1.3.2 EIB pro-actively generates projects that address development needs

General By investing in the regional development banks, the EIB use their regional specialisation and integration into their specific regions. They can demonstrate more focussed analytical, project and program approaches.

Furthermore these banks have generally lower project preparation and monitoring costs. There are niches where only they can operate on a sustainable basis (e;g. Smaller projects and countries).

“EIB participation in regional development banks in the ACP” EIB document 07/133 p4

Some EIB representatives met consider that the EIB cannot have a real programme approach and that this is indeed for the better. Their role is to react to demands. In some sectors however (eg. infrastructure) they go beyong responding to the markes, also for the financial sector they have country strategies. (MN 266)

An EIB staff member underlined that the EIB aims at doing things that have a developmental aspect. The EIB will not do anything that is out of the programmatic plan of the country. There are however different possibilities and concretely this boils down to choosing between different possibilities that are relevant in terms of addressing development needs. Other criteria that are essential to take into account are whether the project is commercially viable and that the EIB needs to have a real value added. In this perspective the EIB is rather responsive and pragmatic than pro- active and strategic (while remaining in line with the general strategic lines of its business plan). People come to the EIB with a project. The EIB cannot afford, notably in terms of resources, to make a programme specific to the country, although there is a slight evolution in this respect. Poverty reduction is also more an indirect benefit they are looking for. They look more directly at environmental benefits and the generation of wealth. The EIB tries to create conditions from which everybody should benefit. (see MN 331)

Commission staff representatives also raised the question to know to what extent EIB projects were not only addressing development needs, but were also strategic in this respect. Indeed they considered that the EIB was financing operations that were needed in terms of development needs, but had more questions on the issue to know whether these were the most needed ones and whether the EIB sufficiently looked at the broader picture in this respect (see MN 332). Several stakeholders underlined that in their view the EIB was acting mainly as an Investement Banks, having priorities in terms of profit generating and much less in terms of development. They consider that “the constraint tends to become the objective”. This reasoning was applied to “Development Banks” in general, not only to the EIB. (eg. MN 322).

The NGO group Counterbalance is critical about the EIB effectively addressing development needs. According to Counterbalance, concerning the Grand Inga hydroelectricity project in Democratic Republic of Congo (DRC) : although fewer than 7% of the population of the DRC have access to electricity, the project aims to export most of its power. The project seems more oriented towards EU’s interests than DRC development needs. Source: Counter Balance, Challenging the EIB, “Corporate welfare and development deceptions : why the EIB is failing to deliver outside the EU?”, February 2010

The Bankwatch network on its side considers that the EIB has done little to ensure its lending meets the needs of the poor countries in which it funds some of its biggest infrastructure projects. There is little indication that EIB lending activities have contributed to the goal of EU strategies for poverty alleviation and social development. The report details several examples of EIB financed projects that support this statement. For example, the Nam Theum 2 Dam project in Laos will have

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

ADE - EGEVAL II

Final Report September 2010 Annexe 9/Page 24

experience with dam projects in Laos indicates that villagers will lose farmlands, forests, fisheries and water resources on which they depend. The EIB mentions that it supports the investment because of the project’s high development impact and the enhancement of regional integration. However, the report stresses that in a country notorious for corruption, financial mismanagement and a lack of transparency, there is little evidence to support EIB’s assertions.Source: CEE bankwatch network, “Raising the bar on big dams, Making the case for dam policy reform at the European Investment Bank”, November 2007

2003_BOAD PG IV There is no evidence on pro-active EIB generation of this operation.

2003_Dakar-

Ziguinchor The Senegalese Government sent an official request to the EIB in order to partly finance the project. Consequently, the EIB has not pro-actively generated this project. Operation’s « Conseil d’administration. Prêt sur les ressources de la FI. Projet Liaison maritime

Dakar-

Ziguinchor (Sénégal) », EIB, 2004, p1

It seems that the Senegalese government has requested the EIB’s financing because the project concerns quasi-infrastructure and the EC support wouldn’t probably be possible for this kind of project.

Source: MN017

2003_MAURITIUS

CONTAINER The EIB has previously worked with the borrower (CHCL) for Port Louis Container Terminal I project. Therefore, the EIB has not pro-actively generated this project in order to meet the demand requirement in terms of trans-shipment.

« Fact sheet A : proposal to appraise a new operation », EIB, 2004, p 1

2003_GILGEL

GIBE This project is the third loan to EEPCO (Gilgel Gibe project and EEPCO Urban Power Distribution & Load Dispatch project). This first one is completed and the implantation of the second was proceeding in a satisfactory manner at the time of project selection.

No evidence that that the EIB has pro-actively acted in that field.

However, the Bank contacted the Etjhipian Government in order to prepare direct lending to the local private promoters.

“Nevertheless, under the Cotonou Agreement, the Bank has the specific mandate to finance the private sector as well as the commercially-run public sector at market rates. In order for Ethiopia to get the full benefit from the financing under the Cotonou Agreement, contacts with the

Ethiopian authorities were started with a view to agree on the principle of direct lending to the local private promoters.”

“Ethiopia - Country strategy paper and indicative programme for the period 2008-2013”, European Community, 2007, p 47

2004-WAGP There is no evidence that the EIB has plaid a proactive role in this project. It refinances the Government of Ghana who seems to have been the major proactive player.

Sources: Factsheet A and B, Appraisal Report.

2005_ACPGLOB

CA2006 Project addresses development need, but was not generated by EIB 2005_EMP

AFRICA FUND II Project addresses development need, but was not generated by EIB 2005_ACPGLOB

ADEMI Project addresses development need, but was not generated by EIB though EIB played a strong role in its design and in placing Banco Ademi on a growth path

2005_ACPGLOB

2005_ACPGLOB

CA2006 Project addresses development need, but was not generated by EIB 2006_EAU

SENEGAL The water reform undertaken in Senegal was lead by the Government in collaboration with donors, namely the World Bank, AFD and EIB. The EIB has taken part of water investment program in Senegal.

“Rapport financier. Projet: Programme eau Sénégal”, EIB, 2007, p2

An EIB staff member mentioned that the EIB has convinced the Commission of the importance of the water sector in Senegal. Even if the Commission has taken the initiative, the EIB has played an important role in this project setting-up.

Source: MN016

2007_ACPGLOG

SOCREDO This line of credit oriented to environmental operations is the first project in this filed for the EIB (except a similar credit line in New Caledonia). This is considered as a pilot project. Therefore the EIB tends to target a new “market” and thus generates new projects.

“Fact sheet B: financing proposal”, EIB, 2007, p3

2008_EDFI The EDFIs generate projects that addresses development needs

2009_MICRO

FINANCE_ACP The internal EIB documents stated that this investment is an emergency response of IFC and KfW to the financial crisis. Then it appears that the Bank has not pro-actively generated this project.

“Fact sheet A : Appraisal Autorisation ”, EIB, 2009, p 3

I-1.3.3 Project identification/appraisal documents demonstrate conformity with development