By Nawa Mutumweno – The decision by the European Investment Bank (EIB) to set-up a country office is a clear endorsement by Europe that Zambia is one of the best investment destinations in Africa, Minister of Finance, Felix Mutati, has said.
‘’The plan to set up a country office in Zambia by a Triple A (AAA) credit rated organisation like the European Investment Bank whose board of governors are Finance ministers in the entire European Union, means the international community is steadily appreciating the government’s algorithm for the economic recovery programme and stabilisation programme, Zambia-Plus,’’ Mr. Mutati elaborated.
‘’The fiscal prudence and economic governance measures which we have put in place under Zambia –Plus need to be sustained so that quality investments flow into Zambia for us to meet our job creation and poverty reduction objectives in line with the development vision of President Edgar Lungu,’’ he added.
During the Zambia-EIB Seminar on EIB Financing in Sub-Saharan Africa which was recently held at the EIB Headquarters in Luxembourg, Europe, EIB Deputy Director-General, Patrick Walsh, disclosed that, ‘’due to our growing investment portfolio in Zambia, significant progress will be made in the coming few months to establish an office by the third quarter of 2017.’’
Mr. Walsh said the operations of the EIB Zambia Country Office will be targeted at supporting the European Union’s development agenda, contributing to poverty reduction; and, facilitating achievement of the UN Sustainable Development Goals (SDGs).
Zambia becomes the sixth country in Africa to host an EIB Country Office after earlier establishments in South Africa, Kenya, Ethiopia, Ivory Coast and Cameroon.
‘’EIB is keen to support programmes related to climate action such as renewable energy, climate adaptation, and projects with a high and sustainable impact on society and the environment,’’ Mr. Walsh stated.
The Zambian Minister of Finance was recently on a trip to Belgium, Luxembourg, France, Germany and Sweden to strengthen economic cooperation; build alliances; source for investments; and mobilise resources for Zambia’s development needs in sectors such as energy, cash-crop agriculture, infrastructure, social welfare (social-cash transfer), and multi-sectoral capacity building – including financial sector development.
For 2017, the EIB is in the process of finalising finances for several projects such as:
- Investment grant of Euro 45 million blended with a loan of Euro 110 million for rehabilitation of the Great North Road;
- Investment grant of Euro 40 million for the Kenya-Tanzania-Zambia Interconnector;
- Investment grant of Euro 65 million blended with a loan of Euro 15 million for Lusaka Power Transmission and Distribution Network; and,
- Investment grant of Euro 15 million blended with a loan of Euro 15 million for aquaculture.
Other projects under EIB consideration in 2017 are the Industrial Development Corporation (IDC) Scaling-Up Solar Project and the Zambia Water for Health Facility.
For the period 2010 to 2015, the EIB supported several public and private sector programmes in Zambia. Under the public sector arm, the bank financed projects totalling Euro 407 million.
|Rehabilitation of the Great East Road||80 million|
|Kafue-Livingstone Power Transmission Line||22 million|
|Itezhi-Tezhi Transmission Line||50 million|
|Zambia Water and Sanitation||75 million|
|Lusaka Transmission and Distribution Network||78 million|
|Lusaka Sanitation||102 million|
A number of Zambian-based private sector organisations benefitted from Euro 56.5 million EIB support between 2010 and 2015. These include the following:-
|BancABC||25 million||Lending to SMEs|
|Madison Finance Company||4.5 million||Micro-finance programme|
|Pulse Financial Services||4 million||Micro-finance programme|
|AB Bank||3 million||Micro-finance programme|
|FNB Zambia||20 million||SMEs and micro-finance programmes|
The overarching priorities of the EIB are infrastructure and private sector development. Under infrastructure, focus is on energy development, water development, transport and logistics and telecommunications.
In actualisation of this, the EIB provides direct loans to the public sector, helps to mobilise private sector participation in Public Private Partnerships (PPPs), and promotes regional integration in order to unlock sustainable economic growth.
For private sector development, the focus of EIB is on micro-enterprises, small and medium enterprises, and corporates. In operationalising this, emphasis is on development of the financial sector, increased direct lending to corporates, guarantees, project finance, and PPPs.
‘’The EIB is keen to develop the local private sector through facilitation of their access to finance, and funding of critical social and economic infrastructure,\\ said Mr. WALSH AT THE CONCLUSION of the Zambia-EIB Seminar.
Conditionality for access to finance for eligible projects under the EIB mandate objectives for local or regional projects, include:-
*Consistency with EU external policy goals;
*Social acceptability; and,
The EIB has over 50 years’ experience supporting EU development policies in Africa, and in that time has invested over Euro 18 billion in more than 1 300 projects.
The bank is the world’s largest multilateral lender and borrower, and is committed to the central axes of Africa-Caribbean-Pacific/European Union Cooperation, notably development of the private and financial sectors in countries and territories outside the EU.
Zambia is set to benefit immensely from the establishment of an EIB Country Office. The coming of EIB to Zambia will definitely improve the credit-rating benchmark for the financial sector.