MICROCAPITAL BRIEF: European Investment Bank (EIB) Introduces $33m Pacific Microfinance Facility

The European Investment Bank (EIB), the long-term lending bank of the European Union, has introduced the Pacific Microfinance Facility, a program that aims to support community projects and micro- and small enterprises (MSEs) in the Pacific region [1]. EIB reportedly plans to provide up to EUR 30 million (USD 32.9 million) in loans to “local partners” on unspecified Pacific islands for on-lending to such efforts.

According to Pim van Ballekom, the Vice President of EIB, “Entrepreneurs and small businesses are more flexible in terms of spotting new business opportunities, creating jobs and contributing to economic development…[T]he new focus will back investment in education, water, renewable energy and energy efficiency schemes that will primarily benefit low-income households” [2].

The Pacific Microfinance Facility will provide loans denominated in local currency to reduce borrowers’ foreign exchange risk, a challenge that reportedly has been associated with microfinance lending in the region in the past [2].

As of 2015, EIB has approximately EUR 400 million (USD 439 million) in outstanding loans to organizations in sub-Saharan Africa, the Caribbean and the Pacific for small scale lending. The total lending portfolio of EIB was EUR 80.3 billion (USD 88.2 billion) as of 2014.

By Benjamin Krupp, Research Associate

About European Investment Bank (EIB)

Created in 1958, the European Investment Bank (EIB) serves as the long-term lending bank of the European Union. In addition to supporting projects in EU member states, its main priorities include financing investments in likely future member states and EU partner countries, principally in the area of small and medium-sized enterprises. According to its website, “the EIB operates on a non-profit maximizing basis and lends at close to the cost of borrowing.” The total lending portfolio of EIB was EUR 80.3 billion (USD 88.2 billion) as of 2014.

Sources and Additional Resources

[1] Fiji Times: Bank Lends a Hand

[2] Pacific Islands News Association: European Investment Bank Confirms Dedicated Pacific Microfinance Support

MicroCapital, June 11, 2015: OPIC, Calvert, Swiss Agency for Development and Cooperation, EIB Invest $12m in Participatory Microfinance Group for Africa (PAMIGA) to Support Access to Solar Power, Irrigation in Rural Africa

MicroCapital, June 6, 2015: Pacific Financial Inclusion Programme (PFIP), Bima Partner to Offer Microinsurance in Rural Papua New Guinea

MicroCapital Universe Profile: European Investment Bank (EIB)

Do you know that MicroCapital publishes the MicroCapital Monitor newspaper each month? Find out more at https://www.microcapital.org/products-page/

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