European Investment Bank

investing for development?

The HUB

2. 12. 2010, Praha

1) What is the EIB

2) EIB and it's role in development

3) The work of the Counterbalance

coalition

Who are we?

● The Counterbalance coalition is composed of environmental and development NGOs from several European countries

● A watchdog coalition

What is the EIB?

The basics

● The EIB was founded in 1957 under the treaty of Rome

● Currentrly, it is one of the largest international public financial institution

● Initially it was funded through “subscribed capital”, but now raises most of its funds on global debt markets (AAA rated)

Who decides ...

● The voting power of states is derived from the amount of subscribed capital, but ...

● There is a tendency to take decisions by consensus.

Board of governors

Board of directors

Management

committee

The EIB and the global South

EIB outside of the EU (1)

● The EIB operates outside of the EU under so called mandates, which● set priorities for the EIB lending● provide community guarantees

● There is a significant number of competing expectations from the EIB lending – highly politicised objectives

EIB outside of the EU (2)

● ACP countries are covered under the agreement from Cotonou● Development objectives from the very beginning

● The rest (ALA, candidate countries, Mediterranean, south Caucasus and Russia)● The present mandate sets out different objectives

for each region

EIB outside of the EU (3)

● Neighbourhood countr.: up to EUR 12,4 bln.● Asia and Latin America: up to EUR 3,8 bln.

● energy security of the EU, economic co-operation through direct investment

● Mediterranean: up to EUR 8,7 bln.● Priority for energy investment and large infrastructure

CRISIS

The winds of change

● “Wise person's panel” which stared as a mid-term review of the ELM

● Decision of the ECJ on the 6th of November 2008

● Refusal of the EP to rubber-stamp the present mandate. The EP insisted on preparation of a new one.

The EIB and types of lending

Safety? Efficiency first!

Types of lending (1)

● Traditionally, the main focus of the Bank was on projects● Environmental and social impacts assessment

weaker than in many other IFIs● Very weak or no ex-post evaluation● Often questionable value added

Types of lending (2)

● Growing attention is focused on financial intermediaries (global loans, private equity)● “Black box” effect● No clarity on either disbursement or performance● Assessment of the projects delegated to the

intermediary institution

One example for all - Zambia

● EIB has been lending in the country since 1978● Sectors funded in the last 32 years restricted to

4; Industry (largely mining), Credit Lines, Energy and Services

● No lending to other industries such as agriculture, infrastructure, health, education, telecommunications, transport, water or sewage

● No lending at all by the EIB since end of 2008

EIB in Zambia (2)

EIB in Zambia since 2003 (3)

● 3 credit lines – c. € 54 million● 4 separate mines (3 copper & one nickel)

Kansanshi, Mopani, Lumwana & Munali. c. € 196 million

● 1 energy - Zesco Kariba North, € 7.6 million

● No others

Thank you for your attention.

Isabella Besedova &

Martin Krylmartin.kryl@hnutiduha.cz