On his first official visit to Lebanon, Vice President of the European Investment Bank (EIB), Dario Scannapieco, delivered a resounding message of support from the European Investment Bank to Lebanon.
In a whirlwind visit to Beirut (last week), Scannapieco translated the EU Bank's unremitting support to the country by signing a EUR 265 million facility in support of the private sector development, as part of its Economic Resilience Initiative (ERI).
"We understand the economic challenges facing Lebanon, and we are stepping up measures in order to support the ongoing efforts to boost economic activity in the country. We have signed finance agreements with four strong partners in Lebanon; Byblos Bank, Fransabank, First National Bank, Societe General de Banque au Liban," Scannapieco said in an exclusive interview with the National News Agency (NNA).
The European Investment Bank (EIB) has signed the "Lebanon Private Sector Support" project, a line of credit in a combined amount of EUR 265 million to support projects conducted by small- and medium- sized enterprises (SMEs) and mid-cap companies in Lebanon. This facility represents one of the first operations under the EIB's ERI which aims to contribute to the sustainable growth of the Lebanese economy and support its resilience in the context of the refugee crisis in the wider region. ERI helps to shock-proof the region by supporting vital infrastructure and much-needed private-sector development. SMEs make up the vast majority of firms in the region and are key drivers for growth and job-creation.
The project will be implemented by the four abovementioned Lebanese banks, each with a dedicated loan amount: Byblos (EUR 100 million), Fransabank (EUR 75 million), Societe Generale de Banque au Liban (EUR 60 million) and First National Bank (EUR 30 million).
"These loans are very important because approximately 12,500 jobs will be created. On the other hand, the purpose of our visit is to touch base with the Lebanese government. We had the opportunity to meet with the Prime Minister's advisor, as well as the governor of the Lebanese Central Bank, Riad Salame. We also met with the Minister of Water and Energy, and the Vice President of the Council of Development and Reconstruction (CDR). I feel very optimistic after those meetings. The government has ambitious and clear objectives, and I hope the EIB contributes to help achieve those goals," the EIB VP said.
Moreover, Scannapieco sounded upbeat about the ongoing cooperation and partnerships with different ministries in Lebanon, saying that the positive and stable political context would most definitely accelerate the process of signing and ratifying EIB's finance operations in Lebanon.
"Clearly, stability will improve the overall economy, so there will be a trend of more investments because people tend to invest with more confidence when they foresee a positive and stable political atmosphere. Meanwhile, we await the capital investment program on which the Lebanese government is working."
The EIB has been present in Lebanon for more than 40 years and has financed over 60 projects with a total finance of EUR 1.8 bn. The EU Bank is currently seeking to step up its operations for more support to the Lebanese economy which faces serious challenges.
"We have been operating in Lebanon for long and it really pleased me to hear from Lebanese sides their appreciation of the fact that the EIB has never left Lebanon alone, even in the most difficult of times. We have a number of projects, and we believe that we can do more. Actually, the bank has launched a program to dramatically increase its activity in the countries that are mostly affected by the refugee crisis such as in Lebanon and Jordan," Scannapieco said.
In the last 15 years, the EIB provided finances of more than EUR 1 billion. This year will be a record year for the bank's activity and strategy in Lebanon, the EIB VP said.
"Our strategy in Lebanon is supported by three main pillars: First, support to SME's as a way to create job opportunities through the banking system. Second, support to key infrastructure -- according to the Lebanese law, refugees can work in the construction sector, so when we support big infrastructure, there will be an indirect effect on the refugees. Third, providing technical assistance and consultancy because we want projects to be prepared and implemented rapidly," Scannapieco added.
"We will achieve this by re-enforcing co-operation with the Lebanese banking sector to reach out to SMEs, a key contributor to GDP and employment. And finally, we will diversify our products offer by collecting grant support with a view to improve SMEs' access to finance through technical assistance focusing on capacity building of intermediaries (training) and advisory services in support of final beneficiaries (producing business plans, filling out loan applications)," he added.
Furthermore, Scannapieco explained that the ERI had been launched by the EIB at the request of the European Council.
"The new initiative aims to support Lebanon and other Southern European Neighbourhood as well as West Balkan countries. The ERI will substantially increase the support from the EIB to the two concerned regions. In addition to our regular lending, the EIB will provide further EUR 6 billion of financing under ERI, which are expected to deliver EUR 15 billion of new investments up to 2020, taking the total EIB mobilisation of investment in the regions to some EUR 35 billion. This will be interpreted in more EIB finance and operations in Lebanon. The EIB has been stepping up its activities to support economic growth and stimulate employment opportunities in Lebanon by focusing on private sector development, and in particular SMEs, and the development of social and economic infrastructure, Energy, Transport, Water, Energy, Environment, as well as human and social capital," the EIB VP explained, mentioning as well more projects in the making to improve the resilience of the Lebanese economy to internal and external shocks.
In assessment of the Lebanese Banking system, Scannapieco commended Lebanon's "strong banking sector".
"The Lebanese banking sector is very large, with assets for more than 370% of the country's GDP. We are pleased to have many partnerships with Lebanese banks. Numbers speak for themselves; the total amount of our credit-lines extended to Lebanese banks is over EUR 1 billion. Our assessment is that Lebanese banks have no problem with liquidity, and this is a good opportunity in the current context to develop instruments to provide capital relief to banks and to mitigate the risk of banks when they decide to lend start-up technological companies," he explained.
On whether the EIB funds NGO activities, the EIB VP said, "We are a project driven bank. We do not provide humanitarian support. However, we invest in innovative projects that can help. For example, we invested in Euromena fund which invests in ITWORX, a company that provides innovative solutions to educate Syrian children inside the refugee camps. We also have annual meetings with NGO's in the bank and we make sure to listen to them. Their presence on the ground is a vital source of information for us."
As for the means by which the EIB has been addressing forced displacement inside Europe, Scannapieco said that the EU supported efforts by national and local authorities to manage and integrate refugee flows by extending special terms to Member States making refugee related investments.
"The German State of Brandenburg has received a 120m EUR loan from EIB for refugee accommodation that can be transformed later into student accommodation or community facilities."
Touching on the Bank's climate related investments, Scannapieco said that the EIB was the world's largest global lender in this field.
In the last five years, the EIB has provided more than EUR 90 billion for climate related investments around the world. In 2016 EIB climate finance reached a record high of EUR 20.7 billion and represented 27% of overall financing. EIB's support for climate related investment in developing countries reached EUR 2.2 billion in 2016, representing 31% of lending in these most vulnerable countries.
"In Lebanon, we are working on an operation that will enable companies to improve energy efficiency and use renewable energy. We hope to get this operation ready in 2017. We have also inked agreements with the public sector that have to do with water and wastewater management, and we are following up on their implementation. The implementation process is somehow slow due to some technical issues, but we had a profitable meeting with the CDR and things are starting to improve. We also discussed with the Central Bank a facility to support energy efficiency and renewable energy. We truly believe that Lebanon has a huge potential which has not been exploited," he added.
The EIB is a longstanding partner to Lebanon. Over the years, the Bank provided a total finance of EUR 1.6 billion across many sectors: energy (EUR 112 million), transport (EUR 335 million), equity (EUR 26.5 million), water and wastewater (EUR 401 million) as well as private sector development (EUR 705 million).
Source: National News Agency