Devex Invested: EIB gets a new development branch

The European Investment Bank has long been criticized for being too risk-averse, having too few staffers outside Luxembourg, and insufficiently consulting with the European Commission in Brussels.

Now, in an effort to address some of those critiques, it is creating a new development branch for its work outside the European Union. The board of directors endorsed the proposal last week.

My colleague Vince Chadwick — who has covered the ins and outs of debates around European development finance — has the details.

• The new branch will have dedicated resources to enable a different set of objectives and expectations for lending outside the EU. A beefed-up regional hub for East Africa is planned in Nairobi, Kenya, with more to follow around the world.

• As part of the governance changes, EIB has also proposed a new advisory group to weigh in on the approval process for projects, define policy strategies, and advise the board. The details about that group will be determined in coming months.

• For now, the new branch won’t mean more funding for external lending, though it could pursue “higher risk taking in return for lower volumes,” Markus Berndt, director of the bank’s strategy group, tells Vince.

• “That’s why it’s so important that we have this dedicated branch, so we know what is outside and what's inside the EU, and that then gives comfort to the rest of the organization,” Berndt says.

Read more: Q&A: The EIB’s new development branch

What we’re watching

I’m in New York this week following the United Nations General Assembly, though many of the events surrounding high-level meetings are virtual. I’ll be chatting with the U.N. Capital Development Fund, the Sustainable Development Goals Fund, and the U.N. Development Programme about financing; tuning in to the Uniting Business LIVE event; covering some of the conversations at the Concordia Annual Summit; and more.

I’m also moderating a conversation about the private sector and the U.N. Here’s how to tune in if you’re interested.

If you’re in New York and want to connect, send me a message on Twitter or email me at adva.saldinger@devex.com.

Climate commitments fall short

Boosting African capital

CDC Group has made its first investments as part of its African Private Credit Fund Strategy, committing $60 million to two funds. The strategy aims to help attract more commercial investors to African markets and develop reliable, long-term private debt funding for the continent.

Vantage Capital and BluePeak Private Capital will each get $30 million to provide credit to “mid-market” African companies to help meet a financing gap that has been made worse by the COVID-19 crisis.

“We are excited to be supporting the continuing development of the private credit [fund] sector. This can fill a funding gap with debt capital for medium-sized enterprises whose financing needs are of a size that excludes them from accessing credit from traditional banks,” says Jo Fry, investment director and head of intermediated credit at CDC.

In memoriam

John Ruggie, the author of the Guiding Principles on Business and Human Rights endorsed by the U.N. Human Rights Council in 2011, died last week. Ruggie previously served as U.N. special representative on business and human rights and also helped found the UN Global Compact. He had been working as the Berthold Beitz professor in human rights and international affairs at Harvard University’s Kennedy School of Government.

Investments of interest

• Global Innovation Initiative Group established a new fund to invest in early stage tech innovation startups in Africa. It will provide multistage funding and support for businesses, and it seeks to diversify the places where venture capital funding is available on the continent.

• AFC Capital Partners is launching the Infrastructure Climate Resilient Fund. Over three years, it aims to raise $2 billion to improve African ports, roads, telecommunications, clean energy, and more in the face of climate change. AFC Capital Partners is a new private sector arm of the Africa Finance Corporation, with the climate resilient fund as the first offering.

Vince Chadwick contributed to this edition of Devex Invested.