Brussels, 26/11/2008 (Agence Europe) - On Wednesday 26 November, the European Investment Bank (EIB) lent €20 million to a group of commercial banks based in Zambia to support investments by small and medium sized enterprises (SMEs). The loan will, according to an EIB press release, have “an important developmental impact on the southern African country by encouraging private sector growth”. The small-scale investments supported by the EIB funds will help to diversify the economy which is largely dependent on copper mining and will create jobs for local communities across Zambia. The loan to the Zambian financial sector supports the European Union's development and cooperation objectives in Africa, alleviating poverty and encouraging economic growth by promoting the private sector. The project is supported by Zambia's government and will be used to finance investments by small companies from a wide range of sectors, including industry, agriculture, tourism and infrastructure. In addition, the financial advantage of this EIB loan has been maximised to benefit the final beneficiaries - the small businesses - thanks to the EIB's decision to provide funding in both euro and dollars (USD). Most of Zambia's export revenues are denominated in USD, therefore the provision of funding in this currency reduces conversion losses and foreign exchange risk. The first and second tier banks that will channel the EIB funds to SMEs are amongst the best performing in Zambia. The loan signed on Wednesday is the sixth granted by the EIB to the financial sector in Zambia since 1994. The previous such loan, totalling €40 million, created over 7,000 jobs and enabled investments of some €130 million. (O.L./transl.rt)