# CE2004088EN.01049001.xml

| 8.4.2004 | EN | Official Journal of the European Union | CE 88/490 |
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8.4.2004

EN

Official Journal of the European Union

CE 88/490

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(2004/C 88 E/0502)

WRITTEN QUESTION E-0226/04

by Margrietus van den Berg (PSE) to the Commission

(2 February 2004)

Subject:   Starch factories and developing countries

Subject:

On a working visit to Veendam, I was informed about the possibilities of starch being produced from cassava in developing countries and about the factors which are hampering progress in that area. In many developing countries, cassava is frequently a local crop which thrives in the natural environment and is very suitable for use in the production of starch. Starch is a raw material for the food, textiles and paper industries. Construction of a starch factory may create a large number of jobs in the rural parts of developing countries which frequently have to cope with high rates of unemployment. Many jobs can be created in agriculture, in industry and in small private businesses. It costs between EUR 4 and 5 million to construct a factory of this nature. That is an affordable investment which can give a real positive boost to local economies in developing countries. Private investors are interested in participating in the projects with venture capital, but that is not sufficient for the implementation of the projects. Banks, too, must participate by granting loans, but they are less cooperative. Participating banks want guarantees for the amounts that they lend. The provision by the European Union of bank guarantees in respect of such projects would be very valuable and would encourage the banks to participate. That would result in the green light being given for considerable small-scale investments with a huge economic spin-off in the local economy of developing countries.

| 1. | Is the Commission aware of the possibilities which the starch industry offers with regard to job-creation in developing countries, and has it already noted the problems that are occurring in respect of bank guarantees? |
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1.

Is the Commission aware of the possibilities which the starch industry offers with regard to job-creation in developing countries, and has it already noted the problems that are occurring in respect of bank guarantees?

| 2. | Does the Commission acknowledge that the absence of bank guarantees is creating an obstacle to these valuable projects? |
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2.

Does the Commission acknowledge that the absence of bank guarantees is creating an obstacle to these valuable projects?

| 3. | Is the Commission prepared to make a contribution to a possible solution to this problem, for example by providing bank guarantees? |
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3.

Is the Commission prepared to make a contribution to a possible solution to this problem, for example by providing bank guarantees?

Answer given by Mr Nielson on behalf of the Commission

(12 March 2004)

(12 March 2004)

| 1. | The starch industry is generally a capital intensive sector; however, whilst contributing to the economic development in the rural areas producing cassava, it will insure some valuable job creation. While the Commission has no specific experience in the starch industry in developing countries, one of our main private sector development instruments, the Center for Enterprise Development (CDE), has had some selected projects in this sector. A contact person at the CDE is M. Touré (Tel. 0032-2-6791905, e-mail: cto@cde.int). |
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1.

The starch industry is generally a capital intensive sector; however, whilst contributing to the economic development in the rural areas producing cassava, it will insure some valuable job creation. While the Commission has no specific experience in the starch industry in developing countries, one of our main private sector development instruments, the Center for Enterprise Development (CDE), has had some selected projects in this sector. A contact person at the CDE is M. Touré (Tel. 0032-2-6791905, e-mail: cto@cde.int).

| 2. and 3. | The Commission is aware that the absence of bank guarantees is often a problem for investment projects in African, Caribbean and Pacific countries (ACP). For this and other reasons, the Commission is currently looking into the possibilities of providing guarantees. There are two ongoing activities. First, the main instrument for private sector development, the EUR 2,2 billion investment facility (IF) managed by the European Investment Bank (EIB), has the possibility to provide guarantees to banks. A recent study of the EIB has confirmed the need to develop local financial markets and the potential use of guarantees for this purpose. The IF committee will discuss in the coming months if and how bank guarantees should be granted by the EIB. Second, the Commission, together with the ACP secretariat, is currently conducting a study on the international guarantee system. The goal of this study is to analyse if there are needs for guarantee instruments in ACP countries that are not covered by the existing guarantee system. The Commission will make sure that the issue of bank guarantees is duly taken into account in this study and that an appropriate follow-up of the recommendations of this study will take place. |
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2. and 3.

The Commission is aware that the absence of bank guarantees is often a problem for investment projects in African, Caribbean and Pacific countries (ACP). For this and other reasons, the Commission is currently looking into the possibilities of providing guarantees. There are two ongoing activities. First, the main instrument for private sector development, the EUR 2,2 billion investment facility (IF) managed by the European Investment Bank (EIB), has the possibility to provide guarantees to banks. A recent study of the EIB has confirmed the need to develop local financial markets and the potential use of guarantees for this purpose. The IF committee will discuss in the coming months if and how bank guarantees should be granted by the EIB. Second, the Commission, together with the ACP secretariat, is currently conducting a study on the international guarantee system. The goal of this study is to analyse if there are needs for guarantee instruments in ACP countries that are not covered by the existing guarantee system. The Commission will make sure that the issue of bank guarantees is duly taken into account in this study and that an appropriate follow-up of the recommendations of this study will take place.

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