EIB Investments in Education outside the European Union · The EIB at a glance ‣Largest...

EIB Investments in Education outside the European Union

Didier Bosman

13 December 2017

18/12/2017 Corporate Presentation 2017 1

Overview

1. EIB Group

2. EIB’s Innovation & Skills programme

3. Education lending

4. Conditions for EIB financing

5. Examples of projects

18/12/2017 European Investment Bank Group 2

The EIB: the EU bank

‣ Natural financing partner for the EU institutions since 1958

‣ Around 90% of lending is within the EU

‣ Shareholders: 28 EU Member States

Investing in Europe’s growth


The EIB: capital breakdown


We are the world’s largest provider of climate finance


>25% worldwide 35% in the world’s

developing regions

EIB’s 2015 Climate Strategy We are increasing our climate commitment:

USD 100bn over the next 5 years

The EIB at a glance

‣ Largest multilateral lender and borrower in the world ‣ We raise our funds on the international capital markets

‣ We pass on favourable borrowing conditions to clients

‣ Some 450 projects each year in over 160 countries

‣ Headquartered in Luxembourg and has 40 local offices

‣ Around 3 000 staff: ‣ Not only finance professionals, but also engineers, sector

economists and socio-environmental experts

‣ Almost 60 years of experience in financing projects


We deliver impact where it’s needed


JOBS 4.4m jobs in small

businesses

HEALTH 10m people with

access to improved health services

EDUCATION 890 000 students

benefiting from EIB projects

WATER 25m people

benefiting from safe drinking water

TRANSPORT 960m additional

passengers

ENERGY 4m households powered by EIB

projects

URBAN 120 000 households

in social and affordable housing

DIGITAL 11m people with new or upgraded

connections

Overview

1. EIB Group






Our priorities


SMEs Infrastructure Environment Innovation

EUR

16.9bn

EUR

19.7bn

EUR

13.5bn

EUR

33.6bn

Slowing productivity in the EU

18/12/2017 Groupe Banque européenne d’investissement 10

Enablers of competitiveness:

human capital

11

Shortfalls in human capital development

18/12/2017 European Investment Bank Group

Europe’s economy, which is based on knowledge-intensive manufacturing and related services, will generate a growing demand for young people with excellent post-secondary training and a relevant skill-set.

Nevertheless, the EU spends only slightly more than 6% of its GDP on education compared to the US and South Korean education spending of around 7.3% of GDP

Despite its importance for a knowledge-intensive economy like the EU, the gap is most pronounced in tertiary education, where EU spending is more than 40% below US or South Korean levels.

0

1

2

3

4

5

6

7

UnitedStates

South Korea EU

Other

Tertiary

Education expenditure (% of GDP)

10% of the gap estimated to

be for education

infrastructure

Gap in tertiary education a

major risk for EU com-

petitiveness

Source: OECD

26/03/2015

Overview

1. EIB Group






Innovation and Skills references


14

Innovation and Skills (Knowledge Economy)

R&D

Innovation

Education

EIB Lending to «Innovation & Skills»

18/12/2017 15

Source: EIB

European Investment Bank

2.2 bn

5.1 bn

3.6 bn

6.2 bn

7.1 bn

10.7 bn 10.9 bn

10.2 bn

12.5 bn

18.3 bn

16.5 bn

10.4 bn 9.3 bn

15.6 bn

13.4 bn

16.1 bn

13.5 bn

18

37

27

48

45

56 57 55

73

95 95

66

76

104

108

123

150

0

20

40

60

80

100

120

140

160

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

20,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

To

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Total Lending 2000-2016: EUR 182 bn


18/12/2017 16

Source: EIB


Total: EUR 182 bn

64 bn 35%

35 bn 19%

32 bn 18%

28 bn 15%

8 bn 4%

5 bn 3%

3 bn 2%

3 bn 2%

2 bn 1% 2 bn

1% 558 m 0%

290 m 0%

63 m 0%

Lending by sector 2000-2016

Industry

Education

Telecommunications

Services

SMEs & MidCaps

Healthcare

Transport

Energy

Construction

Urban development

Water, sewerage

Solid waste

Agriculture, fisheries, forestry


18/12/2017 17

Source: EIB


0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

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45,000

50,000

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Lending to Innovation 2000-2016 : Total EUR 182 bn

EU: Education Reference Objectives

• At least 95% of children between the age of four and the age of compulsory

schooling should participate in pre-school education;

• The proportion of 15-year-olds with poor literacy, mathematics and science

should be less than 15%;

• The rate of 18- to 24-year-olds who left the education and training system

prematurely should be less than 10%;

• At least 40% of people aged 30 to 34 should graduate from higher education;

• At least 15% of adults should participate in lifelong learning activities;

• At least 20% of higher education graduates and 6% of 18-34 year olds with an

initial vocational qualification should have completed part of their education or

training abroad;

• The employment rate of graduates (those between 20 and 34 years with at least

a level of secondary education and graduated less than three years ago) should

be at least 82%.

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Investing for Youth

18/12/2017 19

Investing in Skills

Skills

Facilities

• Universities/research facilities

• Schools for upper secondary/tertiary education

• Social housing for students and mobile employees

• Buildings for Public Employment Services (PES)

Vocational training programmes

• Operational costs eligible

• Private & public sector promoters

• Ceiling: average costs of vocational training per pupil per country

Student loans & mobility programmes

• Student loans:

• Link between loans and the costs incurred during studies

• Eligible costs broadly defined

• Mobility programmes for apprentices & young employees:

EUR 3 billion

annually

20

EIB Lending to Education

Total : EUR 40 bn

-

1,000

2,000

3,000

4,000

5,000

6,000

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017*

Tota

l sig

nat

ure

vo

lum

e (

m E

UR

)

Lending to Education 2000-2017

* as of 30.11

21


Total over period: EUR 40 bn

EU 39.8 bn

97%

Non-EU 666 m

2%

Morocco 283 m

1%

Turkey 100 m

Serbia 75 m

Ecuador 70 m

Tunisia 70m

Jordan 40m

Albania 13m

Ukraine 9m

Dominican Rep. 5 m

Regional - Africa 2 m

Lending outside of Europe 2000-2017*

* as of 30.11

22


Higher education 15.5 bn

38%

Education general 10.7 bn

26%

Secondary education 8.8 bn

22%

Primary education 3.5 bn

9%

Technical and

vocational secondary education

1.6 bn 4%

Sports, culture and support education

187 m 1%

Pre-primary education 140 m

0%

Lending by Education type 2000-2017*

* as of 30.11

Overview

1. EIB Group







The conditions for direct EIB financing

Projects funded by the bank must be:

In line with EU objectives (eligibility)

Financially bearable

Justified economically

Technically viable

Justified from a social and environmental point of view

Use of the appropriate procurement procedures are essential

The conditions for direct EIB financing

A minimum project size

Proper structuring in legal and financial terms

Acceptable risk profile for the EIB given its credit policies

Adequate guarantees (eg Region, State, ...)

Comprehensive legal due diligence on the legal framework, statutes, etc.

25


EIB's overall approach to the education sector

The education sector is conceived in a broad way:

Higher Education and Research Centres

Lower cycles

Vocational training and apprenticeship

Cultural Education

Sport in the educational setting

Student housing

Transversal operations to improve accessibility or improve energy

efficiency

Student Loans

Public research

Teacher training

Typical examples of EIB interventions in the education sector

Basic education 10% of lending volume

Nursery and primary schools, adapted education, canteens, …

Including nurseries.

Secondary 37 % of lending volume

High schools, colleges, gymnasiums, adapted teaching, canteens, boarding schools

European priority for youth employment: vocational training, apprenticeship, …

Training programmes for teachers

Higher education 39 % of lending volume

Entire campus development, infrastructure for teaching, research, administrative, sports infrastructure, student housing, university restaurants, libraries, laboratories, …

Financing of research

27


Socio-economic assessment criteria (focus on higher

education)

Demographic evolution

Relationship between knowledge acquisition and market demand

Professional opportunity and salary increase for young graduates

Quality of educational offer

Support to the local economy (physical presence of the university)

Obsolescence of buildings (energy efficiency, respect of standards,

adequacy of spaces, integration of new technologies, etc.)

Quality of spaces for teaching

Each of these criteria varies according to the projects


Approach to socio-economic assessment in the

higher education sector

• Macro: overall country context and overall strategy for the sector. Contextual economic and social indicators through which system-wide changes in education are monitored and evaluated.

• Meso: institutions (ministries, local and regional governments, universities that help structure the distribution of resources and activities at the micro level). Structure of decision-making at this level.

• Micro: project-specific analysis. Focused, as far as possible, on the various indirect consequences or intangible effects of investment. • Cost efficiency analysis

• Cost benefit analysis

• Rate of return on investment in education (OECD indicator)

• Economic rate of return. Educational projects generate tangible and intangible costs and benefits, and the usual analysis of the wage-based rate of return fails to appropriately capture all the costs and benefits associated with the investment.

Eligible costs in the education sector

An infrastructure project contains :

All that is needed to complete the project

Purchase of land or building

Studies

Demolitions, asbestos removal, soil remediation, archaeological research

Construction work, connections and infrastructure

Furniture and equipment

Functional housing

Energy improvement projects, upgrades, improvements in accessibility to people

Realization of renewable energy programmes

Administrative costs, competition fees, taxes,…

Projects may involve new construction, renovation and restoration of historic

buildings

Schools for religious education are excluded

Civil protection authorities are analysed on a case by case basis

30

Role of the EIB in setting up projects

• Assist the promoter in defining the “EIB project"

• Informal approach, very early stage

• Review of amounts, schedule

• Political, legal, regulatory context

• Dialogue with the borrower on the legal and financial

structuring of the operation

• Solvency, guarantees

• Due diligence, legal opinions

• Meetings with decision makers, external counsel, etc.

31

Role of the EIB in setting up projects

‣ Technical Assistance. Tunisian Ongoing Case

‣ Financially supported by the EC – EUR 12.5 million ‣ Hard: Technical assistance related to the execution of

the investment programme, focused on capacity building improvement, monitoring of the infrastructure sub-projects and diverse capacities developments

‣ Soft: The Qualitative Intervention Programme aimed at ensuring the sustainability of infrastructures through an improvement of the disciplinary climate and management of the school environment in general


EIB project cycle


We support sound and sustainable projects

EIB project cycle

Step 1 Proposal

Step 2 Appraisal

Step 3 Approval

Step 4 Signature

Step 5 Disbursement

Step 6 Monitoring

and reporting

Step 7 Repayment

• Financial • Economic • Social • Environmental • Technical

assessment

• EIB Management Committee

• Investment Committee (for operations potentially benefiting from an EU guarantee under EFSI)

• EIB Board of Directors

Finance contract is signed

Overview

1. EIB Group



4. The conditions of intervention of the EIB



Modernisation School Infrastructure

Tunisia

Project: • The project is focused on the expansion of capacity and the upgrading of quality

standards at the secondary level. 369 schools all over Tunisia (25% of the secondary

school capacity of the country)

• Co-financing from EIB-KFW-EC

Contribution to Youth Employment: • The construction of new secondary schools is required to allow increasing participation in

secondary schools, currently limited by insufficient capacities in some locations due to

internal migration. The project will improve the school environment, contributing to better

acquisition of skills, through renovated facilities, modernized equipment and improved

disciplinary climate – thanks to dedicated qualitative interventions in a large selection of

renovated schools

Project Cost: EUR 213 m Loan: EUR 70 m

http://www.eib.org/index.htm

Technical and Technological Institutes

Ecuador

Project: • Construction, extension, rehabilitation and equipment of 21 Technical and Technological

Institutes (TTI’s), classified at the post-secondary level of education.

• Co-financing from EIB-EC and parallel financing with the WB

Contribution to Youth Employment: • The TTIs will be offering 60 technical and vocational programmes leading to professional

qualifications that are recognised and valued by employers in local labour markets.

• The project would result in high and meaningful socio-economic benefits for the country

and furthermore contribute to the EU response to the 2016 earthquake as some of the

Institutes will be located in the regions most impacted by this natural disaster.



Ukraine Higher Education

Ukraine

Project: • Improving the teaching and research capabilities of the selected universities, at the same

time reducing energy consumption and improving energy efficiency of the Universities’

campuses.

• In line with the EU-Ukraine Association Agreement, signed in June 2014, which also

encourages the two parties to intensify their cooperation in the field of higher education,

aiming, in particular at reforming and modernising the education systems and at enhancing

the quality and relevance of the higher education system and institutions.

• The project contributes towards overall improved efficiency and lower energy intensity of

essential services for the Ukrainian population. The project is expected to improve the cost

efficiency of the seven university campuses. Reducing the energy costs enables the

universities to direct the scarce resources to their core activities and subsequently to

increase and widen the universities’ financial basis.



University of Fes

Morocco

Project: • Construction of an eco-campus in Fez, with research facilities and equipment,

teaching facilities, a student residency, administration areas and sport facilities.

• Co-financing from EIB-EC

Contribution to Youth Employment: • The university will respond to increasing demand for higher education and

training in Morocco, both in the country itself and for the larger African region,

as Morocco is attracting a growing number of students from the continent.



EIB Investments in Education outside the European Union · The EIB at a glance ‣Largest...

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