Special Report No 14 // 2015#The ACP Investment Facility: does it provide added value? #(pursuant to Article 287(4), second subparagraph, TFEU)
Date: 2015-09-22
Institutions: European Court of Auditors
Subjects: ACP countries, ACP-EU relationship, development aid, financial aid, investment promotion, long-term financing, medium-term financing, project evaluation, small and medium-sized enterprises, sustainable development

EN 

2015 

NO 14

Special Report  The ACP Investment 

Facility: does it provide 
added value?

EUROPEAN
COURT
OF AUDITORS

 
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EN 

2015 

NO 14

Special Report

The ACP Investment 
Facility: does it provide 
added value?

(pursuant to Article 287(4), second subparagraph, TFEU)

Audit team

02

The ECA’s special reports set out the results of its performance and compliance audits of specific budgetary areas or 
management topics. The ECA selects and designs these audit tasks to be of maximum impact by considering the risks 
to performance or compliance, the level of income or spending involved, forthcoming developments and political and 
public interest.

This performance audit was produced by Audit Chamber III — headed by ECA Member Karel Pinxten — which specialises 
in external actions spending areas. The audit was led by ECA Member Klaus-Heiner Lehne, supported by the head of his 
office, Michael Weiss; Sabine Hiernaux-Fritsch, head of unit; Lars Markström, team leader; Polina Cherneva and  
Athanasios Tsamis, auditors.

From left to right: S. Hiernaux-Fritsch, M. Weiss, K.-H. Lehne, A. Tsamis, 
L. Markström.

Contents

03

Paragraph

Glossary and abbreviations

I–VII 

Executive summary

1–10 

Introduction

1–9 

10 

The establishment of the Investment Facility

The value added by the Investment Facility

11–13  Audit scope and approach

14–37  Observations

14–27 

Overall, the Investment Facility’s operations are coherent with other EU development cooperation 
measures

16–18 

Project prospection and selection

19–27 

Funding arrangements

28–37 

The Investment Facility provides access to long‑term financing, loans in local currency and 
generates a catalytic effect

29–30 

Long‑term financing

31–33 

Financing in local currency

34–37 

Catalytic effect 

38–42  Conclusions and recommendations

Annex I  — 

 Yearly and cumulative operations approved, contracts signed and disbursements 
made for the Investment Facility in ACP countries

Annex II  —  Breakdown by financial instrument

Annex III  —  List of projects reviewed by the Court

Replies of the European Investment Bank

 
 
 
 
 
Glossary and abbreviations

04

ACP: The African, Caribbean and Pacific Group of States

EDFs: European Development Funds 
The EDFs are the main instrument for providing European Union aid for development cooperation to the African, 
Caribbean and Pacific States and to overseas countries and territories. The partnership agreement signed in 
Cotonou on 23 June 2000 for a period of 20 years (‘the Cotonou Agreement’) is the current framework for the 
European Union’s relations with these countries and territories. Its focus is on reducing and eventually eradicating 
poverty.

EIB: European Investment Bank 
Under Article 309 of the Treaty on the Functioning of the European Union the EIB’s task is to contribute to the 
development of the internal market. In addition, under the Cotonou Agreement, the Bank administers the ACP 
Investment Facility.

EU delegation: The EU is represented by 139 EU delegations and offices around the world. The EU delegations are 
part of the European Commission and serve the EU’s interests as a whole.

OCT: Overseas countries and territories

SMEs: Small and medium-sized enterprises

Executive summary

05

I
The ACP Investment Facility was set up under the 
Cotonou Agreement and began operation in 2003 
for a period of 20 years. The Facility’s objective is to 
support investments by private and commercially 
run public entities in all economic sectors. It provides 
medium- to long-term financing through various 
financial instruments and thereby aims at deliver-
ing sustainable economic, social and environmental 
benefits.

II
The Investment Facility, which receives its capital from 
the 9th, 10th and 11th European Development Funds, 
is a risk-bearing revolving fund which is intended 
to be financially sustainable. Its total endowment is 
3 685 million euro. Capital contributions by the Mem -
ber States are paid directly to the European Invest-
ment Bank (EIB), which manages the Facility.

III
For our audit, we used operations signed between 
2011 and 2014 as a basis for assessing whether the 
Investment Facility added value to EU development 
cooperation with African, Caribbean and Pacific (ACP) 
countries. We assessed whether the Investment Facil-
ity’s operations were coherent with other EU develop-
ment aid provided to ACP countries and evaluated 
how successful the Facility was in providing access to 
long-term financing as well as loans in local curren-
cies. Lastly, we assessed whether the Facility’s opera-
tions had a catalytic effect.

IV
We concluded that the Investment Facility indeed 
adds value to EU development cooperation with ACP 
countries.

V
The Investment Facility’s operations are overall coher-
ent with the EU’s development cooperation with ACP 
countries. Projects have been launched under the 
Impact Financing Envelope. The contractual obligation 
to inform the end beneficiaries about EIB/Investment 
Facility funding is not always followed and technical 
assistance does not always target small and medium-
sized enterprises (SMEs).

VI
The Investment Facility provides long-term loans 
and financing in local currency. It also demonstrates 
a positive catalytic effect.

VII
At the end of this report, we make two recommenda-
tions designed to increase the added value provided 
by the Investment Facility.

Introduction

06

02 
The European Investment Bank (EIB) 
complements the Facility’s funding 
with its own resources. An overview of 
the main components of funding pro-
vided by the Investment Facility and 
the EIB from its own resources in the 
African, Caribbean and Pacific Group 
of States (ACP) and Overseas Coun-
tries and Territories (OCTs) is shown in 
Figure 1 below.

1  ACP–EC Partnership (Cotonou) 

Agreement (OJ L 317, 
15.12.2000, p. 3).

2  Council Decision 2001/822/EC 

of 27 November 2001 on the 
association of the overseas 
countries and territories with 
the European Community (OJ 
L 314, 30.11.2001, p. 1).

The establishment of the 
Investment Facility

01 
Created under the Cotonou Agree-
ment1 and the Overseas Association 
Decision2 the Investment Facility 
was launched in 2003 for a period of 
20 years. Its objective is to support in-
vestments by private and commercial-
ly run public entities in all economic 
sectors (services, energy, telecommu-
nications, transport, etc.). It provides 
medium- to long-term financing 
through various financial instruments 
and thereby aims at delivering sustain-
able economic, social and environmen-
tal benefits.

1 Overview of funding provided by the Investment Facility and EIB from own 

resources in ACP countries and OCTs

e
r
u
g
i
F

EU cooperation
agreements

Funds managed
by the EIB

Source
of funding

Budget
(million euro)

ACP

Cotonou Agreement

OCTs

Overseas Association
Decision

Source: ECA with data from EIB.

ACP Investment Facility

EDF (9,10 and 11)

EIB own resources

EIB

OCT Investment Facility

EDF (9,10 and 11)

EIB own resources

EIB

3 637

3 750

48.5

100

 
07

3  Article 51 of Council 

Regulation (EU) 2015/323 of 
2 March 2015 on the financial 
regulation applicable to the 
11th European Development 
Fund (Financial Regulation) 
(OJ L 58, 3.3.2015, p. 17).

4  Nevertheless, the Parliament 

formulated several 
recommendations concerning 
the Investment Facility in its 
resolution of 29 April 2015 on 
Discharge 2013: EU general 
budget - 8th, 9th and 10th 
EDFs, P8_TA-PROV(2015)0120, 
paragraphs 53 to 63.

5 

See for details Article 3(1)(a) 
and (b) of Annex II to the 
Cotonou Agreement.

Introduction

03 
Contributions to the Investment Facil-
ity are paid by the Member States 
directly to the EIB. These funds are 
allocated under the 9th, 10th and 11th 
European Development Fund (EDF). 
The Investment Facility is managed by 
the EIB, acting on behalf and at the risk 
of the EU3 and, in the same way as the 
EDFs, outside the framework of the EU 
general budget. The Investment Facil-
ity does not fall within the scope of the 
Court’s annual Statement of Assurance 
audit, and is not subject to discharge 
by the European Parliament4.

04 
The Investment Facility is a revolving 
fund, i.e. its income and repayments 
are used to finance its continuing op-
erations in order to make it financially 
sustainable. Under the 9th, 10th and 
11th EDF, the Facility was provided 
with total budget of 3 685.5 mil-
lion euro. By the end of 2014, 2 057 mil-
lion euro had been paid in by Member 
States. Further details on the Invest-
ment Facility’s portfolio in ACP coun-
tries are provided in Annex I.

05 
Under the 11th EDF, a replenishment of 
500 million euro was allocated to the 
Investment Facility endowment to be 
used as dedicated funding, the ‘Impact 
Financing Envelope’ (IFE) for funding 
operations with higher development 
impact.

06 
The Investment Facility is an off-bal-
ance sheet item in the EIB’s accounts. 
The Investment Facility portfolio grew 
from 2.8 billion euro at the end of 2010 
to 4.5 billion euro by the end of 2014. 
The income for this period is presented 
in Box 1.

07 
The Cotonou Agreement states that 
the Investment Facility must oper-
ate on market-related terms without 
creating distortions in local markets or 
displacing private sources of finance. 
The Facility must also seek to have 
a catalytic effect by encouraging 
the mobilisation of long-term local 
resources and attracting private inves-
tors and lenders5.

1 Investment Facility portfolio and income over the years 2011–2014 (million euro)
x
o
B

2012

2013

2014

2011

Signed contracts (cumulative)

Total income for the year

3 009.1

78.4

3 364.1

45.7

3 835.6

10.3

4 488.2

31.2

Source: EIB.

 
08

6 

2014 Annual report on EIB 
activity in Africa, the 
Caribbean and Pacific, and the 
overseas territories, p. 17 
(http://www.eib.org/
infocentre/publications/all/
investment-facility-annual-re-
port-2014.htm?lang=en).

Introduction

08 
Regarding the terms and conditions of 
financing, the essential difference be-
tween financing from the Investment 
Facility and loans from EIB’s own re-
sources is the level of credit risk. While 
the EIB’s own resources are limited to 
loans secured by solid guarantees and 
other security arrangements, funding 
provided from the Investment Facility 
can accept a higher risk level. Loans 
from EIB own resources are mainly 
used for public sector projects.

09 
The Investment Facility mainly pro-
vides credit lines to financial inter- 
mediaries, risk capital via equity in-
vestments and financing of infrastruc-
ture projects (see Annex II).

The value added by the 
Investment Facility

10 
The EIB highlights three particular 
ways in which the Investment Facility 
can add value6:

(a)  by providing beneficiaries in 

the ACP countries with access to 
long-term financing;

(b)  by providing financing in local cur-

rency; and

(c)  by increasing the credibility of 
beneficiaries and by mobilising 
other financial resources, to gener-
ate a catalytic effect.

Audit scope and approach

09

11 
We assessed whether the Investment 
Facility added value to the EU’s devel-
opment cooperation with ACP coun-
tries. In doing so, we focused on the 
following two questions:

(a)  Are the Investment Facility’s opera-
tions coherent with other EU de-
velopment cooperation measures 
benefitting ACP countries?

(b)  Does the Investment Facility pro-

vide access to long-term financing 
and loans in local currency, and 
does it generate a catalytic effect?

13 
Our audit work consisted of an ana-
lytical review, interviews with EIB and 
Commission staff and detailed exami-
nation of a sample of operations. One 
audit visit was conducted — to Kenya 
and Uganda. The sample, which cov-
ered a range of financing instruments 
and sectors, consisted of 20 opera-
tions that received financing from the 
Investment Facility (see Annex III). The 
sample represented 35 % of the total 
number of Investment Facility con-
tracts signed with beneficiaries in ACP 
countries between 2011 and 2014.

12 
This was a short and focused audit — 
the first audit conducted by the Court 
in this particular area — carried out 
between January and May 2015. It cov-
ered Investment Facility operations in 
the ACP countries which were signed 
between 2011 and 2014. Operations 
financed from the EIB’s own resources 
were not included because they fall 
outside the Court’s remit. Funding 
provided to OCTs was not included 
either as the amounts involved were 
very small. The audit did not include 
an assessment of results and outcomes 
and does therefore not conclude on 
the effectiveness of the ACP Invest-
ment Facility.

Observations

10

The Investment Facility 
Committee was set up by 
Article 13 of Council 
Regulation (EC) No 617/2007 of 
14 May 2007 on the 
implementation of the 
10th European Development 
Fund under the ACP–EC 
Partnership Agreement (OJ 
L 152, 13.6.2007, p. 1). The 
Committee consists of 
representatives of the 
Member States and the 
Commission as non-voting 
member.

Overall, the Investment 
Facility’s operations are 
coherent with other EU 
development cooperation 
measures

14 
We examined whether Investment 
Facility operations were coherent with 
other EU development cooperation 
measures benefitting ACP countries. 
This meant examining selection pro-
cedures and funding arrangements. 
Our opinion, for the 20 operations 
reviewed, is that they were coherent 
with the EU’s development policy as 
broadly described in the Cotonou 
Agreement.

15 
The Impact Financing Envelope (IFE) al-
lows the Investment Facility to support 
higher-risk projects whilst also promis-
ing a higher development impact. The 
IFE has enormous potential to further 
increase coherence with other EU 
development cooperation measures 
by focusing on projects which gener-
ate a strong development impact with 
the overarching objective of poverty 
reduction. Following a decision in April 
2014 on the financial instruments to 
be used, two projects were approved 
before the end of 2014.

Project prospection and 
selection

7 

16 
The EIB coordinates project prospec-
tion and selection from its headquar-
ters in Luxembourg. It makes use of its 
representatives in the ACP countries, 
in consultation with the in-country EU 
delegations. A recent policy decision 
to increase the EIB’s presence in the 
ACP countries, and to house the EIB’s 
local offices in EU delegation premises, 
should further contribute to better 
coordination between the EIB and the 
Commission.

17 
Financing proposals are prepared by 
the EIB and include a description of the 
project and its coherence with the rel-
evant EU country or regional support 
strategy. When a financing proposal 
is presented to the Investment Facility 
Committee7, the Commission is asked 
to provide an opinion on the propos-
al’s consistency with the EU’s develop-
ment policy. Once the proposal has 
been accepted by the Investment Fa-
cility Committee, it is submitted to the 
EIB’s Board of Directors, which takes 
the final financing decision.

18 
The Commission had expressed a fa-
vourable opinion in respect of all 20 
of the operations which we reviewed. 
In cases where the Commission had 
comments, these had been dealt with 
at the relevant Investment Facility 
Committee meeting.

11

8 

The ‘allocation procedure’ 
does not apply to 
microfinance for which the 
financial intermediaries 
provide the EIB a global 
allocation list.

Observations

Funding arrangements

Credit lines

19 
Credit lines to financial intermediaries 
are the main instrument employed by 
the Investment Facility to support the 
financing needs of small and medium- 
sized enterprises (SMEs) in ACP coun-
tries. Using financial intermediaries to 
‘on-lend’ the funds to SMEs potentially 
allows many more SMEs to be reached, 
in a cost-effective manner, than would 
be possible via direct EIB lending. Co-
operation with financial intermediaries 
gives the Investment Facility access to 
information on vital economic devel-
opments in the private sector.

20 
The EIB works with financial inter-
mediaries selected after careful due 
diligence checks on their past perfor-
mance, future strategy and their focus 
on lending to a wide range of SMEs. 
The benefits of the Investment Facil-
ity’s use of financial intermediaries are 
twofold: (a) the facility provides the 
financial intermediaries with secure 
long-term financing, thereby develop-
ing the local financial sector, and (b) 
the facility stimulates the financial 
intermediaries’ on-lending to SMEs.

21 
As part of its eligibility checks of the 
correct use of credit lines, the EIB has 
established an ’allocation procedure‘ 
whereby the EIB endorses the end 
beneficiaries before disbursement of 
a credit line to the financial intermedi-
ary8. Under this procedure the financial 
intermediary is required to identify the 
EIB/Investment Facility in the on-lend-
ing loan agreement with each end 
beneficiary, and to report to the EIB on 
the use of the credit line.

22 
The allocation procedure is useful for 
checking the eligibility of end benefi-
ciaries, and is not used by many other 
development finance institutions. We 
found that the allocation procedure 
worked as intended in the projects 
sampled in Uganda but not in Kenya 
concerning the obligation to identify 
the EIB/Investment Facility (see Box 2).

2
x
o
B

Financial intermediaries’ use of Investment Facility financing

None of the three banks visited in Kenya had identified the Investment Facility financing in their on-lending 
loan agreements with SMEs. In this respect, the financial intermediaries did not meet their contractual obliga-
tions, and the end beneficiaries were not informed that the Investment Facility was the source of the funding.

 
12

9 

For example risk assessments, 
due diligence, management 
training, project development.

10  Article 2 of Annex II to the 
Cotonou Agreement.

25 
The Investment Facility makes equity 
investments both directly — by acquir-
ing shares in a company — and indi-
rectly through a private equity fund 
(see example in Box 3). Compared 
with loans, equity investments require 
more active management from the 
EIB. Typically, the EIB is represented 
on fund advisory committees, where 
it can ensure consistency with chosen 
strategies and alignment with EU de-
velopment policy. Private equity funds 
also pursue social impact objectives 
(see example in Box 8 — Microfinance 
fund).

Observations

23 
Many credit lines to financial interme-
diaries are supplemented by various 
types of technical assistance9. While 
it was intended that end beneficiar-
ies should also benefit from technical 
assistance in the form of management 
training and project development, we 
found that, for the audited credit lines, 
the financial intermediaries had not in-
formed the SMEs about the possibility 
of receiving such technical assistance.

Equity investments

24 
The Cotonou Agreement allows for the 
provision of risk capital in the form of 
equity participation and shall normally 
be for non-controlling minority hold-
ings10. Equity participation provides 
growth capital to SMEs to foster finan-
cial inclusion, job creation and entre-
preneurship. For equity investments, 
the EIB has an exposure limit of 20 % of 
the capital endowment. At the end of 
2014, the equity share of the Invest-
ment Facility was 13 % of the capital 
endowment.

3
x
o
B

Example of investment through a private equity fund

The Investment Facility has agreed to invest 10 million euro in a private equity fund established to make 
investments in medium-sized enterprises located in East African countries. The EIB is represented on the 
fund’s advisory committee. The investment strategy is to take strategic minority stakes in medium-sized 
enterprises with strong growth prospects. The intention is to make investments with a holding period of 4 to 
6 years in up to 14 different companies. The focus is on consumer goods, retail, financial services, telecom and 
manufacturing.

The fund’s first investment was a participation in a buy-out of Tanzania’s leading producer of personal care 
products. The buy-out was carried out in a consortium with a large international bank and another private 
equity house.

 
Observations

13

The Investment Facility 
provides access to 
long‑term financing, and 
loans in local currency 
and generates a catalytic 
effect

28 
We examined whether Investment Fa-
cility operations provided the expect-
ed added value. Although today the 
market situation is different, in the first 
years of the Investment Facility the 
EIB was one of the few actors on the 
market offering long-term financing in 
local currencies to the private sector. 
The facility also had a catalytic effect 
in that it attracted additional funding.

Direct investment in 
infrastructure projects

26 
In many ACP countries there is a real 
shortage of basic infrastructure. The 
Investment Facility supports infra-
structure projects in electricity supply 
and generation, telecommunications, 
water and sewerage, as well as trans-
port, health and education. A spe-
cific focus has been on renewable 
energy and climate-change projects. 
Infrastructure projects can generate 
sustainable growth, create jobs and 
improve regional integration.

27 
All audited infrastructure projects 
were found to be coherent with other 
EU development cooperation meas-
ures (see example in Box 4).

4
x
o
B

Example of an infrastructure project

The Investment Facility invested 30 million euro in the Kribi gas-fired power plant, a 216 MW natural gas-fired 
thermal power plant in Cameroon. The plant, with a total project cost of 253 million euro, is the first of its 
kind in the country and will provide electricity for more than 160 000 households, local industry and small 
businesses. The aim of the project is to meet the growing domestic demand for electricity, benefit trade, job 
creation and economic growth.

 
Observations

14

Long‑term financing

29 
In all sectors investments are nor-
mally more sustainable if they involve 
long-term financing. When provided 
in the form of credit lines to financial 
intermediaries, long-term financing 
gives banks the opportunity of ad-
ditional secure funding. This is useful 
for banks’ on-lending to SMEs in need 
of financing. In the audited sample, 
the average length of loans to financial 
intermediaries was 9 years.

30 
The EIB is not alone in this regard, as 
most other development financing 
institutions also provide long-term 
financing. However, the Investment 
Facility has increased its lending for 
credit lines significantly in recent 
years. At the end of 2014 credit lines 
represented 28 % of the Investment 
Facility portfolio compared with 14 % 
at the end of 2010. The increased share 
reflects the ongoing importance in 
the long-term financing offered by the 
Investment Facility (see Box 5).

5 Investment Facility credit lines 2011–2014 (million euro)
x
o
B

2013

2014

Total

Country/Region

2012

2011

Botswana

Dominican Republic

Ghana

Haiti

Kenya

Malawi

Mozambique

Nigeria

Regional - Africa

Regional - Caribbean

Regional - East Africa

Regional - Southern Africa

Regional - West Africa

Rwanda

Seychelles

Zambia

Total

Source: EIB.

1.00

20.00

15.00

76.50

100.17

120.00

60.00

114.00

15.50

8.00

8.00

13.50

50.00

4.00

10.00

8.00

5.00

177.00

241.67

270.00

20.00

20.00

50.00

5.00

50.00

80.11

152.00

25.50

25.00

427.61

20.00

16.50

48.00

8.00

140.00

15.00

5.00

270.17

80.11

50.00

330.00

25.50

10.00

8.00

5.00

25.00

1 056.28

 
15

11  Article 5(c) of Annex II to the 

Cotonou Agreement.

Observations

Financing in local currency

31 
Where feasible and appropriate, the 
EIB is encouraged to provide loans in 
local currency to avoid an exchange 
risk for the end beneficiary11. The EIB’s 
internal credit-risk policy limits lend-
ing in local currency to 20 % of the 
total Investment Facility endowment. 
Financing in local currency was higher 
during the 2011–2014 period, both in 
terms of annual volume and of the pro-
portion of the total Investment Facility 
portfolio, than at any time previously. 
At the end of 2014, the amount lent in 
local currency was 18.1 % of the total 
Investment Facility endowment.

32 
Providing loans in local currency is 
a worthwhile means of increasing the 
development impact of the Invest-
ment Facility. It is an initiative which 
has been welcomed by many financial 
intermediaries in ACP countries (see 
example in Box 6).

33 
Financing in local currency is also pro-
vided by other development finance 
institutions, and some financial inter-
mediaries are in a position to manage 
the exchange risk themselves. Never-
theless there is still a great demand 
for loans in local currency, and the EIB 
plays an important role in meeting this 
demand.

6
x
o
B

Microfinancing in Haiti

A credit line was opened to a microfinance institution in Haiti to enable it to grow its portfolio in the con-
text of post-earthquake reconstruction. The target beneficiaries are individual entrepreneurs and very small 
companies in urban areas, engaging mainly in trade activities, crafts and services. The amount provided by 
the Investment Facility, the equivalent of 3 million euro, was disbursed in local currency (Haitian gourdes). 
The exchange risk is fully borne by the Investment Facility. The initiative offers small local businesses access to 
funding.

Catalytic effect

34 
The Cotonou Agreement states that 
the Investment Facility’s opera-
tions should have a catalytic effect 
by encouraging the mobilisation of 
long-term local resources and attract-
ing foreign private investors and lend-
ers to projects in the ACP States12.

35 
A simple method for indicating the 
catalytic effect is to calculate leverage 
ratios by dividing the total amount of 
investments in projects by the total 
provided by the Investment Facility. 
Supported by information obtained 
from interviews with financial inter-
mediaries and end beneficiaries, the 
audited sample of 20 Investment Facil-
ity projects has the following leverage 
ratios (see Box 7).

12  Article 3(1)(b) of Annex II to the 

Cotonou Agreement.

 
Observations

16

7 Leverage ratio 
x
o
B

Financial instrument

Infrastructure projects and direct loans

Credit lines

Equity

Source: ECA.

Leverage

Comments

4.6

3.2

7.1

Total project cost divided by Investment Facility 
committed amount

Investment Facility finance up to 50 % of total 
project cost

Total equity fund amount divided by Investment 
Facility committed amount

36 
The Investment Facility’s effect in lev-
eraging additional funds is sometimes 
difficult to assess. The measurement 
depends on whether the Investment 
Facility is deemed to have ‘joined in’ 
(the EIB was asked by another develop-
ment finance institution to participate 
in a project) or ‘been an initiator’ (the 
project was initiated by the EIB).

37 
Catalytic effect is, however, considered 
to be a wider concept than leverage 
alone. The added value of the Invest-
ment Facility lies also in the increase 
in credibility brought about by the 
EIB’s involvement. Higher credibility 
gives confidence to other lenders and 
donors and attracts them to partici-
pate in specific projects (see examples 
in Box 8).

8
x
o
B

Projects with a strong catalytic effect

Lake Turkana Wind Farm

The Investment Facility is participating in the financing of the 623 million euro Lake Turkana Wind Power Plant 
project, which is one of the largest single private investments ever made in Kenya and the largest wind farm 
in sub-Saharan Africa. The financing from the Investment Facility is 150 million euro. This is a project in which 
the Investment Facility has shown a strong catalytic effect: the EIB’s involvement has been instrumental in 
encouraging other investors to participate.

Microfinance fund

The Investment Facility invested 5 million euro in a microfinance fund targeting microfinance institutions and 
small producers active in fair trade throughout Africa. The total raised capital was 22 million euro. The fund 
was originally initiated by three non-governmental organisations. Without support from the Investment Facil-
ity, this project would most probably not have taken place.

 
 
Conclusions and 
recommendations

17

38 
On the basis of the audit work carried 
out we conclude that the Investment 
Facility adds value to the EU’s develop-
ment cooperation with ACP countries. 
The facility is coherent with the EU’s 
development cooperation with ACP 
countries, provides access to long-term 
financing and loans in local currency, 
and generates a catalytic effect.

Recommendation 1 
Systematic disclosure of 
the Investment Facility in 
on‑lending agreements

The EIB should make sure that finan-
cial intermediaries include a refer-
ence to the Investment Facility in 
their on-lending contracts so that end 
beneficiaries are informed about the 
source of the funding.

39 
The Investment Facility’s coherence 
with other areas of EU development 
cooperation with ACP countries has 
been further enhanced since the EIB 
started taking on higher-risk projects 
through the Impact Financing Envel- 
ope (see paragraph 15).

40 
In Kenya we found that financial inter-
mediaries did not fully comply with 
the visibility requirement of disclos-
ing the Investment Facility in their 
on-lending agreements with SMEs (see 
paragraphs 21 to 22).

41 
Technical assistance provided to sup-
plement credit lines did not sufficient-
ly target the end beneficiaries (see 
paragraph 23).

Recommendation 2 
Proposing technical 
assistance to supplement 
credit lines

In order to enhance the development 
impact at the level of SMEs the EIB 
together with the financial interme-
diaries should ensure that the end 
beneficiaries are fully able to benefit 
from technical assistance.

Conclusions and recommendations

18

42 
The Investment Facility plays an 
important role in providing access to 
long-term financing and loans in local 
currency. It has also demonstrated 
a positive catalytic effect (see para-
graphs 28 to 37).

This report was adopted by Chamber III, headed by Mr Karel PINXTEN, Member of 
the Court of Auditors, in Luxembourg at its meeting of 22 September 2015.

For the Court of Auditors

Vítor Manuel da SILVA CALDEIRA 
President

 
 
 
Annexes

19

I
x
e
n
n
A

Yearly and cumulative operations approved, contracts signed and disbursements 
made for the Investment Facility in ACP countries

2003–2010

3 396.3

2 816.1

1 401.4

2011

429.6

193.0

305.5

2012

617.0

355.0

315.1

2013

818.0

471.5

277.2

(million euro)

Total

5 704.6

4 488.2

2 589.7

2014

443.6

652.6

290.5

Approvals

Signatures

Disbursements

Source: EIB.

 
Annexes

20

Signed amounts between 2011 and 2014 

I Breakdown by financial instrument 
I
x
e
n
n
A

Other
100 million euro

Infrastructure projects
378 million euro

Equity
136 million euro

Source: EIB.

Credit lines
1 056 million euro

 
Annexes

21

I List of projects reviewed by the Court (million euro)
I
I
x
e
n
n
A

Contract name

Country

No

Investment 
Facility signed 
amount 

Total project 
amount1

Year of 
signature

Sector/
instrument

1

2

3

4

5

6

7

8

9

10

11

Cameroon

Kribi gas-fired power plant

Haiti

Kenya

Kenya

Kenya

Kenya

Kenya

Malawi

Mauritius

Nigeria

ACME Haiti local currency loan

Lake Turkana Wind Power

Family Bank PEFF

Housing finance

Family Bank microfinance facility

Shelter Afrique

Malawi credit line

Mauritius Airport Hotel

Access Bank

Regional–Africa

ADENA Fund

12(a)

Regional–Africa

EDFI/EFP-Proparco

12(b)

Kenya

EDFI/EFP-FMO

13

14

15

16

17

18

19

20

Regional–Africa

Catalyst Fund

Regional–Africa

Convergence ICT Fund

Regional–ACP

Regional–Africa

Tanzania

Tanzania

Uganda

Uganda

FEFISOL

PTA Bank

NMB – PEFF

NMB – Microfinance

Crane Bank

EADB

1  Amounts committed at the time of audit.

29.5

3.0

150.0

10.0

20.0

10.0

15.0

15.0

8.0

50.0

12.0

Part of 100 million 
euro commitment 
to EDFI–EFP

8.93

19.25

5.0

80.0

50.0

20.0

28.0

25.0

260

6

623

20

50

20

38

30

21

125

100

75

45

125

145

22

160

107

88

56

50

2012

2011

2014

2013

2012

2013

2013

2013

2012

2012

2011

2013

2011

2012

2011

2014

2013

2013

2014

2012

INFRA (Energy)

Credit line

INFRA (Energy)

Credit line

Credit line

Credit line

Urban Dev

Credit line

Tourism

Credit line

Equity

Loan

Credit line

Equity

Equity

Equity

Credit line

Credit line

Credit line

Credit line

Credit line

 
Replies of the European 
Investment Bank

22

Executive summary

Conclusions and recommendations

The European Investment Bank welcomes the final 
report of the European Court of Auditors ‘The ACP 
Investment Facility (ACP IF): does it provide added 
value?’ The exercise made it possible to evaluate 
the consistency and relevance of a representative 
sample of projects financed by the Investment Facil-
ity in terms of the EU development objectives set 
out in the Cotonou Agreement. All of the conclu-
sions and recommendations adopted by Chamber 
III are acceptable from our point of view.

Observations

Funding arrangements

26 
The Investment Facility does finance basic infra-
structure projects stricto sensu (especially private) 
in the energy, transport, telecommunications and 
water sectors. Operations in the health and educa-
tion sectors are for the time being carried out in 
the framework of intermediated financing (credit 
lines or equity participations in investment funds), 
particularly via the impact financing envelope 
introduced in 2014. The aim is to increase access to 
health care and education, particularly for the most 
vulnerable population groups, especially by helping 
private companies to expand their offer. We never-
theless envisage getting more directly involved in 
financing basic infrastructure in these two sectors, 
particularly via blending operations.

Recommendation 1
The systematic reference to the source of financing 
in the loan contracts between the financial inter-
mediaries and the final beneficiaries is already the 
subject of a clause in all our financial intermedia-
tion contracts. We are endeavouring to step up our 
efforts to ensure that this clause is properly imple-
mented. Following the audit, we have already asked 
our Kenyan partners1 to actively fulfil this contrac-
tual obligation, and in future we will pay particular 
attention to this crucial aspect of ensuring the 
visibility of the European Union’s action under the 
Cotonou Agreement.

Recommendation 2
While it is true that a substantial portion of techni-
cal assistance is designed to build the capacities 
of local financial institutions (especially commer-
cial banks and microfinance institutions), with the 
aim of comprehensively modernising the financial 
sector in the ACP countries, technical assistance 
programmes are also directed to a lesser degree 
towards final beneficiaries, entrepreneurs, to help 
make more SME investment projects bankable. Our 
more recent technical assistance operations have 
already begun to directly target businesses as well. 
It should be noted, moreover, that under the 11th 
EDF the EIB intends to deepen its cooperation with 
the European Commission, particularly on private 
sector development operations financed under the 
‘blending’ heading. This will make it possible to 
increase the amount and broaden the type of tech-
nical assistance provided to the final beneficiaries 
of Investment Facility funds. Talks on a number of 
concrete approaches are currently under way.

1  SHELTER-AFRIQUE COMMUNITY DEVELOPMENT project.

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The ACP Investment Facility, managed by EIB, is 
a risk-bearing revolving fund supporting investments by 
private and commercially run public entities in the African, 
Caribbean and Pacific Group of States. It provides 
medium- to long-term financing through various financial 
instruments and thereby aims at delivering sustainable 
economic, social and environmental benefits.
The Court concludes that the Investment Facility adds value 
and its operations are overall coherent with the EU 
development cooperation with ACP countries. The 
contractual obligation to inform the end beneficiaries about 
EIB/Investment Facility funding is however not always 
followed and technical assistance does not always target 
small and medium-sized enterprises.

EUROPEAN
COURT
OF AUDITORS