European DFIs and EIB launch EUR 280 million financing initiative to support Covid-19 impacted businesses
EIB and EDFI members expand existing - European Financing Partners (EFP) - financing scheme to reduce the economic impact of the Covid-19 pandemic on private sector companies in developing countries.
As part of Team Europe’s response to the Covid-19 pandemic, eleven members of EDFI, the Association of European Development Finance Institutions, are partnering with the European Investment Bank (EIB) to create a new, dedicated Covid-19 financing initiative through the existing European Financing Partners (EFP) scheme. The EUR 280 million initiative will support financial institutions and businesses in developing countries and ensure continued business investment.
“Increasing targeted support for private sector investment around the world is crucial to strengthen the resilience of companies and communities most impacted by Covid-19. The European Investment Bank is pleased to join forces with development finance partners from across Europe to build on the successful track record of European Financing Partners. The EUR 280 million of new Covid-19 through EFP support represents a further milestone in Team Europe’s rapid response to support partners around the globe,” said Ambroise Fayolle, European Investment Bank Vice-President.
The dedicated support enabled EDFI members and the EIB to scale up their joint robust and targeted response to support businesses and SMEs in developing and emerging markets and local financial institutions most impacted by Covid-19. The initiative will start operations in November with an initial amount of EUR 280 million. It has been designed to provide additional support to clients suffering from the economic consequences of the pandemic.
Increasing targeted support for private sector investment around the world is crucial to strengthen the resilience of companies and communities most impacted by Covid-19.
Ambroise Fayolle, EIB Vice-President
Co-financing between development finance institutions is an important component of Team Europe’s response.
Bruno Wenn, EDFI Chair
Launched in 2003, EFP has demonstrated how financial support can be provided using an efficient and fast track process with low administrative overheads. EFP enables large-scale investment in developing countries to be supported while reducing the risk faced by individual development finance institutions.
Since its launch, the partnership between development finance partners and the EIB has supported sustainable private sector investment in 43 projects, with a total value of EUR 590 million across countries included in the OECD DAC list.
The new dedicated Covid-19 initiative builds on this excellent track record to pool resources, facilitate and streamline financial cooperation to face the current crisis
Forty percent of the EFP financing so far has been allocated to financial intermediaries, and infrastructure and agribusiness represent other key sectors. While financial institutions are expected to feel the negative consequences of Covid-19 more strongly over time, they are also expected to play a key role in implementing many of the government’s policies to support SMEs and businesses. In order withstand any liquidity crunch, short-medium term financing may be required. Providing effective recovery solutions cannot be achieved without a well-functioning financial sector. Strengthening the impact of EFP to address new challenges caused by Covid-19 represents an important component of the response, as it will allow financial institutions and to mobilise additional resources and diversify their operations while reaching a broader spectrum of individuals in need.
“Co-financing between development finance institutions is an important component of Team Europe’s response. Building up on the long-lasting strategic partnership we have with the EIB and the success of our existing EFP facility, it has emerged as the preferred platform to offer emergency support financing to crucial sectors such as energy, infrastructure, financial intermediaries, manufacturing, agri-business and services,” said Bruno Wenn, EDFI Chair.
EDFI is the Association of 15 bilateral European development finance institutions that invest in the private sector in emerging and frontier markets to create jobs, boost growth, and fight poverty and climate change. Since EDFI was set up in 1992, its member institutions have financed app. 15,000 projects, and they now manage a combined investment portfolio of EUR 46 billion across financial services, clean energy, industry and many other sectors in more than 100 countries.
The European Investment Bank (EIB) is the long-term lending institution of the European Union (EU) owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals and achieve the UN Sustainable Development Goals, both in Europe and beyond. The EIB is present in more than 160 countries and supports projects promoting climate action, economic resilience and gender equality.
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