EIB and ACP - New dynamic for financing SMEs

The European Investment Bank (EIB) has moved up a gear in the past two years when it comes to financing small and medium-sized enterprises in the ACP countries. This is in line with the pressing demands of the ACP Group, which on 15 July held a workshop on “Enhancing access to finance for SMEs”; seen as the backbone of ACP economies.

According to the December 2010 figures, the EIB set aside a total of €180 million for microfinance in the ACP countries in the form of debt and equity. This represents 80% of the EIB’s total microfinance portfolio. The EIB deals either directly with specialised institutions or through commercial banks and on occasion with micro-entrepreneurs. In this way, since 2005 the EIB has acquired shares equivalent to €15.6 million in three holdings operating in Sub-Saharan Africa: Advans SA SCAR*, MicroCred SA** and Access Microfinance Holding AG, Germany.

Priority for rural and/or very poor areas

At the beginning of this year these three holdings had already created nine microfinance institutions with 54 subsidiaries in eight countries of Sub-Saharan Africa, serving 97,000 clients each having access to an average of € 1,046. A very low rate of on average 1.48% of portfolios after 30 days were at risk. The three holdings often team up with regional institutions or local banks. This is true in Liberia, where the German company Access Microfinance Holding joined with various partners, including the African Development Bank, to develop Access Bank Liberia, the country’s number one bank in providing services to SMEs. The EIB is committed to seeing this model develop even further in the ACP countries.

In the Pacific and Caribbean countries the EIB selects local partners. As in the Dominican Republic, where for more than a decade now it has contributed, for example, to developing the Banco de Ahorro y Credito Ademi and the Banco Adopem, which support many microfinance institutions whose clients are mainly entrepreneurs in rural and/or very poor areas.

Technical assistance

The EIB’s intervention in the Dominican Republic includes a technical assistance programme to assist present and aspiring entrepreneurs in gaining access to the means to implement their projects and to ensure that the financing is as effective as possible. This is a component of many of the EIB’s direct or indirect interventions in the sector.

Expectation and homage

The success stories of microfinance granted to SMEs in the ACP countries are so numerous that expectations are very high that there will be significant expansion in this area. The statement by ACP Secretary General Dr. Mohamed Ibn Chambas, for example, represents both encouragement for and recognition of the dynamic developed by the EIB, which “through the Investment Facility has the potential to assist ACP countries in the structural transformation of our SMEs into competitive ones”

* Advans SA SCAR (created by Horus Development Finance, formerly Horus Banque et Finance, France),

** MicroCred SA (investment company created by PlaNet Finance and partners: the International Financial Company (IFC) of the World Bank group, the Société Générale and AXA Belgium)

Hegel Goutier