EIB Investments in Education outside the European Union · The EIB at a glance ‣Largest...
Transcript of EIB Investments in Education outside the European Union · The EIB at a glance ‣Largest...
EIB Investments in Education outside the European Union
Didier Bosman
13 December 2017
18/12/2017 Corporate Presentation 2017 1
Overview
1. EIB Group
2. EIB’s Innovation & Skills programme
3. Education lending
4. Conditions for EIB financing
5. Examples of projects
18/12/2017 European Investment Bank Group 2
The EIB: the EU bank
‣ Natural financing partner for the EU institutions since 1958
‣ Around 90% of lending is within the EU
‣ Shareholders: 28 EU Member States
Investing in Europe’s growth
18/12/2017 European Investment Bank Group 3
The EIB: capital breakdown
18/12/2017 European Investment Bank Group 4
We are the world’s largest provider of climate finance
18/12/2017 European Investment Bank Group 5
>25% worldwide 35% in the world’s
developing regions
EIB’s 2015 Climate Strategy We are increasing our climate commitment:
USD 100bn over the next 5 years
The EIB at a glance
‣ Largest multilateral lender and borrower in the world ‣ We raise our funds on the international capital markets
‣ We pass on favourable borrowing conditions to clients
‣ Some 450 projects each year in over 160 countries
‣ Headquartered in Luxembourg and has 40 local offices
‣ Around 3 000 staff: ‣ Not only finance professionals, but also engineers, sector
economists and socio-environmental experts
‣ Almost 60 years of experience in financing projects
18/12/2017 European Investment Bank Group 6
We deliver impact where it’s needed
18/12/2017 European Investment Bank Group 7
JOBS 4.4m jobs in small
businesses
HEALTH 10m people with
access to improved health services
EDUCATION 890 000 students
benefiting from EIB projects
WATER 25m people
benefiting from safe drinking water
TRANSPORT 960m additional
passengers
ENERGY 4m households powered by EIB
projects
URBAN 120 000 households
in social and affordable housing
DIGITAL 11m people with new or upgraded
connections
Overview
1. EIB Group
2. EIB’s Innovation & Skills programme
3. Education lending
4. Conditions for EIB financing
5. Examples of projects
18/12/2017 European Investment Bank Group 8
Our priorities
18/12/2017 European Investment Bank Group 9
SMEs Infrastructure Environment Innovation
EUR
16.9bn
EUR
19.7bn
EUR
13.5bn
EUR
33.6bn
Slowing productivity in the EU
18/12/2017 Groupe Banque européenne d’investissement 10
Enablers of competitiveness:
human capital
11
Shortfalls in human capital development
18/12/2017 European Investment Bank Group
Europe’s economy, which is based on knowledge-intensive manufacturing and related services, will generate a growing demand for young people with excellent post-secondary training and a relevant skill-set.
Nevertheless, the EU spends only slightly more than 6% of its GDP on education compared to the US and South Korean education spending of around 7.3% of GDP
Despite its importance for a knowledge-intensive economy like the EU, the gap is most pronounced in tertiary education, where EU spending is more than 40% below US or South Korean levels.
0
1
2
3
4
5
6
7
UnitedStates
South Korea EU
Other
Tertiary
Education expenditure (% of GDP)
10% of the gap estimated to
be for education
infrastructure
Gap in tertiary education a
major risk for EU com-
petitiveness
Source: OECD
26/03/2015
Overview
1. EIB Group
2. EIB’s Innovation & Skills programme
3. Education lending
4. Conditions for EIB financing
5. Examples of projects
18/12/2017 European Investment Bank Group 12
Innovation and Skills references
18/12/2017 European Investment Bank Group 13
14
Innovation and Skills (Knowledge Economy)
R&D
Innovation
Education
EIB Lending to «Innovation & Skills»
18/12/2017 15
Source: EIB
European Investment Bank
2.2 bn
5.1 bn
3.6 bn
6.2 bn
7.1 bn
10.7 bn 10.9 bn
10.2 bn
12.5 bn
18.3 bn
16.5 bn
10.4 bn 9.3 bn
15.6 bn
13.4 bn
16.1 bn
13.5 bn
18
37
27
48
45
56 57 55
73
95 95
66
76
104
108
123
150
0
20
40
60
80
100
120
140
160
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
16,000
18,000
20,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
To
tal n
um
ber
of
op
era
tio
ns
To
tal L
en
din
g v
olu
me (
EU
R m
)
Total Lending 2000-2016: EUR 182 bn
EIB Lending to «Innovation & Skills»
18/12/2017 16
Source: EIB
European Investment Bank
Total: EUR 182 bn
64 bn 35%
35 bn 19%
32 bn 18%
28 bn 15%
8 bn 4%
5 bn 3%
3 bn 2%
3 bn 2%
2 bn 1% 2 bn
1% 558 m 0%
290 m 0%
63 m 0%
Lending by sector 2000-2016
Industry
Education
Telecommunications
Services
SMEs & MidCaps
Healthcare
Transport
Energy
Construction
Urban development
Water, sewerage
Solid waste
Agriculture, fisheries, forestry
EIB Lending to «Innovation & Skills»
18/12/2017 17
Source: EIB
European Investment Bank
0
5,000
10,000
15,000
20,000
25,000
30,000
35,000
40,000
45,000
50,000
Ger
man
y
Ital
y
Fran
ce
Spai
n
Un
ite
d K
ingd
om
Po
lan
d
Swed
en
Fin
lan
d
Hu
nga
ry
De
nm
ark
Au
stri
a
Po
rtu
gal
Turk
ey
Be
lgiu
m
Cze
ch R
epu
blic
Gre
ece
Net
her
lan
ds
Ire
lan
d
Slo
ven
ia
Ro
man
ia
Slo
vaki
a
Luxe
mb
ou
rg
Cyp
rus
Serb
ia
Latv
ia
Swit
zerl
and
Esto
nia
Lith
uan
ia
Bu
lgar
ia
Isra
el
Tun
isia
Cro
atia
Ecu
ado
r
Re
gio
nal
- E
U c
ou
ntr
ies
Re
gio
nal
- E
U
Mal
ta
Alb
ania
Lie
chte
nst
ein
Mo
rocc
o
Ukr
ain
e
No
rway
Geo
rgia
Bo
snia
an
d H
erze
govi
na
Tota
l Sig
nat
ure
Vo
lum
e (
M E
UR
)
Lending to Innovation 2000-2016 : Total EUR 182 bn
EU: Education Reference Objectives
• At least 95% of children between the age of four and the age of compulsory
schooling should participate in pre-school education;
• The proportion of 15-year-olds with poor literacy, mathematics and science
should be less than 15%;
• The rate of 18- to 24-year-olds who left the education and training system
prematurely should be less than 10%;
• At least 40% of people aged 30 to 34 should graduate from higher education;
• At least 15% of adults should participate in lifelong learning activities;
• At least 20% of higher education graduates and 6% of 18-34 year olds with an
initial vocational qualification should have completed part of their education or
training abroad;
• The employment rate of graduates (those between 20 and 34 years with at least
a level of secondary education and graduated less than three years ago) should
be at least 82%.
18
Investing for Youth
18/12/2017 19
Investing in Skills
Skills
Facilities
• Universities/research facilities
• Schools for upper secondary/tertiary education
• Social housing for students and mobile employees
• Buildings for Public Employment Services (PES)
Vocational training programmes
• Operational costs eligible
• Private & public sector promoters
• Ceiling: average costs of vocational training per pupil per country
Student loans & mobility programmes
• Student loans:
• Link between loans and the costs incurred during studies
• Eligible costs broadly defined
• Mobility programmes for apprentices & young employees:
EUR 3 billion
annually
20
EIB Lending to Education
Total : EUR 40 bn
-
1,000
2,000
3,000
4,000
5,000
6,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017*
Tota
l sig
nat
ure
vo
lum
e (
m E
UR
)
Lending to Education 2000-2017
* as of 30.11
21
EIB Lending to Education
Total over period: EUR 40 bn
EU 39.8 bn
97%
Non-EU 666 m
2%
Morocco 283 m
1%
Turkey 100 m
Serbia 75 m
Ecuador 70 m
Tunisia 70m
Jordan 40m
Albania 13m
Ukraine 9m
Dominican Rep. 5 m
Regional - Africa 2 m
Lending outside of Europe 2000-2017*
* as of 30.11
22
EIB Lending to Education
Higher education 15.5 bn
38%
Education general 10.7 bn
26%
Secondary education 8.8 bn
22%
Primary education 3.5 bn
9%
Technical and
vocational secondary education
1.6 bn 4%
Sports, culture and support education
187 m 1%
Pre-primary education 140 m
0%
Lending by Education type 2000-2017*
* as of 30.11
Overview
1. EIB Group
2. EIB’s Innovation & Skills programme
3. Education lending
4. Conditions for EIB financing
5. Examples of projects
18/12/2017 European Investment Bank Group 23
18/12/2017 European Investment Bank Group 24
The conditions for direct EIB financing
Projects funded by the bank must be:
In line with EU objectives (eligibility)
Financially bearable
Justified economically
Technically viable
Justified from a social and environmental point of view
Use of the appropriate procurement procedures are essential
The conditions for direct EIB financing
A minimum project size
Proper structuring in legal and financial terms
Acceptable risk profile for the EIB given its credit policies
Adequate guarantees (eg Region, State, ...)
Comprehensive legal due diligence on the legal framework, statutes, etc.
25
18/12/2017 European Investment Bank Group 26
EIB's overall approach to the education sector
The education sector is conceived in a broad way:
Higher Education and Research Centres
Lower cycles
Vocational training and apprenticeship
Cultural Education
Sport in the educational setting
Student housing
Transversal operations to improve accessibility or improve energy
efficiency
Student Loans
Public research
Teacher training
Typical examples of EIB interventions in the education sector
Basic education 10% of lending volume
Nursery and primary schools, adapted education, canteens, …
Including nurseries.
Secondary 37 % of lending volume
High schools, colleges, gymnasiums, adapted teaching, canteens, boarding schools
European priority for youth employment: vocational training, apprenticeship, …
Training programmes for teachers
Higher education 39 % of lending volume
Entire campus development, infrastructure for teaching, research, administrative, sports infrastructure, student housing, university restaurants, libraries, laboratories, …
Financing of research
27
18/12/2017 European Investment Bank Group 28
Socio-economic assessment criteria (focus on higher
education)
Demographic evolution
Relationship between knowledge acquisition and market demand
Professional opportunity and salary increase for young graduates
Quality of educational offer
Support to the local economy (physical presence of the university)
Obsolescence of buildings (energy efficiency, respect of standards,
adequacy of spaces, integration of new technologies, etc.)
Quality of spaces for teaching
Each of these criteria varies according to the projects
18/12/2017 European Investment Bank Group 29
Approach to socio-economic assessment in the
higher education sector
• Macro: overall country context and overall strategy for the sector. Contextual economic and social indicators through which system-wide changes in education are monitored and evaluated.
• Meso: institutions (ministries, local and regional governments, universities that help structure the distribution of resources and activities at the micro level). Structure of decision-making at this level.
• Micro: project-specific analysis. Focused, as far as possible, on the various indirect consequences or intangible effects of investment. • Cost efficiency analysis
• Cost benefit analysis
• Rate of return on investment in education (OECD indicator)
• Economic rate of return. Educational projects generate tangible and intangible costs and benefits, and the usual analysis of the wage-based rate of return fails to appropriately capture all the costs and benefits associated with the investment.
Eligible costs in the education sector
An infrastructure project contains :
All that is needed to complete the project
Purchase of land or building
Studies
Demolitions, asbestos removal, soil remediation, archaeological research
Construction work, connections and infrastructure
Furniture and equipment
Functional housing
Energy improvement projects, upgrades, improvements in accessibility to people
Realization of renewable energy programmes
Administrative costs, competition fees, taxes,…
Projects may involve new construction, renovation and restoration of historic
buildings
Schools for religious education are excluded
Civil protection authorities are analysed on a case by case basis
30
Role of the EIB in setting up projects
• Assist the promoter in defining the “EIB project"
• Informal approach, very early stage
• Review of amounts, schedule
• Political, legal, regulatory context
• Dialogue with the borrower on the legal and financial
structuring of the operation
• Solvency, guarantees
• Due diligence, legal opinions
• Meetings with decision makers, external counsel, etc.
31
Role of the EIB in setting up projects
‣ Technical Assistance. Tunisian Ongoing Case
‣ Financially supported by the EC – EUR 12.5 million ‣ Hard: Technical assistance related to the execution of
the investment programme, focused on capacity building improvement, monitoring of the infrastructure sub-projects and diverse capacities developments
‣ Soft: The Qualitative Intervention Programme aimed at ensuring the sustainability of infrastructures through an improvement of the disciplinary climate and management of the school environment in general
18/12/2017 European Investment Bank Group 32
EIB project cycle
18/12/2017 European Investment Bank Group 33
We support sound and sustainable projects
EIB project cycle
Step 1 Proposal
Step 2 Appraisal
Step 3 Approval
Step 4 Signature
Step 5 Disbursement
Step 6 Monitoring
and reporting
Step 7 Repayment
• Financial • Economic • Social • Environmental • Technical
assessment
• EIB Management Committee
• Investment Committee (for operations potentially benefiting from an EU guarantee under EFSI)
• EIB Board of Directors
Finance contract is signed
Overview
1. EIB Group
2. EIB’s Innovation & Skills programme
3. Education lending
4. The conditions of intervention of the EIB
5. Examples of projects
18/12/2017 European Investment Bank Group 34
Modernisation School Infrastructure
Tunisia
Project: • The project is focused on the expansion of capacity and the upgrading of quality
standards at the secondary level. 369 schools all over Tunisia (25% of the secondary
school capacity of the country)
• Co-financing from EIB-KFW-EC
Contribution to Youth Employment: • The construction of new secondary schools is required to allow increasing participation in
secondary schools, currently limited by insufficient capacities in some locations due to
internal migration. The project will improve the school environment, contributing to better
acquisition of skills, through renovated facilities, modernized equipment and improved
disciplinary climate – thanks to dedicated qualitative interventions in a large selection of
renovated schools
Project Cost: EUR 213 m Loan: EUR 70 m
Technical and Technological Institutes
Ecuador
Project: • Construction, extension, rehabilitation and equipment of 21 Technical and Technological
Institutes (TTI’s), classified at the post-secondary level of education.
• Co-financing from EIB-EC and parallel financing with the WB
Contribution to Youth Employment: • The TTIs will be offering 60 technical and vocational programmes leading to professional
qualifications that are recognised and valued by employers in local labour markets.
• The project would result in high and meaningful socio-economic benefits for the country
and furthermore contribute to the EU response to the 2016 earthquake as some of the
Institutes will be located in the regions most impacted by this natural disaster.
Project Cost: EUR 191 m Loan: EUR 70 m
Ukraine Higher Education
Ukraine
Project: • Improving the teaching and research capabilities of the selected universities, at the same
time reducing energy consumption and improving energy efficiency of the Universities’
campuses.
• In line with the EU-Ukraine Association Agreement, signed in June 2014, which also
encourages the two parties to intensify their cooperation in the field of higher education,
aiming, in particular at reforming and modernising the education systems and at enhancing
the quality and relevance of the higher education system and institutions.
• The project contributes towards overall improved efficiency and lower energy intensity of
essential services for the Ukrainian population. The project is expected to improve the cost
efficiency of the seven university campuses. Reducing the energy costs enables the
universities to direct the scarce resources to their core activities and subsequently to
increase and widen the universities’ financial basis.
Project Cost: EUR 160 m Loan: EUR 120 m
University of Fes
Morocco
Project: • Construction of an eco-campus in Fez, with research facilities and equipment,
teaching facilities, a student residency, administration areas and sport facilities.
• Co-financing from EIB-EC
Contribution to Youth Employment: • The university will respond to increasing demand for higher education and
training in Morocco, both in the country itself and for the larger African region,
as Morocco is attracting a growing number of students from the continent.
Project Cost: EUR 147 m Loan: EUR 70 m