Malta hosts EIB and EIF meetings
The boards of the European Investment Bank and the European Investment Fund are holding their annual meetings in Malta, today and tomorrow. Exclusive interviews by
gramme in Malta.
4. What is the extent of EIB support extended to non-EU south Mediterranean nations – key sectors and issues addressed?
The prosperity of North Africa and the Middle East is inseparable from the stability of Europe. If we do not contribute to the solution of their problems, these will eventually appear on our own doorstep. In our Mediterranean partner countries, our goal is to boost economic and social development while improving living conditions. By 2020 our loans to these countries will reach nearly €10bn for which we are mobilising resources and expertise in water, energy, transport, education and SME sectors.
5. The Mediterranean is identified as a ‘climate change hotspot’. To what extent has the Bank, could it and would you like it to support climate change activities in the region as well as the rapid development of renewable energies and energy efficiency?
Climate change is a Bank priority - we are by far the largest public multilateral investor in climate mitigation and adaptation projects, investing almost €100 billion in climate action in the past five years. We plan to sustain this level between now and 2020 and we are making a real difference in the Mediterranean.
In Morocco the EIB has invested €250 million in the Ouarzazate solar energy complex - the world’s largest project of this kind. During the EIB’s MED Conference Climate Action in the Mediterranean in Rabat, Morocco earlier this month, we underlined our aim to build a portfolio of climate-action operations in which among other sectors, water projects are crucial. Over the next five years we will commit €4 billion to climate action in Africa, which we hope will bring in over €10 billion of total investment in the climate sector on the African continent.
6. You have called for an urgent ‘paradigm shift’ in how EU is facing the refugee crisis, as well as in the Bank’s related future role and that of private business.
I welcome President Juncker’s announcement in his State of the Union speech last week for an enhanced EU global strategy underpinned by an External Investment Plan, whose precise structure and management has still to be framed. The principle is something of a game-changer. It brings together the concept of finance and development and recognises that Europe needs to tackle global challenges more effectively. It may take a while for this thinking to really permeate all of our institutions, but multilateral development banks and international financial institutions like the EIB can lead the way. In the long term we look forward to a central role in this Plan, with its focus on migration and Africa. We are already involved in projects under the Africa, Caribbean and Pacific Migration Package, which supports migration-related investments and small businesses.
7. What is the EIB’s Economic Resilience Initiative, endorsed by EU leaders in June?
As the EU bank we are a powerful multiplier of EU External Action which is the thinking behind the Initiative. The refugee crisis requires a policy response on many fronts. For us and other MDBs, our key contribution lies in: addressing the urgent need to upgrade and scale up infrastructure in view of future population growth and supporting the development of the private sector to provide sufficient employment opportunities to the host population and to refugees to ensure social cohesion. We know this is what is needed, and our experience and expertise in the regions concerned reinforce this.
8. EIB loans approved in July included financing for social housing and temporary accommodation and reception centres for refugees across Germany. What more can/does the Bank plan to do to support refugees in EU countries?
There is a moral imperative to support the countries at the frontline of the refugee crisis. The Bank can help member states, for example through social housing loans. But we must also invest in the region and offer opportunities closer to home to those fleeing violence. To date, our investments in the EU could provide accommodation for as many as 200,000 refugees and their families. We want our support for entrepreneurs and start-ups to be tailored to help refugees too. That would support their integration by providing economic opportunities, as well as skills and training. To deal with the immediate emergency, we also made a €5 million contribution to the Migration and Refugee Fund of the Council of Europe’s Development Bank to provide reception and transit centres in countries receiving refugees.
9. And are you also helping or will you be helping neighbouring non-EU countries to cope with migrant/refugee flows
Definitely. Earlier this week in New York I addressed the United Nations Summit on Refugees and Migrants about our Economic Resilience Initiative. Focused on the Western Balkans and Europe’s Southern Neighbourhood, it will entail a big increase in EIB financing there: a further €6 billion in addition to the €7.5 billion already planned. It combines support for the private sector, particularly for young people and women, with more investment in socially important sectors like water, health and education. We estimate this extra financing should trigger €15 billion in additional investment in those regions by 2020, taking the total EIB mobilisation of investment to €35 billion. It will ease the pressure on those countries dealing with huge numbers of refugees. It provides a future for those driven from their homes by investing even more in the development of these economies.
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“During my visit we will be signing significant guarantee agreements and I understand that senior representatives from the Maltese authorities and the banking sector will be attending these events. ”
2013 programming period: €12 million of resources provided by the Maltese Government for this operation were fully absorbed and triggered total investments in the country for approximately €106.5 million.
The EIF and Bank of Valletta also signed the first SME Initiative transaction in Malta in January this year, to facilitate access to finance for over 800 Maltese SMEs. It is expected that SMEs, including start-ups, in need of financing will benefit from €60 million available finance in Malta. The SME Initiative Malta is a joint financial instrument of the European Commission, EIB Group and the Government of Malta which aims to stimulate SME financing by providing partial risk cover for SME loan portfolios originated by financial institutions.
3. Bank of Valletta is one of the 30 financial institutions which are EIF shareholders. During your visit to Malta will you be meeting other possible EIF members (financial institutions) and/or government ministers, senior officials, and representatives of trade unions, SMEs and of Finance Malta?
During my visit we will be signing significant guarantee agreements and I understand that senior representatives from the Maltese authorities and the banking sector will be attending these events.
4. How do you assess the overall impact of EIF operations on SMEs in the EU to date?
Not only volumes matter to us, but the real effects of our support – effects on the market and in particular on the SMEs. Recent research jointly conducted by EIF and the European Commission on the economic impact of EU Guarantees on Credit to SMEs in Central, Eastern and South Eastern European countries (published, inter alia, in EIF Working Paper No. 29 in July 2015) concluded that EIF support had significant positive effects on beneficiary firms, especially with regard to employment and turnover.
An analysis of the impact of EIF’s venture capital activities (EIF Working Paper 2016/34, June 2016) showed that EIF investments effectively crowdedin additional capital from other venture capital (VC) investors in the aftermath of the recent economic crisis. The analysis finds the EIF crowding-in power to particularly affect regions with lower levels of educational achievement, hinting that the catalytic effect of the EIF has been stronger in less developed VC markets. Future EIF studies within this series will explore the firm-level dynamics (e.g. growth performance, innovation, exits) of EIF-backed VC start-ups.
5. What should be the R and D priorities for EU SMEs in the coming decade? Do you think that activities focused on renewable energies and energy efficiency should be a key focus?
Businesses drive innovation, growth, employment, economic development and social cohesion across Europe. In this context, also, but not only, activities in the areas of renewable energy and energy efficiency are important sectors. EIF supports companies in these sectors, among others, targeting a strong and continued supply of new innovative companies, which base their activities on intensive research and develop- ment. Besides the existing support measures, which have facilitated SMEs’ research and development activities and innovation in Europe, many new support initiatives have been started and others are under preparation.
6. The EIF-NPI Equity Platform will be launched on 29 September. Is Malta a founding member and if so which are the Maltese NPIs and other banks involved?
This new platform is open to promotional institutions at national and regional/local level (NPIs). To date, EIF has not received any approach from Maltese entities qualifying as NPIs.
7. Do non-EU nations which are candidates or in the precandidate stage or European Neighbourhood states have access to EIF and will they in the future to the EIF-NPI platform? If they don’t, do you think that they should?
The platform is an EU initiative, at this stage mainly focused on NPIs in the EU Member States. The EIF, however, is able to operate outside the EU 28, in candidate countries and countries that are participating in EU programmes implemented by the EIF. Therefore, it might be possible to consider membership on ad-hoc terms of selected non-EU NPIs as a future development of the platform.