DG ECFIN Mid-term evaluation of EIB's external mandate Final report March 2010 COWI A/S Parallelvej 2 DK-2800 Kongens Lyngby Denmark Tel +45 45 97 22 11 Fax +45 45 97 22 12 www.cowi.com DG ECFIN Mid-term evaluation of EIB's external mandate Final report March 2010 Mid-term evaluation of EIB's external mandate Table of Contents Executive summary i - xiv 1 Introduction 1 1.1 Scope of the evaluation 1 1.2 Evaluation objectives 2 1.3 Overview of report 3 2 Evaluation approach and research methodology 4 2.1 Approach 4 2.2 Organisation 5 2.3 Methodology 6 3 The external mandates 15 3.1 2000-2007 general mandate 16 3.2 2007-2013 general mandate 17 3.3 Specific mandates 20 3.4 Risk capital and technical assistance 21 3.5 ACP mandate 23 4 Programme relevance in pre-accession countries 25 4.1 EU programme objectives for the region 26 4.2 EIB regional strategies and operations 34 4.3 Programme relevance in case study countries 41 4.4 Conclusions 41 5 Programme relevance in Mediterranean region 43 5.1 EU programme objectives for the region 43 5.2 EIB regional strategies and operations 47 5.3 Programme relevance in case study countries 51 5.4 Conclusions 51 . Mid-term evaluation of EIB's external mandate 6 Programme relevance in Eastern Neighbours 52 6.1 EU programme objectives for the region 52 6.2 EIB regional strategies and operations 55 6.3 Programme relevance in case study countries 56 6.4 Conclusions 57 7 Programme relevance in Asia and Latin America 58 7.1 EU programme objectives for the region 58 7.2 EIB regional strategies and operations 62 7.3 Programme relevance in case study countries 66 7.4 Conclusions 67 8 Programme relevance in South Africa 68 8.1 EU programme objectives 68 8.2 EIB country strategies and operations 71 8.3 Conclusions 74 9 Effectiveness of Programme 75 9.1 Monitoring and reporting of the Commission 75 9.2 Mandate loans by country 78 9.3 Mandate loan disbursement rates 82 9.4 Absorption capacity 87 9.5 Global loan allocations 89 9.6 Contractual requirements 91 9.7 EIB operating procedures 92 9.8 Framework for Programme activities 102 9.9 Cover of Community guarantee 105 9.10 Risk capital and technical assistance 110 9.11 Effectiveness of specific operations 111 9.12 Value added of EIB operations 113 9.13 Additionality of Programme 115 9.14 Contribution to EU horizontal policies 117 10 Cooperation and coherence 123 10.1 Cooperation between the EIB and the Commission 123 10.2 Cooperation on risk capital and TA operations 131 10.3 Cooperation and co-finance with IFIs and DFIs 131 10.4 Coherence and consistency of other EIB actions 140 11 Efficiency of Programme operations 144 11.1 Mandate loans 144 11.2 Risk capital operations 149 . Mid-term evaluation of EIB's external mandate 11.3 Technical assistance 149 12 Conclusions and recommendations 150 12.1 Conclusions 150 12.2 Recommendations 160 Table of Appendices Appendix 1: Terms of Reference Appendix 2: List of persons interviewed Appendix 3: Mandate loans by region and country Appendix 4: Case study reports (separate appendix) . Mid-term evaluation of EIB's external mandate List of abbreviations and acronyms ACP Africa, the Caribbean and the Pacific AFD Agence Française de Développement AIDCO Europe-Aid Co-operation Office ALA Asia and Latin America BiH Bosnia and Herzegovina CA Conseil d'administration (EIB board) CARDS Community Assistance for Reconstruction, Development and Stabilisation CEDB Council of Europe Development Bank Comm European Commission COP Corporate Operational Plan CSO Civil Society Organisation CSP Country strategy paper DCI Development Cooperation Instrument DEV DG Development DG Directorate General DG ELARG DG for Enlargement DFI Development finance institution EBRD European Bank for Reconstruction and Development EC European Community ECFIN Economic and Financial Affairs EDF European Development Fund EERP European Economic Recovery Plan EIB European Investment Bank ENP European Neighbourhood Policy ENPI European Neighbourhood and Partnership Instrument ESF Energy Sustainability Fund EU European Union EUR Euro FDI Foreign direct investment FEMIP Facility for Euro-Mediterranean Investment and Partnership FGD Focus Group Discussion FYROM Former Yugoslav Republic of Macedonia FRY Former Republic of Yugoslavia HDP Historically disadvantaged persons IF Investment Facility IFI International Finance Institution IPA Instrument for Pre-Accession Assistance IPF Infrastructure Project Facility ISPA Instrument for Structural Policies for Pre-accession KfW Kreditanstalt für Wiederaufbau KPI Key performance indicator MeHSIP Mediterranean Hot Spot Investment Programme MEP Member of European Parliament MIP Multi-annual Indicative Programme MIPD Multi-annual Indicative Planning Document MISP Municipal Infrastructure Support Programme (in Serbia) . Mid-term evaluation of EIB's external mandate MOF Ministry of Finance MoU Memorandum of Understanding MS Member states MW Municipal window NDEP Northern Dimension Environmental Partnership NGO Non-governmental organisation OSPI Other significant performance indicators PAF Pre-accession facility PAM Pre-accession mandate PCR Project completion report PPF Project Preparation Facility PPP Public-private partnership RCF Risk Capital Facility RG Reference group RELEX DG for External Relations SAA Stabilisation and Association Agreement SADC Southern African Development Community SAP Stability and association process SCWP Steering Committee of Wise Persons SEN Southern Eastern SEE South-eastern Europe SFE Special FEMIP envelope SFF Structured finance facility SME Small and medium sized enterprise TA Technical assistance TEN Trans-European Network TOR Terms of Reference UfM Union for the Mediterranean VA Value added WB West Balkans . Mid-term evaluation of EIB's external mandate i Executive summary Since 1963 the EIB has been increasingly active outside the EU. The EIB’s ac- tivities outside the EU make up an average of around 10% of the EIB's out- standing total activities, amounting to EUR 8.8 billion in 2009, of which EUR 4.3 billion was in candidate and potential candidate countries. Under the external mandates, the EIB supports EU external policies through financing operations covered by an EU budgetary guarantee in support of eco- nomic, environmental, and social sustainable development in Pre-accession, Mediterranean, Eastern Neighbours, Asia and Latin America, and South Africa. The activity in these regions is complemented by the EIB activity at own risk, specifically authorized by its Board of Governors under Article 16 of the EIB Statute. In the Decision of the European Parliament and Council of 13 July 2009 (633/2009/EC) that granted an external mandate to the EIB for the period 2007- 2013, a mid-term evaluation was requested.1 The present evaluation covers loans under the mandates for the period 2000-2006 and the first years of the 2007-2013 mandate until end 2009. Risk capital and technical assistance (TA) activities of the EIB in the countries covered by the above decision are also in- cluded in the scope of the evaluation. The overall scope of the evaluation will henceforth be referred to as the Programme, cf. also the definition of the TOR. Evaluation focus and approach The overall purpose of the evaluation is to serve as a support for amending the decision on the EIB external mandate, including the possible increase of the guarantee ceiling by EUR 2 billion. The main objectives of the evaluation is, first, to provide an in-depth evaluation of the relevance, performance and value-added of EIB operations against their specific regional objectives. Second, to assess the consistency of mandate op- erations with relevant EU external policies and strategies and of the additional- ity and value added of EIB operations in the first years of the 2007-2013 man- date. The evaluation was conducted from March 2009 to January 2010 by a team of 10 international evaluation consultants. The main methodologies used were ex- tensive document review, key informant interviews, focus group discussions 1 This was also foreseen in Council Decision 2006/1016/EC, which was nullified by the Court of Justice and which has been replaced by Decision no. 633/2009/EC of 13 July 2009 of the European Parliament and of the Council. Mid-term evaluation of EIB's external mandate ii and 10 country case studies of 12 EIB operations in all regions of the external mandate. I. Conclusion Relevance With the exception of the Eastern Partners mandates, the Programme relevant EU policy objectives identified for both mandate periods are broad. The Com- mission was not requested to provide guidance to the Bank on the interpretation of "EU policy objectives" for mandate loan operations. The broadness of the mandate introduces the risk that some operations only have a marginal value added and that some key EU policy objectives are not sufficiently targeted. In the Eastern Partners mandate the important policy objectives is explicitly mentioned and the risk of targeting other objectives is averted. Pre-accession countries The identified EU policy objectives do not contain any requirement as prioriti- zation in mandate lending. As foreseen in the Council decision, the EIB opera- tions reflected the priorities enshrined in the Accession and European Partner- ship agreements. These agreements are very broad and cover general objectives in all sectors. Further, the EIB has applied its own operational objectives, those for Member states, to operations in pre-accession countries. The agreed upon sector indicators for EIB mandate lending in the candidate countries shows operations to be consistent with EU policy objectives. Judged from the same indicators, mandate loan operations in the potential can- didate countries in 2000-2007 is fully consistent with EU policy objectives for the period. In the present mandate, lending is dominated by global loans – whose final beneficiaries are mainly SMEs and municipalities which account for just below 60 pct.