
In 2016, the majority of the Bank’s activity focused on financing
the development of the
private sector. In Serbia, two loans totalling EUR 170m were signed to support small and
medium-sized enterprises (SMEs), midcaps and infrastructure schemes promoted by local
38
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authorities. In addition, a EUR 26m loan was signed for the modernization of judiciary
facilities in Belgrade and throughout the country.
In Bosnia and Herzegovina, three loans were signed for a total of EUR 65m in order to support
small and medium-sized projects promoted by SMEs, mid-caps and other private or public
sector entities. The Bank also signed two infrastructure loans totalling EUR 65m in the
country. This included a EUR 50m loan to modernize the national road network and a EUR
15m loan for the reconstruction of the Banja Luka clinical centre and the construction of a new
hospital in Bijeljina.
In Montenegro, a EUR 30m loan was signed to support small and medium-sized projects
promoted by SMEs, mid-caps and other private or public sector entities. In addition, a EUR
25.50m loan was signed for the rehabilitation and construction of water and waste water
infrastructure of municipalities. The project will help to bring Montenegro closer to the EU’s
environmental standards, improving environmental services, reducing public health risks and
enhancing the region's attractiveness for tourism, a valuable economic activity.
Lastly, in the former Yugoslav Republic of Macedonia, a EUR 35m loan was signed for the
construction of a new 28-km motorway section on the Pan-European Corridor X between
Demir-Kapija and Smokvica in the country. A further EUR 10m was signed for small and
medium-sized projects promoted by SMEs, mid-caps and other private or public sector
entities.
Trends for 2017
The Economic Resilience Initiative (ERI) will be a key priority for EIB financing in the
Western Balkans. This initiative aims to boast economic resilience in the Southern
Neighbourhood and the Western Balkans, also in the context of the migration challenge, by
upgrading and developing social and economic infrastructure and stimulating growth and job
creation. There will be a particular focus on developing the projects in the private sector (BB3)
to diversify the portfolio and have a bigger impact on the resilience of the target countries. In
the context of the Western Balkans, ERI projects will focus on the development of
Connectivity, small and medium-sized enterprises and social sectors respectively.
Inter-institutional cooperation
Since 2009, the EIB, the European Commission, KfW and the EBRD have been cooperating
under the Western Balkans Investment Framework (WBIF). This provides a joint grant facility
and a joint lending facility for priority investments in the region. The objective is to simplify
access to credit by pooling and coordinating different sources of finance and technical
assistance, with a focus on infrastructure sectors, including social infrastructure. In 2016, EUR
132.3m of assistance (investment grants, guarantees, technical assistance) was provided under
the WBIF. Of the EUR 132.3m total, the EIB was the lead IFI for EUR 53.2m of WBIF
assistance provided respectively.
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5.4.2 Mediterranean countries
EIB Operations signed in 2016 and key realisations
The Bank’s operational plan for the
Southern neighbourhood for 2016 remained focussed on
the ELM priorities including private sector development, social and economic infrastructure as
well as climate change. The EIB has delivered well on this plan, with close to EUR 1.6bn
signed for 16 new operations in the region. The year showed a market shift in focus, as 12
operations and two thirds of the lending volume was dedicated to the private sector, including
credit lines in support of SMEs in Egypt, Morocco and Tunisia. Indeed, the EIB is already
stepping up its lending and support to the private sector as part of its ERI commitment. The
Bank has also stepped up its direct support to the corporate sector with three operations located
in Tunisia and Israel.
Accounting for 7 projects and some 25% of total lending, the environmental sector was a key
focus in 2016. This included infrastructure projects such as the Cairo Metro phase 3 of line 3
and the expansion of rolling stock. The Depolmed project concerns the rehabilitation and
extension of waste water treatment plants and sewerage networks located in coastal areas of
Tunisia. The project is co-financed with AFD and benefits from a contribution of the NIF. The
investments will contribute to the preservation of the Tunisian littoral; improve living
conditions of the local population and reduce the pollution of the Mediterranean Sea. The
Bank has also reinforced its co-operation with its banking partners to cover the environmental
sector: (i) The FEMIP Sustainable Energy Facility (with BMCE and BCP) will finance energy
efficiency and small renewable energy investments in the private sector in Morocco; (ii)
BMCE Ligne Verte is a co-financing with FMO to finance projects by private promoters in the
waste management sector in Morocco. The GCT mise à niveau environmentale project
concerns the upgrading of Groupe Chimique Tunisien's production facilities aimed at
improving environmental protection in Skhira and M’Dhilla near Gabès.
Another focus of attention was the SME sector in Egypt, Tunisia and Morocco, representing
some 50% of total lending. Support to the corporate sector was also on the increase for 3
projects in Tunisia and Israel and close to 15% of the lending volume. They entail 2 operations
under InnovFin, the financing tools offered by the EIB Group covering the value chain of R&I
under Horizon 2020 also in Associated Countries. The 2016 InnovFin projects include the
financing of the R&D activities related to specialty chemicals of ICL in Israel and Tunisie
Telecom’s roll-out
of mobile 4G access networks to connect 1.1 m customers.
The largest recipient country of EIB lending in the region was in Egypt, with EUR 890m of
loans for SMEs and urban transport, energy and SMEs. Tunisia came second with EUR 408m.
During the Investment Conference Tunis 2020 in November 2016, the Bank underlined its
commitment to the democratic process in the country by signing 5 contracts including the
financing of Pont de Bizerte, one of the priority projects of the 2016-2020 Tunisian
Development Plan, as well as further financings in the field of energy, SME financing and
corporate lending.
In 2016, the Bank signed two NIF contributions in Jordan, NEPCO Green Corridor and Wadi
Al Arab, with a total amount of around EUR 31 Mio. This contributed to a new record high
volume for NIF grant funding entrusted to EIB in the neighbourhood regions (East and South)
in one year. The type of support awarded by NIF in the Southern Neighbourhood focused on
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Investment Grants (around EUR 28m) accompanied in one project - NEPCO - by a Technical
Assistance (EUR 2,7m).
The general objective of the NEPCO project is to strengthen the Jordanian high voltage
electricity transmission backbone, enabling the connection of large amounts of new renewable
generation to the network, and transmit electricity from central desert areas to Amman, where
generation is fossil-fuel based. The Project thereby contributes to carbon dioxide emission
reduction. The Wadi Al Arab project will cover a pressing need in the northern governorates of
Jordan and forms part of the National Water Strategy aimed at optimizing water distribution
across the country. It consists of a new water intake facility from the King Abdullah Canal, a
treatment plant, pumping facilities and a transmission pipeline to the Zabda Reservoir on the
western side of the City of Irbid. The system will provide an additional 30 million cubic
metres per year to the Irbid Governorate.
Cooperation with others
Finally, throughout the year, the EIB continued and/or renewed its collaboration with other
IFIs / BFIs including AFD, EBRD and KfW active in the region in terms of the co-financings
of the above described projects. Work with other institutional partners in particular the Union
for the Mediterranean continued throughout the year. Some of the UfM led initiatives to which
EIB contributed in 2016 include the third Union for the Mediterranean Ministerial Conference
on Employment and Labour in September in Jordan and the 2nd UfM Regional Conference of
Governance & Financing for the Mediterranean Water Sector in Tunis in December 2016.
Finally, in July 2016, the Bank organised, together with EBRD and WB, the first presentation
of “What’s Holding Back the Private Sector in MENA? Lessons from the Enterprise Survey“.
The formal private sector in the Middle East and North Africa economies needs to play a
critical role for the overall economic transformation of the region.
Trends for 2017
In 2017, the lending activity of EIB in the Southern Neighbourhood will be enhanced in the
context of the weak economic outlook for the region and the refugee crisis, which have lead
the European Council to invite the EIB to step up its lending to the region and to endorse the
Bank’s proposed Economic Resilience Initiative covering the Southern Neighbourhood and
Western Balkans. The full implementation of the ERI will not only lead to a volume increase
of some 50-60% in the years ahead compared to recent results, but will also impact the project
mix.
In this context, the Bank expects to continue its increased focus on private sector development,
with a further strengthening of its SME support as well as a continued effort to expand
corporate lending. The other main focus will be on the reinforcement of the enabling
environment to stimulate growth by continued support for investments in transport, energy
(including renewables and energy efficiency) and the environment. Within the transport sector,
the Bank is increasingly focusing on urban transport which is a major challenge throughout the
region characterised by rapidly increasing urbanisation. The Bank has also reinforced its
pipeline of wastewater projects, as the Mediterranean Sea remains under severe pressure from
pollution. Finally, the Bank also expects to finalise one to two education infrastructure
projects, thereby strengthening human capital potential in the region.
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5.4.3 Eastern Europe, Southern Caucasus and Russia
EIB Operations signed in 2016 and key realisation
EIB lending volumes in the Eastern Neighbourhood continued to increase and the Bank
became one of the main financiers in the region. 2016 lending amounted to EUR 1.6 bn, which
is the highest amount ever extended by the EIB in the Eastern Partnership countries, of which
100% was under the ELM. Support to transport infrastructure represented EUR 750m,
demonstrating
the EIB’s active role to support transport connectivity in the region as well as
sustainable transport. EIB financing in 2016 also supported other crucial sectors, such as local
private sector development, as well as energy, municipal and social infrastructure.
A further important achievement in 2016 was that 41% of signatures supported climate action.
The main contributors to this target were operations in sustainable transport and energy
efficiency with the remainder coming from credit lines. This reflects the potential to reduce the
energy intensity of economies in the region and the role which EIB plays by stepping up its
financing and advisory support in that field. As a flagship project, EIB is supporting energy
efficiency with a EUR 120m loan, to refurbish teaching, research and supporting facilities at
several universities across Ukraine.
Similarly, EIB financing targeted energy interconnections to help partner countries to reduce
energy dependency and to bolster their resilience. This included a EUR 41m loan to finance
the Ungheni-Chisinau gas pipeline between Moldova and Romania.
The Bank has continued to support local private sector, both through intermediated lending
and direct loans. Loans for SMEs and Mid-Caps
accounted for 26% of the EIB’s lending
in the
region in 2016. In this context, the EIB signed a programme to support the development of
domestic agro industries in Georgia based on the value chain concept. The EIB is also
supporting larger agricultural companies with direct investment loans. In 2016, the EIB agreed
to provide EUR 71m to finance the investment plan of Nibulon, a major privately owned
Ukrainian grain producer and exporter. The EIB and EC signed a Delegation Agreement under
the “DCFTA Initiative East”, funded by the Neighbourhood
Investment Facility (NIF): this
initiative will provide targeted financial and technical support in the countries that signed the
Association Agreement with the EU, in order to facilitate wider access to finance for SMEs.
The EIB group deployed the “Innovfin – EU Finance for Innovators” programme in associated
countries in the region under the Horizon 2020 (Armenia, Georgia, Moldova, Ukraine)
providing a series of integrated and complementary financing tools and advisory services
offered by the EIB Group, targeting investments in research and innovation.
Lending to Ukraine continued to be a dominant feature of EIB activities in the region in the
context of the EU support package for Ukraine. The EIB fully delivered on its commitment:
over the period 2014-2016, the EIB group signed 15 transactions totalling more than EUR 3 bn
targeting a wide range of sectors and provided substantial advisory support alongside its
financing. In order to implement the package of loan operations in the difficult environment
prevailing in Ukraine, EIB, closely collaborating with the Ukrainian authorities, set up a
dedicated Task Force, including additional expert staff in the Kiev Representative office, to
deliver a targeted approach to ensure accelerated project preparation and implementation of
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investments. The EIB also delivered in 2016 a record level of financing for projects in
Georgia.
In 2016, three NIF contributions for a total amount of around EUR 74m were contracted in the
Eastern Neighbourhood, one in Georgia (Kutaisi Wastewater Project), one in Ukraine (Ukraine
Railway Modernisation) and one regional programme (the aforementioned “DCFTA Initiative
East”). Since the NIF is not only a mechanism for allocation of funding but also for
cooperation with other IFIs, this record high volume for NIF grant funding underlines the
growing importance of good cooperation with the Commission and partner institutions. The
traditional focus in terms of number of projects supported continues to be on Investment
Grants and Technical Assistance. The large increase in the volume of contracted funding,
however, is due to the one regional programme of high political relevance which includes two
Financial Instruments.
The objective of the Kutaisi Wastewater Project in Georgia is to address environmental
problems by improving and extending the wastewater collection system and by construction of
a mechanical-biological wastewater treatment plant with nutrient removal. The Ukraine
Railway Modernisation Project targets the electrification, along with the modernisation of
signalling and telecommunication systems.
Trends for 2017
In 2017, the EIB will continue supporting investments in the region aligned with key priority
areas established between the EU and Eastern Partnership countries. Also, implementation of
loan operations and instruments committed recently will deliver tangible results for citizens.
Belarus became an eligible country under the ELM by a Delegated Decision of the European
Commission which came into force on 26 September 2016. Following the signature of a
framework agreement between the Republic of Belarus and the EIB, expected in 2017, the
Bank will consider providing financing to support investment priorities in the country.
As of end 2016, as a result of the stepped up effort pledged by the EU regarding EIB lending
support to Ukraine, the utilisation rate under the ELM for the region Eastern Europe, Southern
Caucasus and Russia is high. Pending the outcomes of the ELM mid-term review, the lending
activity of the EIB in the region must be expected to be sharply reduced. The fragile economic
situation of several countries in the region as well as their enhanced economic and political
relationships with the EU call for continued support by the EU bank in the region, in particular
against the background of weaker international financial support.
5.4.4 Asia and Latin America
5.4.4.1 Asia
EIB Operations signed in 2016 and key realisation
The ELM 2014-2020 has been and is expected to remain one of the core facilities under which
the Bank carries out its lending activities in Asia, alongside the Bank’s own-risk
facility. In
line with the ELM objectives and in view of the very limited resources available under the
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ELM for Asia, the EIB has deliberately acted in this region as a niche player focused on
climate action projects. However, a significant lending capacity with own-risk-facility has
positioned the EIB as the key EU actor and will support EU visibility. Moreover, promoters
have great interest in collaborating with EIB as they are both interested in the European know-
how and experience in climate related issues. Supporting renewable energy, urban public
transport and energy efficiency in those countries, in addition supporting EU economic
diplomacy, will help showcase EU values and cooperation. Incidentally, several main players
in climate action projects are EU companies and these operations support EU exports.
In Asia, Bank lending supported a broad range of projects including projects contributing to
climate change mitigation, renewable energy and energy efficiency, water and wastewater and
support to SMEs. Overall during 2014(H2)-2016, 83% of EIB financing in Asia was classified
as climate action (mitigation and adaptation). Two new operations were signed in 2016, for a
total amount of EUR 245m (of which EUR 200m under own-risk-facility and EUR 45m under
ELM). The Bank also appraised, approved and negotiated 4 new operations (EUR 570m, of
which EUR 450m under own-risk-facility and EUR 120m under ELM), but the signatures
were postponed to 2017. In addition, major progress was made in allocating funds under the
existing Framework Loans (FLs) in China and India, with 37 operations (for a total amount of
EUR 300m, all under own risk facility) approved, boding well also for future disbursements.
The EIB also developed a strong pipeline of climate action projects in Asia, demonstrating that
the Bank contributes to the EU global leadership in promoting low-carbon and resilient growth
in the region.
A MoU was signed with China in Beijing (May 2016) by Vice President Jonathan Taylor and
Vice Minister Shi Yaobin (Chinese Ministry of Finance), in the presence of President Hoyer
and Minister Lou Jiwei; the document lays the foundation for further development of the EIB’s
activities in China, both in terms of lending and knowledge exchange with their Chinese
counterparts; the MoU focuses on enhancing cooperation in the area of climate action, and
indicates the Bank's potential investments in 2017-2019 in the country, in particular envisaging
EIB support to projects that contribute to climate-friendly, green sustainable development and
environmental protection and in China.
Trends for 2017
The potential for investment in Climate Action in those countries is huge, as it is a national
priority for China, India and other countries. Asia generates some 40% of the global emissions
and consumes nearly 70% of the world’s coal, and that number has been growing rapidly as
countries in the region industrialise. Asia’s commitment to do more toward the 2 degrees
global climate goal would require an additional USD 300bn pa on clean power-supply
technology and infrastructure such as renewable power, carbon capture and storage, smart
grids, and energy storage. Economies in developing Asia are already advancing technologies
to reduce greenhouse gas emissions, accounting for over 35% of world exports of clean
technology.
In 2017, the Bank will provide financing for climate-related projects to help turn the ambitious
Paris agreement into reality and contribute to climate action operations which are to account
for some 35% of Bank lending outside the EU by 2020. The ELM will be used in less
developed countries to ensure the achievement of its high level objectives and other related
Bank strategic objectives. However, the amount available under the current ELM 2014-2020 is
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very limited (EUR 87m per year for the remaining period), which will constrain the Bank’s
lending operations and lead to visibility deficit in Asia, unless the current ELM mid-term
Review increase the regional ceiling. In addition, the Bank will use the own risk facility in
developing countries such as China and India to complement the amounts available under the
ELM.
Signatures in China and India could cover more than two-thirds of the total signatures (under
the own risk facility), the balance includes operations in Bangladesh, Sri Lanka and Vietnam
(under the ELM). In China, EIB financing will support energy efficiency, green transport and
sustainable forestry projects. In India, the Bank will finance urban transport, renewable energy
as well as small and medium- sized projects that contribute to climate change mitigation and
adaptation. The Bank will also finance climate resilient roads in Laos, environmental water
and sanitation projects in Bangladesh and Sri Lanka, and low-carbon transport projects in
Pakistan and Vietnam.
5.4.4.2 Central Asia
EIB Operations signed in 2016 and key realisation
In 2016 the EIB has signed one sovereign operation with Kyrgyzstan -
the “Kyrgyz Water &
Waste Framework Loan” - for a total of EUR 20m. The EIB loan forms part of a larger
blending package, which includes IFCA funds and EBRD loans.
With the aforementioned signing the remaining funds in the envelope which is earmarked for
Central Asia under the ELM 2014-2020 (EUR 182m) stand at EUR 22m. This amount should
be absorbed by a new sovereign operation with Kyrgyzstan, the “Kyrgyz Agriculture and
Value Chain” expected to be signed early 2017.
With the current signing of the “Kyrgyz Agriculture and Value Chain”, all the
funds reserved
for Central Asia under the ELM will be utilised for EIB operations in Kyrgyzstan (EUR 112m)
and Tajikistan (EUR 70m). In this regard, it is to be underlined that EIB operations in
Kazakhstan are funded exclusively through the EIB’s Own Risk “Climate Change and
Environmental Facility” (“CAEF”).
In 2016, under CAEF, the Bank has signed two operations with DAMU, the state agency for
the development of the SMEs in the country, for a total of EUR 200 m.
Trends for 2017
The Bank may, in close cooperation with the EBRD, finance a new sovereign operation with
Tajikistan for the “Rehabilitation of the Kairakkum Hydro Power Plant” subject to an increase
of the regional ceiling for Central Asia in the context of the mid-term review of the ELM
2014-2020.
For Kazakhstan, the EIB will consider infrastructure operations in renewable energy (mainly
windfarms), railways and energy efficiency under the Own Risk CAEF.
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5.4.4.3 Latin America
EIB Operations signed in 2016 and key realisation
During 2016, five operations were signed in Latin America, for a total amount of EUR 519m.
These five included four operations with the public sector (61% of the total amount) and one
operation with the private sector, the latter having been structured under an EIB own risk
facility (i.e., not under the ELM). These operations covered a wide variety of sectors: energy,
water and sewerage, transport, small local infrastructure and, for the first time, education in the
region.
Following the earthquake in Ecuador, the EIB worked on several initiatives in close
cooperation with EEAS and the EC. The Bank structured a loan (USD 175 m) that will support
the integrated rehabilitation and reconstruction of the area of Portoviejo, one of the most
affected by the natural disaster. This will include several sectors such as social and economic
infrastructure and reestablishment of livelihoods. Also, the Bank worked on additional actions
linked to previously appraised operations to both redirect the scope of the latter and to help
absorb EC funds in the affected regions.
In line with the guidance received from the EC and EEAS, the Bank stepped up its activities in
Argentina, which already led to the approval by the EIB’s Board of Director of the first EIB
operation with
Argentina’s public sector in two decades.
In 2016, two EIB operations benefitted from LAIF support:
A EUR 7 m grant was approved for technical assistance for the EIB loan for the
reconstruction of the area of Portoviejo to ensure and effective and transparent implementation
of the project, to support local final beneficiaries, implement and environmental and social
management plan, and to strengthen stakeholders’ participation.
A EUR 11.3 m grant was approved for the financing of a Technical and technological
Institute in Portoviejo. The economic benefit of the EU contribution derives from its
acceleration effect: The construction works will provide employment and income for the local
labour market during this time of the severe post-quake hardship. Downstream, the
employability skills which the training and apprenticeship programmes are designed to impart
to the graduates will help to reinvigorate the local labour market.
Trends for 2017
In 2017, the Bank will aim at stepping up its lending activities in the region, to enhance its
support to EU policies throughout the region, taking into account the country priorities
conveyed by EEAS, and to contribute to the Bank’s commitment to increase the share of
Climate Action projects. In this context, the Bank aims at resuming its lending operations in
Argentina, where several investment projects have been identified and appraised. Regarding
Colombia, the Bank is firmly committed to support the EU initiatives in the country, especially
in supporting rural development. The EIB is appraising operations that would complement the
EU Trust Fund and could be blended with these budgetary resources to achieve higher impact.
In the other Latin American countries, the Bank will support projects with a significant
positive contribution to the SDGs, with a particular focus on Climate Change mitigation and
adaptation.
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5.4.5 Republic of South Africa
EIB Operations and trends for 2017
Although it is located in sub-Saharan Africa and it undersigned the Cotonou Agreement
political principles, for lending operations the Republic of South Africa is treated under a
specific South African ELM, created following the end of the apartheid regime in 1994. In line
with the ELM priorities, the Bank’s focus in South Africa is therefore
on private sector
development, especially for the benefit of small and medium-sized businesses, vital social and
economic infrastructure, and climate change mitigation and adaptation. Additional priorities
for South Africa at an EU level include competitiveness and innovation.
In 2015 a EUR 200m South Africa Private Sector facility was approved, open to four leading
South African financial intermediaries, to provide financing to private sector projects, in
particular SMEs, in line with the overriding objective of the ELM and the development
priorities of the government of South Africa. So far an amount of EUR 150m has been signed,
while the remaining EUR 50m is expected to be signed in 2017. The provision of long term
funding to small businesses in South Africa is a challenge not unique to South Africa only.
The above mentioned facility is designed to help alleviate this problem. It has a particular
focus on young people, women and non-white entrepreneurs on the part of at least one of the
institutions; it is also expected that some 50% of the total will be taken in local currency (EIB
disposes of its own ZAR funding).
Next to supporting small and medium sized companies via financial institutions in South
Africa, the EIB envisages a catalytic role in larger infrastructure projects, particularly at the
Municipal level. The Bank is also continuing its involvement with initiatives to drive the
climate action agenda which, amongst others, include the expansion and upgrade water
supplies in poorer regions. Further loans for such projects should be appraised in the course of
2017. The Bank has a track record of investing in renewable energy in South Africa, such as
the Khi Solar One and Ka Xu Concentrated Solar Power facilities. All of these are located in
the Northern Cape region.
The EIB will also continue to work together with the EU under the Infrastructure Investment
Programme for South Africa (IIPSA), a EUR 100m grant programme, which aims at
supporting the preparation and implementation of infrastructure projects having a significant
development impact. The programme continues to play a key role as a blending instrument for
the Bank and EDFI partners who are able to commit their own loan instruments to the EU
grants made available for infrastructure investments.
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1835455_0049.png
Table 8.1
EU Budget Resources complementing EIB loans in 2016 (Blending) (EUR m)
2014 (from
July)
Regional blending mechanisms (TA, grants
approved)
Western Balkans Investment Framework
(WBIF)*
Neighbourhood Investment Facility
(NIF)
Investment Facility for Central Asia
(IFCA)
Latin America Investment Facility
(LAIF)
Asia Investment Facility (AIF)
Other TA and grants complementing EIB
projects
SME Finance Facility (SME FF)
FEMIP Support Fund (excl. Turkey) **
Support to FEMIP envelope (2007-2013)
FEMIP Trust Fund*
Eastern Partnership Technical Assistance
Trust Fund (EPTATF)
Eastern Europe Energy Efficiency and
Environment Partnership (E5P)
Risk Capital signatures
MEDA / ENPI Risk Capital
FEMIP Trust Fund*
Impact Financing Envelope of FEMIP
Trust Fund
Global Energy Efficiency and
Renewable Energy Fund*
TOTAL
* includes other sources of funding than EU budget
** negative value corresponds to de-commitment
2015
2016
4.42
132.70
-
-
5.00
62.00
108.05
2.00
10.00
0.00
53.21
39.0
-
18.35
-
0.60
0.27
2.67
0.99
0.99
-
-
-
-
-
1.64
5.32
18.4
4.00
1.00
-
-
151.65
2.00
12.00
-
-
-
-
-
41.4
177.32
197.04
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1835455_0050.png
Table 8.2
List of EIB-managed Union Budget-funded operations (TA, Grants, Equity) signed or approved in 2016
Contract Name
Instruments
Target countries
2016
(EUR m)
Western Balkans Investment Framework (WBIF) (approved)
(EC contrib. - approved)
Infrastructure Project Facility (IPF 6)
TA
Corridor Vc* "Construction of Motorway section "Svilaj -
Od:Zak"including the construction of the border crossing TA (3.42) /
area and cross-border bridge· in Svilaj over the river
IG (21.67)
Sava on the northern border with Croatia”
EPEC 2 - TA for Strengthening Capacity in Western
TA
Balkans
Total
Neighbourhood Investment Facility (NIF) (approved)
TA 4.0, FI
Regional Trade & Competitiveness Morocco & Tunisia
25.0
Ukraine Higher Education
Ukraine Railway Modernization
TA
TA
Regional
Bosnia and
Herzegovina
Regional
26.12
25.09
2
53.21
Morocco & Tunisia
Ukraine
Ukraine
29.0
3.0
7.0
39.0
6.4
2
10
18.4
Total
Eastern Europe Energy Efficiency and Environment Partnership (E5P) (approved)
Ukraine Krivyi Rih District Heating
IG
Ukraine
Yerewan Solid Waste
IG
Armenia
Ukraine Higher Education
IG
Ukraine
Total
Latin America Investment Facility (LAIF) (approved)
(EC contrib. - approved)
Ecuador Earthquake reconstruction
Ecuador Technical Technology Centres
TA
IG
Ecuador
Ecuador
7.0
11.35
18.35
Total
Eastern Partnership Technical Assistance Trust Fund (EPTATF) (signed)
Ukraine Municipal Infrastructure Programme: Support to
TA
Ukraine
the rehabilitation of district heating systems in 3 Cities
Technical Assistance to support the implementation of
TA
Armenia
the Armenia Apex Loan for SMEs
Preparation of solid waste management projects in three
TA
Moldova
regions in Moldova
0.75
0.5
1.07
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1835455_0051.png
Ukraine Early Recovery: Programme Implementation
Support to Final Beneficiaries
Total
FEMIP Trust Fund (signed)
Technical assistance in support of the development of
the Euro-Mediterranean logistic area of Amman
(Madounah) in the HASHEMITE KINGDOM OF
JORDAN
National Appropriate Mitigation Actions Potentials in the
Mediterranean Partner Countries - NAMA Study
Assistance Technique pour l'extension et l'amélioration
fonctionnelle de l'Aéroport International de Tunis
Carthage (AITC)
Technical assistance in support of the South Lebanon
Water and Wasterwater Project (extension)
Renforcement des capacites du secteur de la
microfinance tunisienne
Feasibility study for the Alexandria West Wastewater
Treatment Plant Expansion and Upgrade
Total
Risk Capital signatures
Global Energy Efficiency and Renewable Energy Fund
(GEEREF): Renewable Energy Asia Fund II
Global Energy Efficiency and Renewable Energy Fund
(GEEREF): Catalyst MENA Clean Energy Fund
Global Energy Efficiency and Renewable Energy Fund
(GEEREF): Caucasus Clean Energy Fund
Total
TOTAL
TA
Ukraine
3
5.32
TA
Jordan
0.23
TA
TA
TA
TA
TA
Regional
Tunisia
Lebanon
Tunisia
Egypt
0.29
0.19
0.15
0.48
0.3
1.64
RC/equity
RC/equity
RC/equity
India, the
Philippines,
Indonesia
Jordan, Egypt,
Morocco, Tunisia
Georgia
14.4
15
12
41.4
177.32
* In accordance with the Grant application Form (GAF) and the General Conditions of the European Western Balkans
Joint Fund (EWBJF) approved on 16/06/2016
TA Technical Assistance
FI Financial Instrument
IG Investment Grants
IRS Investment Rate Subsidy
RC Risk Capital
6.
C
O
-O
PERATION WITH
E
UROPEAN
O
MBUDSMAN
The Memorandum of Understanding signed between the EIB and the European Ombudsman
(EO) in 2008 sets the basis for the two stages of the EIB Complaints Mechanism - the internal
(EIB-CM) and the external - approved by the EIB Board of Directors in 2010 after extensive
50
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1835455_0052.png
public consultation. It achieves a common understanding of purpose and consistency of
application across its internal and external parts, with a specific focus on:
The existence of an effective internal Complaints Mechanism (the EIB-CM) that deals
with complaints lodged by external parties to the EIB across all the business units of
the Bank;
Concerning complaints related to operations outside the EU, including the External
Mandates, the European Ombudsman commits to use its Own Initiative
7
power
systematically in order to handle complaints when the complainant is not a citizen or
resident of the European Union;
The scope of the EO's review, with the recognition of the EIB-CM as the required prior
approach.
The table below shows the evolution of the number of complaints handled by the EIB-CM in
the past 6 years. The nature of the complaints refers to allegations related to the projects
financed by the Bank in the areas of Environment and Social, Procurement as well as
Governance (legal and financial structure of the project, Bank’s general due diligence of the
project, implementation of Bank’s
policies by borrowers, etc).
Table 9: Project related complaints lodged with the internal part (EIB-CM) of the EIB Complaints Mechanism
over 2011-2016
2011
2012
2013
2014
2015
2016
4
6 years
EU Member States
9
15
13
13
13
(of which 1 to EO)
67
Non-EU, of which
in External Mandate
Countries
in ACP, OCTs
Total (EU & Non EU
Members)
16
13
3
25
17
15
2
32
18
16
2
31
16
13
3
29
14
13
1
27
23
23
0
27
104
93
11
171
As the above table shows, the number of annual new project-related complaints remained
7
The European Ombudsman may open inquiries on her “Own Initiative” if she considers it justified
in order to
clarify any suspected maladministration in the activities of EU institutions, bodies, offices or agencies,
despite the Statute of the EO that specifies that "Any citizen of the Union or any natural or legal person
residing or having his registered office in a Member State of the Union may, directly or through a
Member of the European Parliament, refer a complaint to the Ombudsman [ ... ]."
51
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relatively stable overall since 2011. However the number of new cases registered in External
Lending Regions grew relatively more to 23, from 13 in 2015. These new cases are located in
Albania, Bosnia and Herzegovina, Costa Rica, Ecuador, Egypt, Georgia, Lao People's
Democratic Republic, Mongolia, Morocco, Paraguay, Serbia, Tunisia. Out of the 23 cases
opened concerning the External Lending Mandate, 9 are related to Environmental and Social
impacts, 12 to Procurement, and 1 to Access to information and 1 to Governance matters
related to projects.
The EIB-CM
also deals with complaints with a ‘preventive’ objective, which are classified as
PR, meaning that the complaint is handled in early stages of the project appraisal together
with the EIB services. The Complainant can always revert to the EIB-CM if not satisfied
with the PR handling of the case. In 2016 the EIB-CM handled 25 of such PR complaints of
which 17 in the Western Balkans, 2 in Africa, 2 in the Eastern Neighbourhood, 1 in Asia and
3 in FEMIP. Of the 17 PR complaints in the Western Balkan, 11 PR cases concerned the
Trans Adriatic Pipeline project in Albania.
The outcome of the complaints handling process varied from "allegations not grounded",
"areas for improvement recommended" to “withdrawn by the Complainant”. During 2016,
the EIB-CM closed 15 cases in Albania (2), Brazil (1), Bosnia and Herzegovina (2), Ecuador
(1), Georgia (1), Moldova (1), Mongolia (1), Morocco (1) and Serbia (5). In the complaint
relating to the Highway Interchange Petlovo Brdo in Serbia the EIB-CM contributed to a
Mediation process between the Promoter and the affected population and in the case of the
Sao Paolo Rolling stock complaint in Brazil the EIB-CM had to withdraw as the complaint
was settled by a national judicial authority. In the Ulaanbataar Waste Water System
complaint in Mongolia the EIB-CM stressed the importance of assessing - at a due diligence
stage -
a promoter’s capacity to
undertake procurement activities and, where appropriate,
provide technical assistance/expertise.
During 2016, the EO did not receive any complaint related to the EIB activities in the
External Lending Region.
7.
COOPERATION WITH INTERNATIONAL FINANCING INSTITUTIONS
27 projects signed in 2016 were co-financed by other IFIs (see Annex 4). EBRD is the first
co-financer (13 projects) representing 44% of the total volume of co-financing, followed by
World Bank Group (7 projects) representing 32% of the total volume of co-financing. AFD co-
financed 4 projects and represents 15% of the volume of co-financing. The Asian
Development Bank co-financed 4 projects, representing a 22% of the total of co-financing and
the Inter-American Development Bank together with the Development Bank of Latin America
(CAF) co-financed 2 projects, representing 4% of the total of co-financing, .
52
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7.1 Relation with European Financial Institutions
7.1.1 Collaboration with AFD and KfW
Cooperation between EIB and AFD has continued to intensify over the last years. Meanwhile,
a regular routine of meetings on policy/coordination level as well as on operational level has
been established, which has facilitated exchange of information and transparency. The EIB
also maintains a system of mutual staff exchange with KfW and since 2016 also with AFD.
The three institutions cooperate closely in the context of the Mutual Reliance Initiative (MRI).
Launched in 2013, the MRI is a widely recognised means of implementing EU external
cooperation policies. It foresees that the three MRI Partners rely on one of them to perform
certain tasks, e.g. some of the project due diligence, or procurement supervision. Promoters
appreciate the resulting simplified processes. The management and decision-making bodies of
the MRI partners have become acquainted to documents prepared by another institution which
they use for their own decisions. Talks continued during 2016 on how to further increase the
level of work sharing and delegation and take the MRI to a higher level of relevance and
effectiveness.
In 2016, 4 projects were co-financed with AFD in the ELM regions, all of which in the
Mediterranean region representing a total EIB financing of EUR 778m, representing 29% of
total EIB financing projects in the Mediterranean region. The average share of the EIB
financing is 27% whereas the average share of AFD financing in such projects is 15%.
In 2016, 3 projects were co-financed with KfW group in the ELM regions, with one project in
Pre-Accession region (Montenegro and Turkey) and one project in the Mediterranean
countries (Morocco) with a total EIB financing of EUR 142m and EUR 93m for KfW group.
The average share of the EIB financing is 10% and KfW group in such projects is 7%.
7.1.2 Collaboration with EBRD
Several meetings have been held in line with the tripartite MoU of 2012 between the EC, EIB
and the European Bank for Reconstruction and Development (EBRD). A Steering Committee
chaired by the Commission took place in June 2016. This focused in particular on the Banks’
response to the Migration Crisis as well as overall cooperation. The EIB and EBRD also held
two Contact Group meetings to exchange views on their pipelines of operations in the regions
where they both operate. In addition, the Banks shared information on their response to the
migration crisis and on other common topics of interest including issues arising in relation to
offshoring and the newly created EU4Business initiative in the Eastern Partnership region.
These regular relations are useful to coordinate actions and to enhance operational synergies in
the countries of operation. Indeed, in 2016, 13 projects were co-financed by EIB and EBRD,
with a total of EUR 1.1bn of EIB financing and EUR 1.2bn of EBRD financing. The average
share of the EIB and EBRD in such projects is approximately 33% each.
7.2 Cooperation with others on development
7.2.1 Strategic Institutional cooperation amongst MDBs
A new and significant development in 2016 was the entry of three new members, the Asia
Infrastructure Investment Bank (AIIB), the Islamic Development Bank and the New
Development Bank (also known as “BRICS” Bank).
53
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The MoU signed by EIB with AIIB in May 2016 in Beijing provides the framework to further
consolidate the relations between EIB and AIIB in the areas of joint financing of eligible
operations, knowledge sharing and the establishment of regular high level meetings. The
memorandum was signed during President Hoyer’s official visit to China, and shows EIB
commitment to working closely with the AIIB to address the infrastructure needs in Asia by
capitalising their long experience and expertise in the region as well as in the EU.
In addition to the multiple working groups and initiatives covering a broad range of issues
(climate, infrastructure, finance, risk, results measurement, ex post evaluation, debt
management etc.), MDB cooperation remains strong at the highest level, when Presidents meet
and discuss strategic priorities.
High-level discussions among MDBs focused on the main topics of the development agenda,
namely how to jointly enhance MDB support for Climate Action and contribute to the
Sustainable Development Goals. Addressing the consequences of the refugee crisis and forced
displacement more generally, was another key topic for MDB cooperation in 2016. A special
MDB Task Force was also set up to define and measure mobilisation and catalysation by
MDBs of private sector finance. Building on recommendations from the G7 and the G20,
MDBs also worked jointly on ways to optimise their balance sheets and increase their lending
capacity in support of development objectives.
Next steps will involve refining principles on the use of blended finance and developing new
approaches to prioritising the use of public funds where they are most needed and where they
can crowd in private finance, in line with the “Billions to Trillions” narrative. MDBs work
together on “de-risking” and the further increase in the use of risk sharing instruments and
guarantee schemes (in line with developments inside the EU) to maximise the impact of public
resources in crowding in private finance.
7.2.2 Operational Institutional cooperation
To maximise the impact of their projects, and to explore new ways of doing things and new
sectors to target on the road to the 2030 Agenda, the Bank is partnering with several
organisations to combine the Bank`s financial know how with their technical expertise and
local knowledge. Taken together, they are boosting their capabilities in several sectors entirely
relevant to the SDGs.
EIB President Werner Hoyer and United Nations Industrial Development Organisation
(UNIDO) Director-General Li Yong formally signed a Memorandum of Understanding in July
2015. Through this, their organisations have agreed to enhance cooperation and to share good
practices and expertise in relevant sectors, most notably resilient infrastructure, sustainable
industrialisation and innovation. This is a timely partnership, which will enable both
institutions to work together to help achieve several of the SDGs, amongst them number 1 (No
Poverty), Number 8 (Decent Work and Economic Growth), Number 9 (Industry, Innovation
and Infrastructure), Number 12 (Responsible Consumption and Production) and Number 13
(Climate Action). The EIB and UNIDO have explored some potential projects in industrial
value chain support in Africa.
The Bank has also agreed to work with the Food and Agriculture Organisation of the United
Nations (FAO), for which EIB Vice-President Pim van Ballekom and FAO Director-General
José Graziano Da Silva signed a Memorandum of Understanding in 2015. This makes sense
for both parties, as the Bank looks to expand investment in agriculture and food security,
54
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notably in terms of private sector companies, value chains, small businesses and entrepreneurs,
and FAO looks out for food security and sustainable job creation in the field of agribusiness.
In addition to joint interests, their organisations can work together on relevant projects in the
future, where technical assistance and expertise could be required to carry out capacity
building on the ground, including the promotion of agribusiness to rural populations, young
people and women, as well as bringing their ideas to bear on development. There are several
ways in which this could happen, and their organisations are again looking at areas for
collaboration. Through working together, they help achieve SDGs Number 1 (No Poverty),
Number 2 (Zero Hunger), Number 5 (Gender Equality), Number 8 (Decent Work and
Economic Growth) and Number 15 (Life on Land).
The crucial importance of creating jobs in rural areas is something that the EIB is approaching
pro-actively. In April 2016, EIB Vice-President Pim van Ballekom and International Fund for
Agricultural Development (IFAD) Associate Vice-President Henock Kifle signed an
agreement to expand cooperation between the two organisations, reflecting the importance of
agribusiness in emerging economies, both now and in the future. The Memorandum of
Understanding reflects the premium placed on small holder farmers, as shared by both the EIB
and IFAD, and they are working together on a project which will support them.
The United Nations Development Programme operates in many countries, supporting
sustainable development, the eradication of poverty the advancement of women and good
governance amongst the ultimate aim of achieving the SDGs. The EIB and UNDP have
therefore formalised a Memorandum of Understanding to work together towards this common
agenda, which has the SDGS at heart, and is placed in the context of the “From Billions to
Trillions” MDB action plan. This was signed by EIB President Werner Hoyer and UNDP
Administrator Helen Clark in October 2016. The thematic focuses of this partnership are
climate change response, responding to crisis and post-crisis situations, the migration crisis
and promoting inclusive markets and entrepreneurship. Technically, their organisations are
targeting Urban Development (SDG Number 11 Sustainable Cities and Communities),
Sustainable Energy (SDG Number 7, Clean Energy), Water Management (SDG Number 3,
Good Health and Wellbeing and SDG 6, Clean Water and Sanitation) and Rural Development.
The United Nations Office for Project Services (UNOPS) supports the successful
implementation of UN partners’ peace-building,
humanitarian and developmental projects
around the world. The EIB can work with UNOPS on key projects to improve lives across the
world. It was in this context that in April 2016, EIB Vice-President Pim van Ballekom and
UNOPS Director Grete Faremo signed an agreement for their organisations to work together.
This partnership will enable both institutions to overcome ongoing challenges to sustainable
development, most notably in fragile economies, as well as climate change and, something
which is essential, increasing the capacity of the private sector to drive growth and change. Put
together, the EIB and UNOPS can catalyse further investment in projects where investors
could be reluctant to get involved. Again, SDG Number 1 (No Poverty), Number 8 (Decent
Work and Economic Growth), Number 10 (Reduced Inequalities), Number 13 (Climate
Action) are all targets, with an indirect benefit to Number 16 (Peace, Justice and Strong
Institutions).
7.2.3 The Boost MENA initiative
In 2016, the EIB and the African Development Bank launched the Boost Africa initiative, a
comprehensive joint programme which aims to enable and enhance entrepreneurship and
55
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1835455_0057.png
innovation across Africa in a commercially viable way through a blending mechanism with the
European Commission.
Similarly to Boost Africa, the Boost MENA initiative currently under development jointly
with the World Bank, in the framework of the Economic Resilience Iniative (ERI), stems from
the belief that entrepreneurship and innovation can play a significant role in accelerating living
standards and social progress. The initiative will draw lessons from the report from the EBRD,
the EIB and the WBG “What’s holding back the private sector in MENA?” based on the
MENA Enterprise Survey (ES) of more than 6,000 firms in eight countries, identifying the
private sector as a key driver for growth and rising prosperity, on the condition that effective
business enabling policies, enhanced access to finance and support to entrepreneurship and
innovation are ensured. Boost MENA will address directly the root causes of the current
increasing migration, which sees thousands of skilled and unskilled young people leave their
countries at the risk of their lives in search of a better economic future. The fast-growing
digital economy is seen as one of the most powerful drivers for future employment and
economic prosperity. Across both developed and developing countries, start-ups and high-
growth innovative SMEs play a crucial role in net job creation. Critically, innovative start-ups
are starting to show very important economic and development impacts and require assistance
to reach their potential.
Like Boost Africa, Boost MENA will adopt a value chain approach aiming to support the
earliest and riskiest stages of entrepreneurship in a sustainable way. The project design will
allow addressing gaps by providing long-term support to promoters targeting entrepreneurs,
through financing and capacity-building, thus sustaining the modernisation of the ecosystem,
in a context characterised by high barriers for newcomers to start a business. Both initiatives
will step up the effort towards mainly first-time entrepreneurs (in particular among youth and
women) in order to contribute, among others, to the international response to the migration
crisis. By increasing the opportunities for young entrepreneurs to set up their companies the
initiative expects to boost the creation of significant numbers of quality jobs, retaining talent
and, in some cases, reversing the brain drain in Africa. In line with the objectives of a letter of
intention to jointly implement Boost Mena, the EIB and WB consider that AfDB could play a
significant role as co-investor in this initiative as well, thanks to its geographic scope of
operations, including North Africa in particular.
A Boost platform is currently under development with a large number of DFIs considering
similar investments. Mobilisation of local investors and business angel networks is also a
medium-term objective, to address the existing financing gap in this segment of the market.
7.3 Coordination with others on Climate
The EIB has continued to cooperate throughout 2016 with MDBs and other IFIs and relevant
groups in order to harmonise climate finance tracking and impact reporting standards.
The Bank tracks climate finance using definitions developed and harmonised in cooperation
with peer institutions. During 2016, Asian Development Bank (ADB) coordinated the 2015
Joint Report on MDBs’ Climate Finance (taking over from WBG the previous year and EIB in
2014). The report showed that, in 2015, MDBs delivered USD 25,096 bn in climate finance
8
.
8
The figure includes own-resources and third parties financing in developing countries and emerging economies
(i.e. for EIB, climate finance in ELM plus ACP countries plus EU11).
56
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In 2017-19
this work has been reorganised on a longer term basis as part of the MDBs’ post-
Paris workplan, with the core reporting led by EBRD, finance tracking and impact reporting by
EIB and IDB and co-financing data by WBG.
MDBs are also working with other bilateral and national organisations (International
Development Finance Club, IDFC: among the members worldwide are KFW, AFD, JICA but
also BNDES, DBSA and China Development Bank) to improve the consistency of finance
reported under the 2015 MDB/IDFC Common Principles for Mitigation Tracking, and initial
Common Principles for Adaptation Tracking. Work continues on tracking in challenging
sectors and on how to reach the ultimate aim of compatible reporting. However, although the
Common Principles are a big step forward, the two groups are still far away from a fully
harmonised approach. One of the main difficulties is agreeing on accounting methods
(granularity of investments).
Further work has progressed on the Principles for Mainstreaming Climate Action in Financial
Institutions, launched at COP21. Until a more permanent arrangement is put in place, EIB is
hosting, on a temporary basis, the Principles for Mainstreaming website:
www.eib.org/FIclimatemainstreaming
These Principles provide a platform to gather an ever increasing number of supporting
financial organisations (e.g. commercial banks, insurance companies, institutional investors).
The headlines of the Five Voluntary Principles are:
COMMIT to climate strategies (including targets, priorities)
MANAGE climate risks (stranded assets, vulnerability analysis, adaptation)
PROMOTE climate smart objectives (instruments, leverage, knowledge sharing)
IMPROVE climate performance (measuring, impact)
ACCOUNT for your climate action (reporting)
A larger group including all 6 MDBs, plus AFD, KfW, NIB and other IFIs, developed and
published, via the Green Bond Principles Network, a harmonised framework for green bond
impact reporting. This impact reporting is linked to harmonised approaches on GHG
accounting and reporting, developed by the IFI working group in which the EIB is a key
participant and which is now being taken forward at an accelerated pace in close cooperation
with UNFCCC.
On Adaptation they also continue to work closely with EU financing institutions in the EU
Financing Institutions Working Group on Adaptation to Climate Change (EUFIWACC). EIB
and other EUFIWACC members published in 2016 the EUFIWACC Integrating Climate
change
adaptation
in
Project
Development
.
57
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1835455_0059.png
A
NNEX
I - L
IST OF OPERATIONS SIGNED IN
2016
List of operations signed in ALA Region (Latin America, Central Asia and Asia)
COUNTRY
OPERATION
ELM - Compreh.
Guarantee
Signed (EURm) / Framework
ELM - Political
Risk Guarantee
Local private
sector dev.
ORF
Objective supported
Social &
Economic Infra
Regional
Integrat.
Climate Action
Sector
India
Maldives
Kazakhstan
Kazakhstan
LUCKNOW METRO RAIL PROJECT
MALDIVES SUSTAINABLE ENERGY DEVELOPMENT
DAMU GREEN LOAN FOR SMES - A
DAMU GREEN LOAN FOR SMES - B
45
200
+
50
150
x
x
x
+
x
+
+
+
Transport
Energy
Credit lines
Credit lines
Water,
Sewerage,
Solid waste
Energy
Kyrgyzstan
WATER SUPPLY SEWERAGE AND SOLID WASTE
20
x
+
Brazil
Ecuador
Ecuador
Ecuador
Panama
NEOENERGIA ELECTRICITY DISTRIBUTION II
METRO DE QUITO
POST-EARTHQUAKE RECONSTRUCTION
FRAMEWORK LOAN
TECHNICAL AND TECHNOLOGICAL INSTITUTES
PROGRAMME
PANAMA CITY AND BAY WASTEWATER
TREATMENT PROJECT
Total 2016 Operations Signed
41
162
70
46
384
-
200
x
x
x
x
x
+
x
Transport
Industry
Education
Water,
sewerage
600
58
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1835455_0060.png
List of operations signed in the Eastern Europe, Southern Caucasus and Russia region in
2016
COUNTRY
OPERATION
Signed (EURm) / Framework
Objective supported
Sector
ELM - Compreh.
Guarantee
ELM - Political
Risk Guarantee
Local private
sector dev.
Social &
Economic Infra
Regional
Integrat.
Climate Action
Armeni a
Armeni a
Armeni a
ARMENIA M6 INTERSTATE ROAD
BORDER CROSSING AND INFRASTRUCTURE
ARMENIA APEX II LOAN FOR SMES AND
MIDCAPS
GEORGIA URBAN RECONSTRUCTION AND
DEVELOPMENT FL
GEORGIA EAST-WEST HIGHWAY II
JSC BANK REPUBLIC LOAN FOR SMES AND
MIDCAPS
GEORGIAN AGRI-FOOD VALUE CHAINS
GEORGIA TRANSPORT CONNECTIVITY
GEORGIA UPGRADE OF MUNICIPAL
INFRASTRUCTURE
MOLDOVA RAIL INFRASTRUCTURE AND ROLLING
STOCK FL
UNGHENI-CHISINAU GAS PIPELINE
UKRAINE URBAN PUBLIC TRANSPORT FL
UKRAINE RAILWAY MODERNIZATION
UKRAINE HIGHER EDUCATION PROJECT
UKRAINE DCFTA SUPPORT FACILITY
51
1
51
x
x
x
+
x
x
Tra ns port
Tra ns port
Credi t l i nes
Compos i te
i nfra s tructure,
Servi ces
Georgi a
100
x
Georgi a
Georgi a
Georgi a
Georgi a
Georgi a
Mol dova ,
Republ i c of
Mol dova ,
Republ i c of
Ukra i ne
Ukra i ne
Ukra i ne
Ukra i ne
49
23
100
250
100
50
41
200
150
120
260
x
x
+
x
+
+
x
x
x
x
x
x
x
x
x
+
+
x
+
x
Tra ns port
Credi t l i nes
x
Agri cul ture,
fi s heri es ,
fores try
Tra ns port
Urba n
devel opment
x
x
Tra ns port
Energy
Tra ns port
x
Tra ns port
Educa ti on,
Indus try
Credi t l i nes
Agri cul ture,
fi s heri es ,
fores try,
Tra ns port
Ukra i ne
NIBULON (CEREAL PRODUCTION AND
TRANSPORTATION)
Total 2016 Operations Signed
1,263
71
354
+
+
+
59
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1835455_0061.png
List of operations signed in the Mediterranean region in 2016
COUNTRY
OPERATION
ELM -
Compreh.
Guarantee
Signed (EURm) / Framework
ELM - Political
Risk Guarantee
Local private
sector dev.
ORF
Objective supported
Social &
Economic Infra
Regional
Integrat.
Climate Action
Sector
Egypt
Egypt
Egypt
Egypt
Egypt
Is rael
Morocco
Morocco
Morocco
Tunis ia
Tunis ia
Tunis ia
Tunis ia
Tunis ia
Tunis ia
CAIRO METRO LINE 3 (PHASE 3)
EBE SME AND MIDCAPS LOAN
QNB EGYPT LOAN FOR SMES
EGYPT PRIVATE SECTOR SUPPORT
CAIRO METRO LINE 2 ROLLING STOCK
ICL RDI
FEMIP SUSTAINABLE ENERGY FACILITY
BMCE LIGNE VERTE
BMCE LOAN FOR SMES AND MIDCAPS
GCT MISE A NIVEAU ENVIRONNEMENTALE
BANQUE DE TUNISIE - LOAN FOR SMES
TUNISIE TELECOM 4G ROLLOUT
DEPOLMED
STEG V TRANSPORT ELECTRICITE
PONT DE BIZERTE
Total 2016 Operations Signed
200
28
92
500
75
92
30
10
150
19
50
100
70
47
123
1,061
332
192
x
x
x
x
x
x
x
x
x
x
+
+
+
Trans port
Credit lines
Credit lines
Credit lines
Trans port
x
Indus try
Credit lines
Solid was te
Credit lines
Indus try
Credit lines
Telecommunica
tions
x
x
x
x
+
+
+
+
x
x
x
x
+
x
Water,
s ewerage
Energy
Trans port
60
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1835455_0062.png
List of operations signed in Pre-Accession region in 2016
COUNTRY
OPERATION
Signed (EURm) / Framework
ELM - Compreh.
Guarantee
Local private
sector dev.
ORF
Objective supported
Social &
Economic Infra
Regional
Integrat.
Climate Action
Sector
Bos ni a a nd
Herzegovi na
Bos ni a a nd
Herzegovi na
Bos ni a a nd
Herzegovi na
Bos ni a a nd
Herzegovi na
Bos ni a a nd
Herzegovi na
FYROM
FYROM
Montenegro
Montenegro
Serbi a
Serbi a
Serbi a
Turkey
Turkey
Turkey
Turkey
Turkey
Turkey
Turkey
Turkey
Turkey
Turkey
Turkey
Turkey
Turkey
Turkey
Turkey
Turkey
Turkey
Turkey
PROCREDIT LOAN FOR SME AND OTHER COP
OBJECTIVES
ROAD MODERNISATION FEDERATION BIH
50
10
x
x
+
x
Credi t l i nes
Tra ns port
RBBH LOAN FOR SMES AND PRIORITY PROJECTS
30
+
+
+
x
Credi t l i nes
ISP LOAN FOR SMES AND PRIORITY PROJECTS III
RS HOSPITALS
CORRIDOR X ROAD PROJECT
PROCREDIT LOAN FOR SME AND OTHER COP
OBJECTIVES
IDF LOAN FOR SMES AND PRIORITY PROJECTS II
MONTENEGRO WATER AND SANITATION
SGRS LOAN FOR SMES AND OTHER PRIORITIES
III
APEX LOAN FOR SMES AND OTHER PRIORITIES
III
UPGRADING OF JUDICIARY BUILDINGS
TSKB LOAN III FOR SMES MIDCAPS AND
INNOVATION
ZIRAATBANK LOAN FOR SMES AND MIDCAPS II
ING BANK TURKEY SMES AND MIDCAPS LOAN III
ODEA BANK LOAN FOR SMES AND MIDCAPS
VAKIFBANK ADDITIONAL LOAN FOR SMES
PETLIM PORT
ETLIK HOSPITAL
EXIMBANK LOAN FOR SMES AND MIDCAPS III
AKBANK LOAN FOR SMES AND MIDCAPS III
AKLEASE LOAN FOR SME AND MID-CAPS A
TSKB ENERGY AND ENVIRONMENT LOAN
FINA ENERJI WIND POWER PLANTS
ISBANK CLIMATE CHANGE FACILITY II
VAKIFBANK LOAN III FOR SMES AND MIDCAPS
FINANS LEASING LOAN FOR SMES AND MIDCAPS
ISTANBUL UNDERGROUND RAIL NETWORK II
HALKBANK LOAN IV FOR SMES AND MIDCAPS
ZIRAATBANK LOAN FOR SMES AND MIDCAPS III
250
150
26
30
26
15
35
25
x
x
x
+
Credi t l i nes
Hea l th
Tra ns port
10
x
+
+
x
+
+
x
Credi t l i nes
Credi t l i nes
Wa ter,
s ewera ge
20
+
x
+
+
+
x
Credi t l i nes
Credi t l i nes
Servi ces
x
100
100
200
100
100
70
50
200
195
60
100
33
150
100
100
+
x
x
x
100
100
x
x
x
x
x
x
x
+
x
x
x
x
x
x
x
+
+
+
+
x
+
+
+
x
+
+
x
x
x
x
+
+
+
+
+
+
x
x
x
x
Credi t l i nes
Credi t l i nes
Credi t l i nes
Credi t l i nes
Credi t l i nes
Tra ns port
Hea l th
Credi t l i nes
Credi t l i nes
Credi t l i nes
Energy
Wa ter,
s ewera ge
Energy
Credi t l i nes
Energy
Credi t l i nes
Credi t l i nes
Tra ns port
Credi t l i nes
Credi t l i nes
Turkey
GAZIANTEP HEALTH CAMPUS
Total 2016 Operations Signed
582
120
2,073
x
Hea l th
61
kom (2017) 0767 - Ingen titel
1835455_0063.png
Annex II - List of operations signed in the regions covered by the Mandate in 2016 and co-
financed with other IFIs or benefiting from EU grants
List of operations signed in the regions covered by the Mandate in 2016 and co-financed with other IFIs or benefiting
from EU grants
PROJECT
COST
(EUR M)
175.00
80.00
61.70
102.00
150.00
176.45
200.00
1,000.00
200.00
120.40
MANDATE / FACILITY COUNTRY
CONTRACT NAME
MALDIVES SUSTAINABLE ENERGY
DEVELOPMENT
WATER SUPPLY SEWERAGE AND SOLID
WASTE
BORDER CROSSING AND INFRASTRUCTURE B
ARMENIA M6 INTERSTATE ROAD
GEORGIA URBAN RECONSTRUCTION AND
DEVELOPMENT FL
GEORGIA EAST-WEST HIGHWAY II
GEORGIAN AGRI-FOOD VALUE CHAINS
GEORGIA TRANSPORT CONNECTIVITY
GEORGIA UPGRADE OF MUNICIPAL
INFRASTRUCTURE
MOLDOVA RAIL INFRASTRUCTURE AND
ROLLING STOCK FL
UNGHENI-CHISINAU GAS PIPELINE
EIB LOAN
SIGNED IN
2016
(EUR M)
45.00
20.00
0.53
51.00
100.00
49.45
100.00
250.00
100.00
50.00
Multilateral
Financing
Institutions
European Bilateral EU budget
Institutions
contrib.
ELM Asia 2014-2020
Maldives
X
X
X
X
X
X
NIF
X
X
X
NIF
EC
(Support to
the reform of
energy sector
programme)
ELM Central Asia 2014-
Kyrgyzstan
2020
ELM East-Ru. 2014-
Armenia
2020
ELM East-Ru. 2014-
2020
ELM East-Ru. 2014-
2020
ELM East-Ru. 2014-
2020
ELM East-Ru. 2014-
2020
ELM East-Ru. 2014-
2020
ELM East-Ru. 2014-
2020
ELM East-Ru. 2014-
2020
ELM East-Ru. 2014-
2020
ELM East-Ru. 2014-
2020
ELM East-Ru. 2014-
2020
ELM East-Ru. 2014-
2020
ELM Latin America
2014-2020
ELM Latin America
2014-2020
ELM Latin America
2014-2020
ELM MED 2014-2020
ELM MED 2014-2020
ELM MED 2014-2020
ELM MED 2014-2020
ELM MED 2014-2020
ELM MED 2014-2020
ELM MED 2014-2020
ELM Pre-Accession
2014-2020
ELM Pre-Accession
2014-2020
Climate Action and
Environment Facility
2014-2020
PAF-32200M-2000-
2020
PAF-32200M-2000-
2020
PAF-32200M-2000-
2020
Armenia
Georgia
Georgia
Georgia
Georgia
Georgia
Moldova,
Republic of
Moldova,
Republic of
Ukraine
Ukraine
Ukraine
Ecuador
Ecuador
Panama
Egypt
Egypt
Morocco
Morocco
Tunisia
Tunisia
Tunisia
FYROM
IFCA
NIF
NIF
(expected)
NIF
(expected)
92.00
41.00
X
UKRAINE RAILWAY MODERNIZATION
UKRAINE HIGHER EDUCATION PROJECT
UKRAINE URBAN PUBLIC TRANSPORT FL
METRO DE QUITO B
TECHNICAL AND TECHNOLOGICAL INSTITUTES
PROGRAMME
PANAMA CITY AND BAY WASTEWATER
TREATMENT PROJECT
CAIRO METRO LINE 3 (PHASE 3) - C
CAIRO METRO LINE 2 ROLLING STOCK
FEMIP SUSTAINABLE ENERGY FACILITY
(BMCE) B and (BCP) C
BMCE LIGNE VERTE
GCT MISE A NIVEAU ENVIRONNEMENTALE B
DEPOLMED
STEG V TRANSPORT ELECTRICITE
CORRIDOR X ROAD PROJECT B
314.00
160.00
400.00
1,361.00
191.44
138.45
2,417.90
187.00
137.50
40.00
149.52
140.00
109.70
300.00
150.00
120.00
200.00
40.97
70.13
45.86
200.00
75.00
30.00
10.00
19.00
69.60
46.50
35.00
X
NIF
E5P*
NIF
X
X
X
X
X
X
X
X
X
X
X
X
X
IPA
IPA
WBIF*
IFCA
X
X
X
X
EC
NIF
NIF
NIF, FEMIP
S
upport*
LAIF
Montenegro
MONTENEGRO WATER AND SANITATION E
114.22
25.50
X
Kazakhstan
Turkey
Turkey
Turkey
DAMU GREEN LOAN FOR SMES - A
ISBANK CLIMATE CHANGE FACILITY II A
ETLIK HOSPITAL
GAZIANTEP HEALTH CAMPUS
100.00
300.00
1,100.00
589.00
10,607.28
50.00
150.15
50.00
120.00
2,314.70
Total, of which EIB financing
volume
- co- financed with other IFIs
* Includes other sources of funding than EU b udget
2,044.70
- benefiting from EU grants
1,281.77