The EU bank

The EIB Group provides funding to microfinance institutions (MFIs) in the form of loans, guarantees and equity participations. EIB can either be a direct investor in or lender to Microfinance Institutions or indirectly finance MFIs through specialised intermediaries, such as Microfinance Investment Vehicles (MIVs) or Microfinance holding groups.

The EIB Group's financial instruments consist of:

• direct loans and intermediated loans: direct loans are credit facilities provided to MFIs at commercial rates.  Intermediated Loans take the form of credit lines or indirect loans to banks and other financial institutions that in turn on-lend to MFIs. In a number of eligible countries, loans are also available in local currency;

• private equity and debt participations in intermediaries: this includes equity or quasi-equity instruments, as well as senior and subordinated debt. A significant share of the EIB Group's investments in microfinance is allocated through specialised intermediaries or MIVs. In turn MIVs provide debt, equity and guarantees to microfinance institutions which offer a wide range of financial services to micro, small and medium-sized enterprises, such as savings, loans, transfers and insurance;

• direct and counter-guarantees: direct guarantees to microfinance institutions and other financial institutions facilitate access to local currency financing solutions for the local banking sector. Counter-guarantees are provided to guarantee schemes underwriting micro-credits extended by microfinance institutions and other financial institutions.

Outside Europe, 75% of the EIB financing is sourced through microfinance investment vehicles and microfinance holding companies. Within Europe, guarantees and securitisations account for the lion's share of the amounts committed.

Non-Financial Instruments:

The EIB Group provides technical assistance via grants to enhance the development impact of its projects and strengthen the capacity of its financial counterparties and final beneficiaries. Funds are intended mainly to address weaknesses in human resources management and operations, Management Information Systems (MIS) and technology, governance, internal audit and risk management procedures.

Over three quarters of technical assistance grants are channelled to microfinance institutions in the African, Caribbean and Pacific countries.

List of technical assistance grants committed as at July 2011

The EIB Group sponsors feasibility and market studies to support and increase the efficiency of its projects. In 2007, the Bank financed and prepared on behalf of Sanabel, the microfinance network of Arab countries, a Review of the economic and social impact of microfinance in the Mediterranean region. It was presented at the FEMIP Conference on Microfinance in May 2008.

In 2009, the EIB Group funded a study on incorporating foreign exchange risk in the financial model of the Regional MSME Investment Fund for Sub-Saharan Africa (REGMIFA). The EIF also commissioned a feasibility study on the microfinance market in the European Union, the findings of which provided background information for a Working Paper entitled “Microfinance in Europe - A market overview”.