Minister of Finance Mr. Felix Mutati has said the decision by the European Investment Bank to set-up a country office is a clear endorsement by Europe that Zambia is one of the best investment destinations in Africa. And the European Investment Bank [EIB] is in the process of arranging blend finance comprising loans and grants to Zambia totaling Euro 320 million this year.
“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 and stabilisation programme, Zambia-Plus,” a beaming Mr. Mutati told members of his senior management team at the Ministry of Finance when he shared a report on his recent trip to Europe.
“We welcome the EIB because they are not afraid of money,” charged Mr. Mutati, adding that “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.”
“The coming of EIB to Zambia will improve the credit-rating bench mark for the financial sector,” Mr. Mutati assured his senior management team and urged them to “be on high alert so that all economic fundamentals continue to move in the right direction.”
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 [SDG’s]. Zambia will become only 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 programs related to climate action such as renewable energy, climate adaptation, and projects with a high and sustainable impact on society and the environment,” stated Mr. Walsh.
The 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 finalizing finances for several projects such as:-
1. Investment grant of Euro 45 million blended with a loan of Euro 110 million for rehabilitation of the Great North Road;
2. Investment grant of Euro 40 million for the Kenya-Tanzania-Zambia Interconnector;
3. Investment grant of Euro 65 million blended with a loan of Euro 15 million for the Lusaka Power Transmission and Distribution Network; and,
4. 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 IDC Scaling-Up Solar Project and the Zambia Water for Health Facility.
For the period 2010 to 2015, the European Investment Bank supported several public and private sector programs in Zambia. Under the public sector arm, the EIB financed projects totaling Euro 407 million, of which: Euro 80 million was for rehabilitation of the great east road; Euro 22 million for the Kafue-Livingstone Power Transmission Line; and, EURO 50 million for the Itezhi-Tezhi Transmission Line. Others included Euro 75 million for the Zambia Water and Sanitation Project; Euro 78 million for the Lusaka Transmission and Distribution Network; and, Euro 102 million for the Lusaka Sanitation Project.
Among Zambian based private sector organisations which benefitted from Euro 56.5 million EIB support between 2010 and 2015 include institutions such as BancABC which got Euro 25 million for lending to SME’s, Madison Finance Company which got Euro 4.5 million for a micro-finance program, Pulse Financial Services which was given Euro 4 million for a micro-finance program, AB Bank which obtained Euro 3 million for micro-finance, and FNB Zambia which received Euro 20 million for SME’s and Micro-Finance programs.
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 actualization of this, the EIB provides direct loans to the public sector, helps to mobilise private sector participation in Public Private Partnerships [PPP’s], 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 operationalization of this, the emphasis is on development of the financial sector, increased direct lending to corporates, guarantees, project finance, and Public-Private-Partnerships [PPP’s].
“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 on EIB Financing in Sub-Saharan Africa which was recently held at the EIB Headquarters in Luxembourg, Europe.
Conditionality for access to finance for eligible projects under the EIB mandate objectives for local or regional integration projects, include:
1. Consistency with EU external policy goals;
2. Technical soundness;
3. Economic viability;
4. Financial viability;
5. Environmental soundness;
6. Social acceptability; and,
7. Open procurement.
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.