The European Investment Bank (EIB) is aiming to develop “simple” and “not so bureaucratic” trade finance and export credit instruments as it seeks to revive European exports and secure supplies of critical raw materials.
Andrew McDowell, director-general of the bank’s development finance arm EIB Global, said the organisation wants to quickly finalise the design of programmes that would support the bloc’s export credit agencies (ECAs).
The multilateral lender last year revealed plans to offer reinsurance, guarantees and other forms of support to ECAs and commercial trade finance banks, in a bid to harness the financial weight of the trading bloc to boost the lending and insuring capacity for exports.
The EIB is working on pilot projects with member state ECAs, the first of which are expected to be “approved and signed” by July, a spokesperson for the bank told GTR.
“I’d love to see a window which enables EIB to act as a conduit for being able to transmit the power of the EU budget to export credit agencies across the EU in a very efficient and unbureaucratic, fast way; that would be my dream,” McDowell told an EIB event in Luxembourg on March 4.
But he warned the EIB is “already coming across design issues” because its investment tools “were not designed to be supporting export credit agencies – in terms of eligibilities, in terms of… some of the contractual conditions we have”.
The organisation has asked the European Commission for exemptions from some limitations normally placed on EIB activities, he said. A spokesperson for the bank declined to provide further information about the exemptions because discussions are ongoing.
“We are all learning as we go along how we marry the business of a bank, a development bank, with the business of export credit insurers, and these are slightly different business models traditionally,” McDowell explained. “So there is a learning process and there is some pain to be gone through in the next few months.”
“I think there is a very open audience in Brussels and among the member states and among the ECAs and ourselves to get that design worked on this year,” he said. “This needs to be done quickly.”
Edna Schöne, an executive board member of the German ECA, Euler Hermes Aktiengesellschaft, said the EIB’s solution “has to be really easier than what I think we’ve come up [with] so far”.
“It has to be a market-ready thing that we set up and so far I think we are really too slow,” Schöne said at the EIB event. “I think we are all committed to really making that happen faster than we’ve been doing.”
Europe’s plethora of institutions and rulebooks renders the trading bloc “complicated and slow” in comparison to China, she said. “We cannot afford to stay that way.”
McDowell cited data presented to him by EGAP, the Czech ECA, showing that the market share of European contractors in Africa plummeted from nearly 40% to just over 19% between 2010 and 2020, as buyers turned to lower-cost options from China.
The data, also provided to GTR, shows between 2010 and 2023, the EU’s share of capital goods exports to every emerging market shrank. The loss of competitiveness was particularly pronounced in the bloc’s own backyard of Balkan and other non-EU Eastern European countries, dropping from a 55.8% share in 2010 to 28.7% in 2023.
EGAP chairman David Havlíček said last month his agency is “the first ECA in history to now undergo screening by the EIB so that we can jointly support a pilot project, specifically an export order from a Czech exporter worth several billion crowns”.
The EIB initiatives are included in the European Commission’s proposal for the EU’s 2028-34 budget, he said.
McDowall said that in addition to exports, EIB co-operation with export credit agencies could help the EU muster greater power to secure supplies of strategic commodities.
“Critical raw materials [are] as much about the trade finance ecosystem around the flow of trade as much as the financing of the project[s] themselves,” he said.
“If we don’t have a trade finance and export finance ecosystem that is competing to bring those trade flows to Europe, we have major economic security issues,” he added. “And we see that in critical raw materials but we also see it in other sectors of the economy.”
