Venture Capital – a tool to develop private employment
The European Investment Bank (EIB) plans to invest 150 million euros in the next three years, 50 million of which will come directly from the European Commission, in order to support private employment in the South of the Mediterranean. This is a crucial aid for SMBs (small and medium businesses).
"The origin of the Arabic Revolutions is above all social. The youth is lacking perspective. Reducing unemployment and developing employment is therefore a crucial imperative. However, the banks prefer to finance institutions or large companies rather than the SMBs, judging their projects too risky” explains Christian Lopez-Baillo, investment director of the EIB (European Investment Bank). To support SMBs and therefore employment, the EIB intervenes with capital-investment funds, venture capital funds as well as microfinance institutions.
This mechanism is broken down into three actions. The EIB is full of capital investment funds, also taking participation in the capital of SMBs. In order to support their action and compensate for the lack of access to international funds, local modestly-sized financial companies are also affected. Moreover, the EIB invests and lends funds to microfinance institutions, for example to microfinance investment companies. Banks, credit cooperatives or other intermediaries which will benefit from this contribution will have to dedicate it to developing the smallest companies, as well as projects from individuals with low income.
“In 2015, the investments from the EIB enabled supporting 80 000 people and to generating 900 additional posts. As for microfinance, it benefits from nearly a million beneficiaries today, half of which are women” Christian Lopez-Baillo is pleased to say.
The help of the EIB is mainly focussed on Algeria, Morocco, Tunisia, Egypt, Jordan, Lebanon and Palestine. The first concrete operation will be signed in September 2016, it will be on Egyptian funds. Other projects, mainly dealing with national as well as multi-country, sectorial or generalist funds are also planned.
“We are especially counting on the catalyst effect our action generates” Christian Lopez-Baillo comments. “What’s more, each euro invested by the EIB generates six additional euros”. A real advantage for companies looking for solid and durable financing to develop employment.