EU Bank to unveil Sh54.7b kitty for housing projects
A team from European Investment Bank (EIB) will be in Nairobi next week to roll out a €430 million (Sh54.7 billion) new kitty targeting private sector financing and investments in housing projects.
This, even as lender, one of the largest in the world prepares to make Nairobi its hub for regional and African operations.
Speaking yesterday during a webinar from Luxembourg, EIB’s Vice President Thomas Ostros said the Nairobi hub will cement the bank’s position in Africa.
“What we will do next week is a very important step for the European Investment Bank, because the visit by our president Werner Hoyer and I, is a big first step ambition to be more present on the ground in Africa,” said Ostros.
EIB is the long-term lending institution of the European Union (EU) owned by 27 member states, and makes long-term finance available for sound investment in order to contribute towards the union’s policy goals.
Last year, it provided more than €5 billion (Sh636 billion) of new financing to support more than €12 billion (Sh1.5 trillion) of transformational private and public investment across Africa.
This included launching new targeted financial initiatives in collaboration with African banks and financial institutions to help business recover from Covid-19 challenges, accelerate climate finance, improve access to finance by female-led business and enhance financing for rural small holders.
Giving a sneak preview of their discussion in Nairobi, EIB’s Global Partners Director Maria-Shaw Barragan said part of the money will be deployed into the climate resilient affordable housing as well as climate related urban mobility project in Nairobi.
“So there will be more details next week, but these two are specific in the type of operations we are talking about when we are talking to the government,” she said.
Speaking on the same webinar, Barbara Marchitto, Head of Country and Financial Sector Analysis said the bank will also announce a new line to financing fragile regions in remote, conflict or climate stricken areas targeting Eastern and Southern Africa.
“This operations are accompanied by risk sharing facilities so the European Investment Bank shares in the risk taken by the intermediaries and creates incentives for more risk taking,” said Marchitto.
She noted that lack of capacity for continually taking risks was holding back financial institutions in Africa.
“We want to make sure we have financial products that tackle this issue in particular,” she said.
The response was on the sidelines of the launch of a study that surveyed 78 banks on the impact of Covid-19 on African banks and opportunities for climate finance and digital transformation.
According to the survey, the Covid-19 pandemic has prompted major changes in how business is conducted, accelerating digitalisation trends that were already underway before the crisis but were slower in adoption.
“This has unlocked new opportunities for African financial institutions to innovate and drive financial inclusion,” said Ostros.
He said African banks had a role in helping society adjust to climate change and contribute to its mitigation by including environmental risks in their credit and investment process, or by incentivising clients for green investments, a role the banks are increasingly aware of and are beginning to take advantage of opportunities in green finance.