In the short term, the European Investment Bank’s most pressing priority in North Africa is to lend support to the victims of Morocco’s devastating earthquake.
“In the aftermath of the earthquake we extended our condolences to the Moroccan people,” says Mourinho. “We also said that we will repurpose some of our funding in Morocco to investment projects responding to immediate requirements in areas such as electricity and water, and to repairing some of the schools that were badly damaged by the earthquake.”
Then on October 11, the EIB pledged €1bn over the next three years to Morocco’s €12bn post-earthquake reconstruction programme. The focus will be on resilient and sustainable infrastructure.
Longer term, the EIB’s aim in North Africa is to support sustainable development. This mirrors its objectives throughout the world.
“The MENA region is economically heterogeneous, with each country having different institutional set-ups and project implementation capacities,” says Mourinho. “But the sectors we are prioritising in the region are not dissimilar from those we are supporting in Europe and elsewhere. Renewable energy, water sanitation and management, and sustainable transport are all key priorities.”
These issues were reflected in the EIB’s €381m of lending to Morocco in 2022. Half of this went to infrastructure projects for environmental protection, renewable energy and energy efficiency.
A showcase investment last year was the EIB’s €200m loan to the ONCF, Morocco’s national railway company. This was the first project signed under the EU-Morocco Green Partnership and underscored the EIB’s commitment to supporting Morocco’s transition to low carbon, sustainable mobility.
‘No green means no business’
This year’s Moroccan earthquake and floods in Libya are shocking illustrations of the region’s vulnerability to natural disasters. In Morocco’s case, however, the damage inflicted on the economy by climate change became apparent in 2022, when a severe drought caused agricultural output to contract by 15%.
This is why there can be no let-up in the EIB’s commitment to its Climate Bank Roadmap for 2021-25, even in regions such as the Middle East and North Africa, where fossil fuels account for a large share of economic output.
This roadmap commits the EIB to increasing the share of its financing dedicated to climate action and environmental sustainability to more than 50% by 2025.
“Last year we reached 58%,” says Mourinho. “But phasing in green energy in the North African region will be an evolution rather than a revolution, with some fossil fuels still needed during the transitional period. Countries should use this period to move towards green energy, green manufacturing and green agriculture, because as from 2030 no green means no business.”
Mourinho says recipients of EIB investment in the region know the transition needs to be accelerated. The result is that the Bank has seldom had to turn down investment opportunities because they do not meet its sustainability requirements. “For every project, we mainstream climate action,” he says. “This means that rather than refuse project proposals, we provide the necessary technical assistance to transform projects from being non-eligible to eligible, and from being non-bankable to bankable.
The EIB is committed to promoting a socially just transition to a sustainable economy.
“Our Climate Bank programme is clear that no transition will succeed if jobs or incomes are lost as a result,” says Mourinho.
Local support
Recent evidence suggests that local communities across North Africa support this transition. Eighty-six percent of Moroccan respondents to the EIB’s 2022 Climate Survey said climate change was already affecting their everyday lives.
Supporting small and medium-sized enterprises is an essential component of the EIB’s commitment to sustainable development and has informed much of its lending in North Africa.
In October 2022 it launched the Trade and Competitiveness Programme with financial support from the EU. This gave a guarantee to the Banque Centrale Populaire, allowing it to extend around €50m of financing for Moroccan exporter SMEs.
This is an example of the EIB’s approach of using guarantees to attract other lenders. “Our quality stamp allows us to crowd in other public and private sector funds,” says Mourinho. “This is how we generate four or five euros of total investment for every euro we commit.”
Mourinho argues that the EIB could achieve even more in the region by strengthening its local presence: “This is something we could improve, by equipping our local offices with origination teams, technical assistance and an upstream advisory capability, helping countries to develop the legal frameworks and enabling environments they still need.”