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New partnership between European Investment Bank and FAO to bolster private sector investment in agriculture

Work to focus on bank priority areas, FAO strategic objectives

Photo: ©FAO/Zacharias Abubeker
FAO's José Graziano da Silva and the EIB's Vice President Pim Van Ballekom sign the memorandum.

14 July 2015, Addis Ababa - Highlighting a renewed global interest in agriculture, the European Investment Bank (EIB) is expanding its collaboration with FAO, a move aimed at broadening and deepening investment in agriculture in countries outside of the European Union.

The two institutions have signed a five-year Memorandum of Understanding (MoU) that seeks to foster investment operations in the field of agriculture, private sector development and value chains that promote both EIB's priorities and FAO's strategic objectives.

The agreement, announced during the Third International Conference on Financing for Development, further marks the engagement of the EIB in the agribusiness sector and, for FAO, a partnership with the world's largest multilateral financial institution.

"This is a landmark opportunity for both of us to combine technical knowledge and financial capacity to engage private and public investors in eradicating hunger," said FAO Director-General José Graziano da Silva, noting that ensuring enough global food supply for a growing population and making agrifood systems more sustainable would require robust investments in developing countries.

"Agriculture and agribusiness are key sectors for development impact, as they are and will remain central to lives, livelihoods and social stability. But they are also a primary base for local entrepreneurship, employment and growth in many countries around the world. If we can combine FAO's local experience and know-how with our investment capabilities and technical expertise to better channel much needed finance to benefit both food supply and entrepreneurship, then why should we not do that?" added EIB Vice-President Pim van Ballekom.

While FAO and EIB have collaborated before, through information-sharing platforms like EastAgri, today's agreement will intensify their cooperation in the joint analysis, planning and execution of investment operations. FAO's expertise in investment-related policies and project formulation for investment, together with EIB's access to international capital markets and prowess in devising robust investment operations, are natural complements to one another.

Early focus on ACP countries, Europe's neighbours and climate change

The cooperation will initially look towards the Eastern and Southern neighbour countries of the European Union and the member states of the African Caribbean and Pacific Group of States (ACP), with the first initiatives likely to focus on investment support in Georgia and Ukraine, leveraging the EIB's existing credit lines.

In the ACP region, the EIB already supports small and medium-sized enterprise development in the agribusiness sector. And recently, the ACP Group of States signed its own MoU with FAO, pledging collaboration on raising private sector support for smallholders and inclusive agricultural value chains.

Many of the ACP's 79 member states are particularly vulnerable to climate change, a priority for both institutions. The articulation of the two institutions' interventions in the region's agricultural and food sector will build on these common priorities.

EIB's four priority areas for investment include boosting innovation and skills, climate action, strategic infrastructure and improving access to finance for smaller businesses. It recently agreed also to focus support towards young farmers and local initiatives favouring supply chains to boost rural incomes.

 Last year, the EIB committed over 77 billion euros worth of investments, making it the world's largest multilateral lender by volume. Around 10 percent of EIB's lending is earmarked for investment outside the 28-Member European Union, where agriculture is emerging as a new priority.

Since 1964, FAO's investment has helped leverage $110 billion on behalf of agricultural development, supporting over 2,000 projects in 170 countries.

Background information

The European Investment Bank (EIB) is the long-term lending institution of the European Union owned by its Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals.

An intergovernmental organization, FAO has 194 Member Nations, two associate members and one member organization, the European Union. It works to meet the demands posed by major global trends in agricultural development and challenges faced by member nations.

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