Loan process

Chart: Loan process

How can I apply for a loan from NIB?

Applications for loan should be directed to NIB's Lending Department. There are no standard forms for a loan application.

What are the eligibility criteria?

All projects financed by NIB should strengthen competitiveness and/or enhance the environment, in accordance with NIB's mandate and eligibility criteria. Furthermore, outside the membership area, projects financed by NIB should be of mutual interest to the country of the borrower and the member countries.

Strengthen competitiveness

One of NIB's two key eligibility criteria for lending is to strengthen the competitiveness of its member countries. Competitiveness is seen as a country's ability to achieve a sustainably higher level of wealth and prosperity, normally defined as a higher level of gross domestic product per capita.

By this definition, competitiveness can be improved either by raising the total value of products and services produced or by producing more per given input of labour or capital. In the short run, a multitude of factors affect a country's competitiveness. In the long run, it is mainly determined by the value added a country can provide with its human and physical capital in producing goods and services.

Competitiveness on a national level is a dynamic process. It is not a zero-sum game. Hence, in the long run, if one economy improves its competitiveness it is normally to the benefit of other countries too.

An economy is an aggregation of many producing units. It is, therefore, unlikely to become more competitive unless its companies strengthen their competitiveness. Consequently, NIB's starting point in evaluating the competitiveness effects of a project is the impact on the company or companies involved. The Bank takes both direct and indirect impacts into account.

Direct impacts are normally purely commercial effects on the company concerned, such as upgrading physical or human capital, improving access to suppliers or markets or developing business practices. A project may also directly affect the wider business community or region, for example, through lower transportation costs or positive cluster effects.

Indirect effects of a project occur through spill-over effects or externalities, which reach beyond the company involved in the project. These effects may include demonstration effects from innovation and new market practices, and increased competitive pressures on other companies in the sector.

Loans and guarantees that fulfill these criteria are often used for:

investments in infrastructure such as transport;
large energy projects;
large investments by the corporate sector such as in the improvement of manufacturing processes and in research and development; and
financing through intermediaries for the operations of small and medium-sized enterprises.

Enhance the environment

Enhancing the environment is the other of the two key eligibility criteria for lending. In practice, this means that NIB provides loans and guarantees for projects that prevent and treat pollution.

In evaluating the environmental impact of a project, NIB compares the expected effects on the environment before and after the project. A project is considered to enhance the environment if it shows a net benefit for the environment. NIB's environmental focus areas are: cleaner production and resource management; environmental technology; emission reductions; and renewable energy. In its evaluation of environmental impacts, NIB takes into account these focus areas and quantitative assessments of environmental benefits.

All projects considered to fulfill the mandate and eligibility criteria, i.e. strengthening competitiveness and/or enhancing the environment, are subject to an objective analysis, including an environmental analysis to ensure that the project is in line with sound banking principles.

How is a loan decision made within NIB?

A decision to grant a loan is made by the Board of Directors, after preliminary approval by the Credit Committee. NIB's President is authorised by the Board to make certain lending decisions.

Links
Financial policies (332 KB)
Environmental policy and guidelines (909 KB)
General guidelines for procurement (50 KB)
Resolution on fighting corruption (56 KB)
Rules of procedure for the Committee on Fighting Corruption (49 KB) Recent loans
Analysis