“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: a.bruun@eib.org

Katrin BockBusiness Analyst

tel +(61 2) 8211 0532email: k.bock@eib.org

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