Development finance institutions the European Investment Bank (EIB) and the Eastern and Southern African Trade and Development Bank (TDB) have jointly launched a 12-year, €81.5-million initiative that will unlock €163-million of investment to support private sector investment in fragile contexts across Eastern and Southern Africa.
The investment initiative will catalyse investment that enhances financial and social inclusion, and is expected to support entrepreneurs in remote regions, startups led by women and young people, among other groups with constrained access to financing.
Private sector investment in sectors most impacted by the Covid-19 pandemic will also be supported through this financing programme.
This is EIB’s first-ever facility to be specifically dedicated to the support of the private sector in fragile contexts, and will focus on overcoming barriers hindering access to finance by socially excluded people and communities.
This initiative was formally launched in Nairobi, Kenya, on November 25 by EIB president Werner Hoyer and TDB president emeritus and group MD Admassu Tadesse, ahead of the formal opening of the EIB’s new Nairobi Hub.
“Ensuring that entrepreneurs and communities across Africa can access finance is essential to tackle social exclusion and the impact of a changing climate. The EIB works closely with leading financial institutions across Africa to unlock high-impact targeted financing,” said Hoyer.
“We are pleased to strengthen our long-standing cooperation with our multilateral partner TDB to develop and today launch this pioneering financing to support people in fragile situations across Eastern and Southern Africa,” he said.
TDB is thrilled to deepen its partnership with the EIB, one of its strategic partners in the region, with which it works closely to advance the realisation of United Nations Sustainable Development Goals, the Paris Agreement and African Union Agenda 2063, said Tadesse.
“TDB and EIB have been growing their cooperation since 2014 to finance critical projects tackling climate action and [supporting] small and medium-sized enterprises to foster sustainable growth in our region. This new facility targeted at businesses in fragile contexts will enable TDB to expand its reach even further to empower those who need it the most to sustainably participate in the economy,” he said.
“Delivering targeted financing in fragile regions is essential to prevent social exclusion and unlock opportunities that drive economic growth. This new cooperation between the EIB and TDB to focus on financing in fragile regions is a model for high-impact investment around the world,” said EIB VP responsible for Eastern and Southern Africa, as well as development, Thomas Östros.
“TDB’s funding base is increasingly composed of triple bottom-line-driven capital looking to build up resilience against environmental, social and economic challenges in our frontier economies,” said TDB group treasury executive Abraham Byanyima.
“Via this first-of-its-kind EIB financing initiative, TDB and EIB look forward to boosting support to small, medium-sized and microenterprises, women, youth, those who are disproportionately affected by poverty in rural areas or urban slums and communities without access to electricity, among others,” he said.
TDB and EIB’s relationship is multifaceted, with three lines of credit currently deployed to advance sustainable development in TDB’s region, various technical assistance programmes and an East African Banking and Microfinance Forum organised by the partners yearly since 2018, EIB said in a November 25 statement.