Grand Duchy of Luxembourg and European Investment Bank to step up cooperation on microfinance in Africa, the Caribbean and Pacific (ACP) and in the fight against climate change
New initiative, the Financial Inclusion Fund, dedicates EUR 3.6m to facilitate access to financial services for micro and small businesses in ACP countries
Luxembourg-EIB Climate Finance Platform (LCFP) extended for another five years until the end of 2024 and with an additional contribution of up to EUR 40m
The Grand Duchy of Luxembourg and the EIB have committed to working ever more closely together on two of their joint priorities: the development of the microfinance sector in ACP countries and the fight against climate change. At the EIB’s annual Donors Conference, taking place in Luxembourg today, they launched a Financial Inclusion Fund, dedicating EUR 3.6m to support for micro and small businesses in Africa, the Caribbean and the Pacific. They also agreed to extend the Luxembourg-EIB Climate Finance Platform, which was originally established in 2017 for three years.
The new Financial Inclusion Fund is jointly financed by Luxembourg’s Ministry of Finance and Ministry for Foreign and European Affairs. It aims to facilitate access to financial services for micro and small businesses in least developed and low-income, but also middle-income, countries in the ACP region. Primarily earmarked for technical assistance, the fund is designed to strengthen the capacity of EIB microfinance counterparts, making them more sustainable and stronger. It will be open to contributions from other donors.
The Luxembourg-EIB Climate Finance Platform, a fund endowed with an initial EUR 30m by the Grand Duchy, has been investing in projects with a strong impact in the fight against climate change since 2017. The partners have now decided to prolong their cooperation, with Luxembourg committing another EUR 40m to the fund. In a letter of intent signed by EIB President Werner Hoyer and Luxembourg’s Minister of Finance, Pierre Gramegna, and Minister for the Environment, Climate and Sustainable Development, Carole Dieschbourg, the partners agreed to extend the lifetime of the fund until 31 December 2024 and to open it up to other donors.
“I am particularly pleased to announce these two initiatives with the Grand Duchy today,” said EIB President Werner Hoyer at the Bank’s headquarters in Luxembourg city. “Luxembourg is not only the host of the European Investment Bank, it is also one of our key bilateral donors. Our continued fruitful cooperation shows that the EU bank is especially suited to supporting the individual development goals of EU countries and private donors. We address critical funding gaps by blending loans with grants from our partners. These innovative blending solutions ensure a high impact – for donor countries and institutions as well as for people in the project regions.”
Pierre Gramegna, Minister of Finance of Luxembourg added: “Donor governments can make a vital contribution to the EIB’s work by providing funds that leverage private capital, bridge the financing gap and de-risk projects in developing countries. Luxembourg and the EIB have an impressive track-record in innovative financial solutions like the EIB-Luxembourg Climate Finance Platform which contributes to climate change mitigation and adaptation. I welcome the two initiatives that are being signed today as they will further strengthen our cooperation aiming to achieve the Sustainable Development goals.”
Paulette Lenert, Minister for Development Cooperation and Humanitarian Affairs said: “Luxembourg has grown to become a key centre of excellence for inclusive finance. Together with the EIB, through our joint proactivity, we have been at the forefront of developing instruments that are specifically designed to raise money for the implementation of the sustainable development goals, like the Financial Inclusion Fund, thereby effectively creating an ecosystem that nurtures and supports innovation.”
Luxembourg’s Minister for the Environment, Climate and Sustainable Development, Carole Dieschbourg, commented: “Collective climate action by governments and businesses will lead to the achievement of about 75% of the commitments set out in the Paris Agreement. This shows why we must aim for successful, fair and transparent cooperation if we want to build a safe and climate-resilient future. The Luxembourg Government commits to reaching net-zero greenhouse gas emissions by 2050. The National Strategy for Sustainable Development, the National Energy and Climate Plan, the Luxembourg Sustainable Finance Roadmap and the Climate Pact are among the key strategies for meeting our ambitious targets. Luxembourg is one of the biggest per capita contributors to international climate finance – and this comes on top of our ODA amounting to 1% of the GDP.”
The EIB’s Donors Conference is an annual event which seeks to showcase donor-financed activities and facilitate dialogue with donors on future partnerships. This year’s conference is addressing a range of questions: Why do we need to bridge the financial inclusion gap? How can financial assistance support local businesses and entrepreneurs? What conditions need to be met to encourage private investment?