1.4.3 In addressing different types (in terms of financial risk involved) of development needs IF and OR are complementary (between operations or within an individual operation),

enhancing responsiveness to development needs

General The use of the Bank’s own resources is constrained by the requirements of the Bank’s Statutes for first class guarantees, and the own resources can only be granted in the form of senior loans and not as risk bearing instruments. The IF is described as risk-sharing instrument. These two types of financing instruments are combined when the financing plan calls for straightforward loans.

“Operational Guidelines of the IF”, EIB, p8

2000_MAGADI_

SODA An interest subsidy on the own resources loan would be hived off and used to pay for infrastructure (e.g. water supplies, schoolrooms) in the Maasai communities around lake Magadi. Source: D2

Source: EIB: Fact Sheet A: proposal to appraise new operation. Magadi Soda Ltd, Luxembourg 6th September 2001. OP3/ACPII/Agora:20000279/DW/hb

2003_MAURITIUS

CONTAINER No evidence was found in that respect. 2003_GILGEL

GIBE No evidence was found in that respect.

2004-WAGP Complementarity is provided by associating the ordinary loan on OR with an interest subsidy under the IF.

Source

EIB, West African Gas Pipeline, Ghana, RM/CRD Opinion (Fact Sheet B Ops B/ACP-IF- 1/2004-0026/EW)

D6: EIB, Appraisal Report, West African Gas Pipeline, Ghana. Luxembourg, 02/10/2006

2006_EAU

SENEGAL No evidence was found in that respect. 2007_ACPGLOG

SOCREDO No evidence was found in that respect. 2009_MICRO

FINANCE_ACP No evidence has been found so far.

JC 1.5

Operations examined aim at addressing countries’/regions’ needs

2000_MAGADI_

SODA The project will improve the utilisation of a unique natural resource thereby contributing to reduce the country’s trade deficit by expanding export revenues both by higher product prices (through product quality improvements) and by increased production. Thereby the project will contribute to improve the competitiveness of the promoter and will consolidate and create job opportunities in a sector where Kenya enjoys a competitive advantage.

Source: D3

Source: : Note to OP3. Opinion for Appraisal Authorisation. Project Magadi Soda, country Kenya. Luxembourg 24/10/2000, PJ/I&S/2000-1186/GCE/SHW/ms

2004_WAGP The project is the first in the West Africa to develop regional exports of natural gas and is fully supported by the New Partnership for Africa’s Development (NEPAD) and by ECOWAS. It will promote regional economic and political integration.

Source: EIB, Appraisal Report, West African Gas Pipeline, Ghana. Luxembourg, 02/10/2006 , §3.1

I-1.5.1 Committee’s portfolio reviews show that operations address countries’/regions’ needs General An EIB source mentioned that the IF was criticised for not being sufficiently ‘developmental’:

MID-TERM EVALUATION OF THE IF AND EIBOR OPERATIONS IN ACP/OCTS

ADE - EGEVAL II

Final Report September 2010 Annexe 9/Page 36

“ACP operations are now subject to much greater stakeholder scrutiny than in the past, be it from the shareholders, other EU institutions (Commission, Parliament and Court of Auditors) and, above all civil society and in particular NGOs, with the result that the Bank is now required to unambiguously demonstrate the value added of each individual operation. As attended to above, there seems to be a perception that the Bank has so far focused mainly on identifying and financing good private sector projects, which in itself is already not an easy task in the ACP context and in that respect, the Bank has been fundamentally in line with the letter of its Cotonou mandate. However it is also being criticised to various degrees, by NGOs, but also by the Commission and by at least one influential Member State for not being sufficiently “developmental” and for being too risk averse.”

Source: MN 027

An EIB staff member noted that one should not forget that the EIB can contribute to Cotonou only as a Bank:

“It should be taken account of our specificity with regard to achieving Cotonou objectives: we are a bank. One should not be too wide in terms of what we can do. It should be considered whether we are (or should be) just a “finance provider” or a “development bank”. Example: SMEs: it is not such an easy example as it may seem. How can we increase VA in field of SME? Sometimes you have to support large projects to be able to support them, where there is a need for long-term money. Other example: micro-finance. Do we need to put more and more money in

microfinance? We would need to have more information beforehand to know where we should act (as a bank). Always thinking on the chain of events we want to have.”

“Remember that the Bank is not a promoter, but it tries to have priorities. Example: energy financing. EIB has clear priority to finance clean energy. This is an area where the Bank will place full priority. With additional instruments like TA etc… the Bank is also supporting technical advice and improving the preparation phase. The Bank is no a promoter but is strengthening the promoter. The Commission’s aid is programme aid, with grants. A totally different dymamic. It is giving away free money. The Bank is not giving away free money.”

Source: MN 024

A COUNTER BALANCE report considers that EIB’s policies and practices are not properly integrated and coherent with EU approaches. There is an ongoing dispute between the European Council, the Commission and the European Parliament about what exactly are and should be the objectives of the EIB. In late 2008, the European Court of Justice ruled that the EIB had to implement the anti-poverty and sustainable development provisions of the EU Treaty. It annulled the legal basis for EIB lending outside the EU because it found the EIB was basing its activities on a narrow interpretation of the EU Treaty. The Parliament also insisted that the EIB apply a developmental, poverty reduction mandate in its lending to Africa and ALA countries. The new Lisbon Treaty also reinforces that aspect, spelling out that poverty reduction must be the focus of all EU policies likely to affect developing countries.

According to this report, the EIB has conflicting objectives (cf table hereunder) which prevent it from focusing entirely on development-related aspects.

Development objectives EU-self interest objective

Sustainable economic and social development of the developing countries, and more particularly the most disadvantaged among them

Support EU presence through Foreign Direct Investment

Campaign against poverty in developing countries

Cost recovery and rapid financial return Improvement or protection of the

environment

Energy security for the EU and raw material supply for the EU

According to this report, the EIB lacks clear operational strategies, priorities and processes that ensure that its money will be spend on projects selected to maximise development results. In

particular, it lacks sufficiently clear and pro-active lending strategies and is often at the mercy of whatever private sector project promoters brings to its attention. As a result, the operations are distorted in favour of larger projects sponsored by major European companies. The report also stresses that the EIB does not consider enough whether proposed projects fit sufficiently with the Country Strategies of the Commission and other European funding bodies. Furthermore, the EIB is not active enough in the discussions the Commission initiated to encourage different public finance bodies to prioritise particular countries and sectors.

Source: Counter Balance, Challenging the EIB, “Corporate welfare and development deceptions : why the EIB is failing to deliver outside the EU?”, February 2010

General No such review or portfolio impact assessment was obtained

2003_BOAD PG IV No evidence so far on how the operation addressed country/region needs– see also I-1.2.1 on little analysis of country needs and I-1.4.1 on tackling development issues.

2003_Dakar-

Ziguinchor No evidence so far on how the operation addressed country/region needs– analysis of country needs and I-1.4.1 on tackling development issues. see also I-1.2.1 on little

2003_MAURITIUS

CONTAINER The project is only mentioned in the appendix related to portfolio of signed own resources operations. The Bank does not show how this project addresses country’s/region’s needs.

“Annual Report 2004 – Investment Facility” EIB “Annual Report 2005 – Investment Facility” EIB “Annual Report 2006 – Investment Facility” EIB

2003_GILGEL

GIBE No evidence was found in that respect.

2004-WAGP EIB preparatory documents do so.

Sources Factsheet A and B, Appraisal Report.

2006_EAU

SENEGAL The annual report of the EIB only mentions this project but it does not explain how this project addresses region/country needs.

“Annual Report 2007 – Investment Facility” EIB, p31

2007_ACPGLOG

SOCREDO No evidence was found in that respect. 2009_MICRO

FINANCE_ACP No evidence was found in that respect.