Multilateral finance institution the European Investment Bank (EIB) and the European Commission have signed agreements, committing €4-billion in funding support for businesses in African, Caribbean and Pacific (ACP) countries until 2027.

This forms part of the European Union's (EU's) Global Gateway strategy.

The agreement consists of a guarantee agreement that will mobilise up to €3.5-billion in lending and a €500-million trust fund contribution.

It marks an important step in the roll-out of the EU’s Global Gateway strategy worldwide and achieving development impact by enabling the EIB to enhance not only public but also private investments in key areas like digitalisation, climate and energy, transport and health in partner countries, the EIB said.

“Mobilising the private sector is critical to sustainable development in African, Caribbean and Pacific countries. With Global Gateway, the EU wants to facilitate local value addition, sustainable growth and job creation, especially for youth,” said European Commissioner for International Partnerships Jutta Urpilainen.

“Today’s agreement is another milestone in advancing this strategic priority. The resources unlocked by the guarantee and trust fund contribution will benefit emerging businesses in key sectors, while enhancing partner countries’ resilience. The EU will continue to rely on the EIB as a key partner in successful implementation and impact on the ground,” she said.

Further, the agreement consists of two parts, including the guarantee agreement under the European Fund for Sustainable Development Plus. This will enable the EIB to provide up to €3.5-billion loans on favourable terms to create jobs and opportunities, particularly for women and youth, and support green and digital transitions in EU partner countries, in line with Global Gateway.

“A pertinent example of how the resources will be used is the agreement signed at the EU-Tanzania Business Forum. Credit lines backed by the guarantee will unlock €270-million for three Tanzanian local banks who will finance projects benefitting especially women and advancing the blue economy,” the EIB said.

Another example is The Green African Agricultural Value Chain Facility, which provides financing to intermediaries across sub-Saharan Africa for on-lending to eligible small and medium-sized enterprises active in agri-food value chains. Average size of credit lines extended to local banks range from approximately €10-million to €25-million.

The second part of the agreement is an EU contribution of €500-million to the ACP Trust Fund, which was established and managed by the EIB, to enable high-impact operations, which would otherwise not be possible.

This trust fund will support, for example, small renewable energy power plants in areas with no grid connection. These will enable autonomous electricity supply, improve people’s livelihoods, and decrease dependency on fossil fuels and rising energy prices, the EIB said.

“The agreement signed today will enable the European Investment Bank to fully contribute to the Global Gateway strategy. The EU guarantee will allow us to scale up our support for national priorities in Africa, Caribbean and the Pacific regions, in full collaboration with our partners from Team Europe and the African Union,” said EIB president Werner Hoyer.

“Backing the private sector is key to foster green and inclusive growth in ACP countries and globally. As public institutions, we need to go the extra mile to make our value proposition attractive for private investors and drive investment in climate, energy, health, food security, digital solutions that will create impact and ultimately boost prosperity,” he emphasised.

The agreement adds to the €26.7-billion guarantee agreement for public lending that the EU and the EIB signed in May 2022. The rolling out of new Global Gateway public investments is already underway.

One of the Global Gateway investments includes an EU-covered EIB loan on urban mobility for Senegal, signed separately at the EIB Forum as part of the Team Europe Initiative on Green Economy in Senegal, which seeks to support sustainable and digital cities, as well as strengthen and modernise public transport in Dakar.

“This action illustrates European investments in the Dakar-Abidjan strategic corridor with the aim of consolidating economic exchanges in the region, strengthen regional integration and boosting sustainable growth,” the EIB said.