EIB Investments in Education outside the European Union - Didier Bosman 13 December 2017 - European Investment ...
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EIB Investments in Education outside
the European Union
Didier Bosman
13 December 2017
Corporate Presentation 2017 18/12/2017 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
European Investment Bank Group 18/12/2017 3
The EIB: capital breakdown
European Investment Bank Group 18/12/2017 4
We are the world’s largest
provider of climate finance
>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
European Investment Bank Group 18/12/2017 5
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
European Investment Bank Group 18/12/2017 6
We deliver impact where it’s needed
JOBS HEALTH EDUCATION WATER
4.4m jobs in small 10m people with 890 000 students 25m people
businesses access to improved benefiting from EIB benefiting from safe
health services projects drinking water
TRANSPORT ENERGY URBAN DIGITAL
960m additional 4m households 120 000 households 11m people with
passengers powered by EIB in social and new or upgraded
projects affordable housing connections
European Investment Bank Group 18/12/2017 7
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
Environment Infrastructure Innovation SMEs
EUR EUR EUR EUR
16.9bn 19.7bn 13.5bn 33.6bn
18/12/2017 European Investment Bank Group 9
Slowing productivity in the EU 18/12/2017 Groupe Banque européenne d’investissement 10
Enablers of competitiveness:
human capital
Shortfalls in human capital development
Europe’s economy, which is based on
knowledge-intensive manufacturing and Education expenditure (% of GDP)
related services, will generate a growing
demand for young people with excellent 7 10% of the gap
estimated to
post-secondary training and a relevant 6 be for
skill-set. education
5 infrastructure
Nevertheless, the EU spends only slightly
more than 6% of its GDP on education 4
Other
compared to the US and South Korean Tertiary
3
education spending of around 7.3% of
GDP Gap in tertiary
2
education a
Despite its importance for a knowledge- major risk for
1 EU com-
intensive economy like the EU, the gap is petitiveness
most pronounced in tertiary education, 0
United South Korea EU
where EU spending is more than 40% States
below US or South Korean levels. Source: OECD
18/12/2017
26/03/2015 European Investment Bank Group 11Overview
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 12Innovation and Skills references 18/12/2017 European Investment Bank Group 13
Innovation and Skills (Knowledge Economy)
R&D
Innovation
Education
14EIB Lending to «Innovation & Skills»
Total Lending 2000-2016: EUR 182 bn
20,000 160
150
18,000
18.3 bn 140
16,000 123
16.1 bn
16.5 bn 15.6 bn 120
Total Lending volume (EUR m)
108
14,000
Total number of operations
104 13.4 bn 13.5 bn 100
95
12,000 95
12.5 bn
76
10,000 80
10.4 bn
10.9 bn 73 9.3 bn
8,000 10.7 bn 66
10.2 bn 60
48 56
7.1 bn 57 55
6,000
37 6.2 bn 45
40
4,000 5.1 bn 27
18
3.6 bn 20
2,000
2.2 bn
0 0
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Source: EIB
18/12/2017 European Investment Bank 15EIB Lending to «Innovation & Skills»
2 bn Lending by sector 2000-2016
1% 2 bn
1% 558 m 290 m 63 m
3 bn 0% 0%
0%
3 bn 2%
2%
5 bn
3%
8 bn Industry
4%
Education
Telecommunications
64 bn
35% Services
28 bn SMEs & MidCaps
15% Healthcare
Transport
Energy
Construction
Urban development
Water, sewerage
Solid waste
32 bn Agriculture, fisheries, forestry
18%
35 bn
19%
Source: EIB Total: EUR 182 bn
18/12/2017 European Investment Bank 16Total Signature Volume (M EUR)
0
10,000
15,000
20,000
30,000
35,000
45,000
50,000
25,000
40,000
5,000
Source: EIB
Germany
18/12/2017
Italy
France
Spain
United Kingdom
Poland
Sweden
Finland
Hungary
Denmark
Austria
Portugal
Turkey
Belgium
Czech Republic
Greece
Netherlands
Ireland
Slovenia
Romania
Slovakia
Luxembourg
Cyprus
Serbia
Latvia
Switzerland
European Investment Bank
Estonia
Lithuania
Bulgaria
Israel
Tunisia
Croatia
Ecuador
Lending to Innovation 2000-2016 : Total EUR 182 bn
Regional - EU countries
Regional - EU
Malta
Albania
Liechtenstein
Morocco
Ukraine
Norway
17
Georgia
Bosnia and Herzegovina
EIB Lending to «Innovation & Skills»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%.
18Investing for Youth
Investing in Skills
Facilities
• Universities/research facilities
• Schools for upper secondary/tertiary education
• Social housing for students and mobile employees
• Buildings for Public Employment Services (PES)
Skills 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
EUR 3 billion • Mobility programmes for apprentices & young employees:
annually
18/12/2017 19EIB Lending to Education
Lending to Education 2000-2017
6,000
5,000
Total signature volume (m EUR)
4,000
3,000
2,000
1,000
-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017*
* as of 30.11
Total : EUR 40 bn
20EIB Lending to Education
Lending outside of Europe 2000-2017*
Albania
13m
Jordan
40m
Ecuador
Serbia 70 m Tunisia
Non-EU Ukraine
75 m 70m
666 m 9m
2%
Turkey
EU 100 m Dominican
39.8 bn Rep.
5m
97%
Morocco Regional -
283 m Africa
1% 2m
* as of 30.11 Total over period: EUR 40 bn
21EIB Lending to Education
Technical
and Sports, culture and
Lending by Education type 2000-2017*
vocational support education Pre-primary education
secondary 187 m 140 m
education 1% 0%
1.6 bn
4%
Primary education
3.5 bn
9% Higher education
15.5 bn
38%
Secondary education
8.8 bn
22%
Education general
10.7 bn
26%
* as of 30.11
22Overview
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 23The 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
18/12/2017 European Investment Bank Group 24The 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.
25EIB'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
18/12/2017 European Investment Bank Group 26Typical 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
27Socio-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 28Approach 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.
18/12/2017 European Investment Bank Group 29Eligible 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
30Role 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.
31Role 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
European Investment Bank Group 18/12/2017 32EIB project cycle
We support sound and sustainable projects
• Financial
• Economic
Step 7 Step 2 • Social
Step 1 Proposal
Repayment Appraisal • Environmental
• Technical
assessment
EIB • EIB Management
Committee
project • Investment
Committee
(for operations
Step 6
Monitoring
cycle Step 3
Approval
potentially
benefiting from
an EU guarantee
and reporting under EFSI)
• EIB Board of
Directors
Step 5 Step 4
Finance contract is signed
Disbursement Signature
European Investment Bank Group 18/12/2017 33Overview
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 34Modernisation School Infrastructure
Tunisia
Project Cost: EUR 213 m Loan: EUR 70 m
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 schoolsTechnical and Technological Institutes
Ecuador
Project Cost: EUR 191 m Loan: EUR 70 m
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.Ukraine Higher Education
Ukraine
Project Cost: EUR 160 m Loan: EUR 120 m
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.University of Fes
Morocco
Project Cost: EUR 147 m Loan: EUR 70 m
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.You can also read
