2nd pacific agribusiness forum: adam bruun "agribusiness financing: innovative financial...
TRANSCRIPT
“Agribusiness Financing: Innovative Financial Solutions”
Adam Bruun, Head of EIB Pacific Regional Office
European Investment Bank
The European Investment Bank (EIB):
Lending to Financial Institutions for SME Financing
2nd Pacific Agribusiness ForumAgribusiness Financing: Innovative Financial Solutions
Apia, 1 September 2016Adam Bruun, Head of EIB Pacific Regional Office
European Investment Bank
How does the EIB support Private Sector Funding?
SMEs + microfinance
Mid-cap enterprises Large corporates SPVs & project
finance
Microfinance, SME and Mid-cap credit lines to local banks
Equity investments mostly through Private Equity funds
Guarantee provided by the EIB to a local bank (only in specific cases)
Direct loans•1
Loans intermediated by a bank•2
Loans guaranteed by a bank•3
European Investment Bank
Risk-bearing: Impact Financing Envelope (IFE)
Areas of Focus Social and demographic challenges:Unemployment, in particular in rural areas and among women and youth, food
security, social and financial exclusion, migration, post-conflict / post-disaster recovery, access to healthcare, access to education and training etc.
Environmental challenges:climate action (including access to renewable energy and energy efficiency),
forestry issues, waste management, preservation of biodiversity, water supply etc.
Four financing channels
Potentially higher risk Transactions Significant and measurable impact
Social Impact Equity Funds
Loans to Financial Intermediaries
Risk-sharing Instruments
Direct Financing
5European Investment Bank
Loans to Financial Intermediaries
Social Impact Funds Risk-sharing Instruments
Direct Financing
- venture capital / private equity / social impact funds
- managers explicitly pursue social impact goals- focus on employment, working conditions,
vulnerable populations, access to healthcare, energy, education, etc.
- first loss guarantees to facilitate risk-sharing operations with local financial intermediaries
- supporting SMEs and small projects- help leverage senior guarantee tranches
from EIB and other IFIs / DFIs
- local currency loans in economically deprived countries
- beneficiaries: smallholder farmers, micro-enterprises and SMEs
- intermediaries: commercial banks, credit cooperatives, microfinance institutions etc.
- strengthened with technical assistance and advisory services
- debt (and possibly equity) instruments with high developmental impact
- promoted by sound, experienced investors
- focus on underserved sectors such as agriculture, private health and education
IFE Instruments
6European Investment Bank
The Caribbean and Pacific Impact Finance Facility (CPIFF)
Financial intermediaries-Microfinance institutions -Downscaling banks-Wholesale funder of MFIs
Eligible clients with loans < EUR 50,000:-Micro and small enterprises -Low income households with small scale impact projects
LENDING FACILITY 40 m
EUR
TECHNICAL ASSISTANCE
FACILITY
Senior debt 3- 7 years with 1-2 year grace periodUnsecuredLocal currency, EUR and USDFixed interest rate
Tailored capacity building
Financial educationMentoring
7European Investment Bank
CPIFF Requirements• As a rule:
– loans to eligible final beneficiaries shall not exceed EUR 50,000
– EIB loan will not exceed 50% of MFI’s equity– EIB loan will finance up to 50% of the eligible loan portfolio
• Qualitative requirements:– Endorsement of client protection principles and
commitment to gradually comply– Satisfactory AML/CFT policy in place– Exclusion list of sectors to be applied– Regular reporting on portfolio results indicators
European Investment Bank
EIB in the Pacific
Adam BruunHead of Regional Office
tel +(61 2) 8211 0536email: [email protected]
Katrin BockBusiness Analyst
tel +(61 2) 8211 0532email: [email protected]
European Investment BankPacific Regional Office Level 25, 88 Phillip StreetSYDNEY NSW 2000 Australia
Thank you!
Example: ACP Smallholder Farming
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A joint initiative of EIB and IFAD to support smallholder farming activities in ACP countriesBuilding on pilot projects carried out by IFAD, with the objective of providing medium to long-term local and foreign currency funding (currently very scarce) 5-8 countries targeted, including Malawi, Mozambique, Ethiopia, Nigeria, Rwanda Amount: up to EUR 50m
Support to up to 100,000 smallholder farmers over 2014-20.
European Investment Bank
10European Investment Bank
Cotonou Agreement: Resources and Amounts
Investment Facility (IF) revolving fund
* Instruments also available under IF
EIB Own ResourcesEuropean Development Fund – EDF (EU Member States’ budgetary funds)
Amounts available under 11th EDF 2014-2020
ACPs EUR 634 m OCTs EUR 5 m
ACPs up to EUR 2,500 m OCTs up to EUR 100 m
• Senior loans*• Intermediated loans*• Widely traded
currencies
• Interest rate subsidies• Technical Assistance
Total capital endowment under 9th , 10th and 11th EDFs
ACPs EUR 3,637 m OCTs EUR 48.5 m
• Junior or subordinated loans• Quasi-equity funding• Equity funding• Guarantees
Local currencies
Including EUR 500m ‘impact financing’ envelope