The European Investment Bank (EIB) has decided to provide US$10 million line of credit to the Dominica Agricultural Industrial Development Bank (DAIDB or AID Bank) in support of projects related to various sectors of the economy including manufacturing and renewable energy.
This morning, the finance contract agreement of this global line of credit was signed between the European Investment Bank and the AID Bank at a ceremony at held at the Fort Young Hotel.
AID Bank’s Chairman Ambrose Sylvester, who addressed the ceremony, said the line of credit will aid in the promotion of economic progress in Dominica.
“This new line of credit from the European Investment Bank will contribute in a very meaningful way in the achievements of the AID Banks mandate which is to promote economic development in Dominica and to mobilize funds for this development. It gives strong support to the government of Dominica’s efforts towards job creation, foreign exchange earnings and growth and expansion of the Dominican economy by making available financing on affordable terms to viable projects in the sectors which have been targeted,” Sylvester said.
Renewable energy and energy efficiency projects will benefit from a dedicated USD 1.3 million component and will further benefit from an interest rate subsidy to facilitate investment in these sectors, a press release stated.
Sylvester described the line of credit as extremely important to the AID Bank and the Government of Dominica, adding “It is most timely and has come at a moment when small island developing states like ours continue to grapple the challenges posed by the global financial and economic crisis.”
Sylvester explained that a primary tranche of funds amounting to US$8.78 million will go towards the first component of the global line of credit to the AID Bank, while an agreement for a second component of US $1.25 will be signed soon.
“The second component of this facility US $1.25 million will benefit renewable energy and energy efficiency projects and the finance contract for this tranche will be signed at a subsequent date,” Sylvester explained.
According to him, other targeted sectors include agriculture, agro-processing, infrastructure, energy, health education tourism services and other productive sectors.
“I believe that the EIB recognizes the critical role that development banks continue to play as financial intermediaries channeling funds to small and medium size enterprises as well as the public sector which in turn contributes to social and economic progress…” he noted.
Head of the Regional Representation for the Caribbean European Investment Bank Yves Ferreira expressed pride in partnership between the EIB and the AID Bank. He is convinced that the investment compliments a EC $17 million grant that the European Commission recently gave to Dominica to help fight the effects of the global economic crisis.
“This facility introduces for the first time in the Caribbean, alongside our traditional lending for small and medium sized enterprises, a renewable energy and energy efficiency small projects window that will benefit from an interest rate subsidy. It is of our opinion that at this time of economic challenges… supporting SME’s and job creation across the island is vital but so is the need to invest in environmental stability… Wish to help Dominica to unlock its green growth potential,” Ferreira stated.
The European Investment Bank operates in the Caribbean under the Cotonou Agreement.
According to a press release, this line of credit is the first EIB project to materialise under the Caribbean Joint Action Plan that the European Investment Bank signed with the Carbbean Development Bank, Finance for Development (“FMO”), the International Finance Corporation and PROPARCO on May 19, 2010 in the Bahamas.