The European Investment Bank (EIB) aims to invest USD 1 billion during 2019-2020
Over four decades, the European Investment Bank has been supporting the Jordanian economy by investing in projects that make a difference in people’s life. The Bank financed overall 77 operations including investments like Tafila windfarm, the first commercial utility-scale wind power in the Middle East, the Amman Ring Road, which improved traffic management in the capital, and the Arab Potash company, the eighth largest potash producer worldwide. The Bank has been supporting vital socio-economic infrastructure as well as private sector development.
During the Jordan Growth and Opportunity conference organised in London last February, the President of the European Investment Bank announced a package of USD 1 billion of additional funding to support the Jordanian economy.
To spot more light on EIB’s commitment to Jordan, Flavia Palanza, Director of Operations in EU Neighborhood Countries spoke to Venture about the Bank’s plans and initiatives.
Can you tell us more about your plans in Jordan?
The EIB is fully committed to support the Jordanian ambitious agenda for sustainable development and vision for reforms and economic transformation, providing finance for vital infrastructure and economic opportunities, in particular for the youth.
As part of the EU and international response to supporting Jordan, we plan to extend USD 1 billion of loans and grants during 2019-2020 in favor of priority projects in a variety of sectors including water, energy efficiency, support to MSMEs, and startups. This constitutes a significant scaling-up of our financing, already started in 2016, which we intend to continue further after 2020 in order to strengthen stability, resilience, and growth.
Can you give us some recent examples of EIB financed projects?
At the end of February, we signed the Deir Alla Water Supply and Sanitation project. The project will improve water supply and sanitation services for more than 85,000 people in the Jordan Valley ,with a positive impact on agriculture, environment and tourism in the Jordan Valley Region. The EIB has signed the EUR 65 million financing agreement with the Jordanian government for the improvement of water supply systems in the “Deir Alla and Al-Karamah” districts in the Jordan valley, as well as the construction of a centralized sewage collection and treatment network in Deir Alla district.
The EIB’s support is part of its Economic Resilience Initiative (ERI) designed to strengthen the EU Southern Neighborhood countries’ ability to withstand shocks. The project will benefit from an additional investment grant of EUR 16.3 million from the Economic Resilience Initiative Fund (ERIF), through a special endowment by the UK Department for International Development (DFID). In addition to our lending activity, we also provide technical assistance and advisory services.
For example, we provided a grant of up to EUR 500,000 (JD 417,000) for advisory and technical assistance to the Deir Alla and Al Karameh water supply and sanitation project.
The assistance aims to increase the effectiveness, quality and sustainability of the project while enhancing its future developmental impact. The grant used for the assistance was provided by the EIB managed initiative on the Climate Action in the Middle East and North Africa (CAMENA).
How important is supporting SMEs for an economy like Jordan’s?
In Jordan, as well as elsewhere, the development of a vibrant private sector is essential to fire up the engines of economic growth to meet the needs and aspirations of people. Fast-growing, small and medium-sized companies play an incredibly important role in triggering innovation, boosting growth and creating employment. Supporting them to foster economic opportunities and building economic resilience is one of the EIB’s top priorities. For this, we work with our local partners in Jordan to channel credit lines to SMEs. We also invest in equity funds that finance start-ups.
For example we invested USD 8 million (JD 6.7 million) in an early stage high-tech fund (Badia Impact Fund). Furthermore, we support micro-finance.
Under the new Southern Neighborhood Micro-finance Facility, we already provided USD 5 million of financing to the Micro-fund for Women and we are partnering with the Open Society Foundation and the International Finance Corporation among others in the preparatory work of the Catalyst Fund initiative, a new venture aiming to develop and mobilize additional funding to launch a new initiative in Jordan catering to the growth needs of Jordanian small and medium-sized enterprises in various sectors.
What are the most pressing challenges you face in the region and Jordan in particular?
The region needs to achieve higher growth rates, create more jobs, especially for the youth, and at the same time implement budgetary policies sustainable in the long term. In Jordan, the economic performance largely reflects the impact of adverse external shocks. These include protracted conflicts in Syria and Iraq, which were Jordan’s main traditional export markets. The Syrian conflict continues to weigh on investor sentiment, tourism, transportation costs and exports.
Hosting more than 1 million refugees has also strained the Kingdom’s limited resources. In this context, I would like to praise the great efforts of the Jordanian government in addressing fiscal constraints while implementing a large set of reforms. Those efforts were unanimously acknowledged in London, as a solid basis for the mobilization of the international community.
In these times of economic and social challenges, the EIB is committed to building resilience, supporting investment and increasing the finance needed in the region. We have an excellent relation with the government of Jordan and we work closely together to provide the government’s investment needs.