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“ Agribusiness Financing: Innovative Financial Solutions”

Learn how the European Investment Bank supports the private sector with financing solutions for small and medium enterprises (SMEs) in the agribusiness sector. Discover the different financing channels, risk-sharing instruments, and impact funds available.

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“ Agribusiness Financing: Innovative Financial Solutions”

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  1. “Agribusiness Financing: Innovative Financial Solutions” Adam Bruun, Head of EIB Pacific Regional Office

  2. The European Investment Bank (EIB):Lending to Financial Institutions for SME Financing 2nd Pacific Agribusiness Forum Agribusiness Financing: Innovative Financial Solutions Apia, 1 September 2016 Adam Bruun, Head of EIB Pacific Regional Office European Investment Bank

  3. How does the EIB support Private Sector Funding? SMEs + microfinance Mid-cap enterprises Large corporates SPVs & project finance Direct loans • 1 Loans intermediated by a bank • 2 Loans guaranteed by a bank • 3 Microfinance, SME and Mid-cap credit lines to local banks Guarantee provided by the EIB to a local bank (only in specific cases) Equity investments mostly through Private Equity funds European Investment Bank

  4. Risk-bearing: Impact Financing Envelope (IFE) Areas of Focus • Social and demographic challenges: Unemployment, in particular in rural areas and among women and youth, food security, social and financial exclusion, migration, post-conflict / post-disaster recovery, access to healthcare, access to education and training etc. • Environmental challenges: climate action (including access to renewable energy and energy efficiency), forestry issues, waste management, preservation of biodiversity, water supply etc. Four financing channels Potentially higher risk Transactions • Significant and measurable impact Social Impact Equity Funds Risk-sharing Instruments Loans to Financial Intermediaries Direct Financing European Investment Bank

  5. IFE Instruments Risk-sharing Instruments Social Impact Funds • venture capital / private equity / social impact funds • managers explicitly pursue social impact goals • focus on employment, working conditions, vulnerable populations, access to healthcare, energy, education, etc. • first loss guarantees to facilitate risk-sharing operations with local financial intermediaries • supporting SMEs and small projects • help leverage senior guarantee tranches from EIB and other IFIs / DFIs Loans to Financial Intermediaries Direct Financing • debt (and possibly equity) instruments with high developmental impact • promoted by sound, experienced investors • focus on underserved sectors such as agriculture, private health and education • local currency loans in economically deprived countries • beneficiaries: smallholder farmers, micro-enterprises and SMEs • intermediaries: commercial banks, credit cooperatives, microfinance institutions etc. • strengthened with technical assistance and advisory services European Investment Bank

  6. The Caribbean and Pacific Impact Finance Facility (CPIFF) LENDING FACILITY 40 m EUR Senior debt 3- 7 yearswith 1-2 yeargraceperiod Unsecured Local currency, EUR and USD Fixedinterest rate • Financial intermediaries • Microfinance institutions • Downscalingbanks • Wholesalefunder of MFIs Tailoredcapacity building TECHNICAL ASSISTANCE FACILITY • Eligible clients withloans < EUR 50,000: • Micro and small enterprises • Lowincomehouseholdswithsmallscale impact projects Financial education Mentoring European Investment Bank

  7. CPIFF Requirements • As a rule: • loans to eligible final beneficiaries shall not exceed EUR 50,000 • EIB loan will not exceed 50% of MFI’s equity • EIB loan will finance up to 50% of the eligible loan portfolio • Qualitative requirements: • Endorsement of client protection principles and commitment to gradually comply • Satisfactory AML/CFT policy in place • Exclusion list of sectors to be applied • Regular reporting on portfolio results indicators European Investment Bank

  8. EIB in the Pacific Thank you! European Investment BankPacific Regional Office Level 25, 88 Phillip StreetSYDNEY NSW 2000 Australia tel +(61 2) 8211 0536email: a.bruun@eib.org Adam Bruun Head of Regional Office Katrin Bock Business Analyst tel +(61 2) 8211 0532email: k.bock@eib.org European Investment Bank

  9. Example: ACP Smallholder Farming • A joint initiative of EIB and IFAD to support smallholder farming activities in ACP countries • Building on pilot projects carried out by IFAD, with the objective of providing medium to long-term local and foreign currency funding (currently very scarce) • 5-8 countries targeted, including Malawi, Mozambique, Ethiopia, Nigeria, Rwanda • Amount: up to EUR 50m Support to up to 100,000 smallholder farmers over 2014-20. European Investment Bank

  10. CotonouAgreement: ResourcesandAmounts European Investment Bank

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