The European Investment Bank (EIB), Europe’s long-term lending institution, and East African-based regional development body, PTA Bank, has launched a new 160 million euros (about K85 billion) lending initiative to support investment across eastern and southern Africa.
EIB has agreed to provide 80 million euros [about K42 billion] for the new initiative that will be matched by PTA Bank and represents the largest single private sector lending scheme ever backed by the EIB in Africa.
Under the new initiative agribusiness, energy, manufacturing and service sector companies will access loans in a range of local and foreign currencies.
Under the new programme being managed by PTA Bank, companies operating in Kenya, Uganda, Tanzania, Rwanda, Burundi, Ethiopia, Eritrea, Djibouti, Democratic Republic of Congo, Zambia, Seychelles, Malawi, Egypt, Mauritius and Mozambique will be able to access loans up to 15 years in euros and dollars or up to seven years in local currency.
Unlike most recent private sector lending by EIB in the region, the new programme will not only target small and medium sized enterprises, but also focus on supporting specific investment needs of larger firms.
“The new engagement announced between the European Investment Bank and PTA Bank reflects our strong shared commitment to support private sector enterprise activity in Africa. This new lending programme represents the largest ever engagement to support business investment in Africa by the European Investment Bank.
“This will help firms present in 12 countries to create new jobs and explore new business opportunities in key sectors. It builds on past lending in Africa with other leading local banks and enable support for investment by larger companies for the first time,” said Pim van Ballekom, EIB vice-president.
Commenting on the occasion, PTA Bank president Admassu Tadesse said: “We are delighted to join forces with the EIB to give a much-needed boost to increased investment in the real economies of eastern and southern Africa which is key to job creation and economic transformation. This programme is a strong addition to other lending programmes we have launched with other funding partners.”
The new lending programme was officially announced at PTA Bank’s regional office in Nairobi. The new initiative will be supported by a two million euros technical assistance programme to strengthen environmental, social and money-laundering assessment skills of PTA staff and to improve assessment of the economic impact of projects financed through the scheme.
EIB is the world’s largest multilateral finance institution and last year provided 1.1 billion euros for investment in sub-Saharan Africa.
The EIB recognises the essential contribution of local partners to ensuring the most effective focus on lending programmes and over the last five years, EIB lending for investment by local companies and in smaller projects through local banks in sub-Saharan Africa has 1.4 billion euros.