By HENRY OWINO
European Union (EU) is in Africa to offer financial support to various small-scales and sustainable investments to Africans. These include agribusinesses, small and medium size entrepreneurs (SMEs) among others.
The EU’s External Investment Plan (EIP) on June 13, 2019 in Nairobi, Kenya launched a financial scheme at an outreach workshop with entrepreneurs. It brought together key institutions and individuals that can take advantage of the many opportunities presented by the EIP scheme.
The scheme is meant to support private and public investments, and promote creation of jobs.
Initially EIP was launched in September 2017, aiming at encouraging private investments in African countries and those neighboring the EU. Since its launch, 94 blended funding operations and 28 guarantee facilities have been approved.
The initiative is seen as one that would foster innovation and sustainable economic growth in African nations. The EIP launch in Nairobi, offers grant/loan blending operations to private investment sectors.
Smallholder agribusinesses in the region could gain easier access to credit after the EU offered Ksh5.7 billion (€50 million) for a financing scheme through a facility known as Kenya Agriculture Value Chain Facility.
The facility launched by the European Investment Bank in Nairobi means agricultural companies in Africa could get funding to deal with “specific investment gaps” that have forced most investors in the sector to either go slow or quit altogether.
Ms Catherine Collin, the European Investment Bank regional representative for East Africa, said the programme will involve local lender Equity Bank to implement the Kenya Agriculture Value Chain Facility to help firms in agriculture expand their business while adopting latest technology.
“I welcome this initiative that will boost both private and public investment in Kenya, enhancing a favorable investment climate and creating jobs especially for young people,” Ms Collin commended the scheme.
Mr Polycarp Igathe, Equity Bank Kenya Managing Director said the lender is aligning its strategy with the national agenda and will be focusing on growing the agribusiness from retail, to large enterprises. As part of the national agenda, the government recently identified food security.
“Under the new financing programme agricultural companies across Kenya will be able to access loans with maturities of up to 7 years, longer than commonly available in the market,” Igathe said in a statement.
“This move is expected to help companies to expand, upgrade and modernize their equipment thereby improving productivity, and strengthening integration of smallholders into the agricultural value chain.” He anticipated.
The money will be provided in Kenya shillings in what officials said will shield local investors from forex fluctuations.
According to Mr Walter Tretton, Chargé d’Affaires of the European Union Delegation to Kenya, said the programme is the first in which the EU is directly funding the private sector in agriculture.
“There is a great deal of expectation on this new approach. The EU chose it in Kenya because we recognize that smallholder farmers do not need handouts: they need an enabling environment to be successful market operators,” Mr Tretton explained.
The EU wants to focus on stronger business and investment policy dialogues. And this requires access to finance and reducing the risk of investing in a difficult environment,” he added.
The Kenyan scheme is part of the European Investment Bank’s ongoing support to strengthen private sector investment and entrepreneurship across Africa through new financing and technical assistance aimed at institutional strengthening.
Mr Tretton revealed that EIP already supports projects in the transportation, energy, agriculture, and water and sanitation sectors, but many of them are public sector investments. However, he clarified the EU is now focusing more on the private sector to support development.
“The main objective of the EU’s EIP is to uplift private and public investment through a variety of financial instruments, including grants provided by the European Union backed up with loans from International and European Financial Institutions as well as importantly an innovative guarantee facility.” Mr Tretton said.
The EIP is expected to play a vital role in contributing to the creation of sustainable investments and job creation, foster innovation and sustainable economic growth in the framework of an integrated and participative approach as well as strengthen economic and commercial ties between Europe and Africa.
According to Mr Juan Casla Urteaga, EU Policy Officer and Coordination of the EIP Secretariat and Blending Facilities, their aims is to improve access to finance for SMEs and to establish new business practices within local financial institutions.
Mr Urteaga said the scheme is not only in East Africa but all African countries or least developed countries.