EBRD launches in Arab world with $1 billion fund
First British president elected; Offices in Egypt, Jordan, Morocco, Tunisia
The European Bank for Reconstruction and Development (EBRD) approved a new $1 billion special fund to invest in the Middle East and north Africa last month.
The bank’s shareholders approved the new fund at the EBRD’s annual meeting in London in May, when the bank also elected a new president – Suma Chakrabarti, formerly head of the UK Department for International Development and more recently the most senior civil servant at the UK’s Ministry of Justice.
Chakrabarti is the EBRD’s first British president and his election breaks with an unwritten deal 20 years ago that if the bank were based in London it would never have a British president. Its entry into the Arab world entails a fundamental change in direction for the bank, which was set up in the wake of the fall of communism in central and eastern Europe, Russia and central Asia.
|Hildegard Gacek will be the EBRD’s first director for the region|
The bank will initially launch operations in four Arab countries – Egypt, Jordan, Morocco and Tunisia – via a special fund financed from the bank’s reserves rather than shareholder capital. Use of shareholder capital would need a change in the geographical remit in the bank’s charter. That change is being sought, but requires parliamentary approval by all shareholders, so the bank launched a special fund to speed up its entry to the region. Hildegard Gacek will be the EBRD’s first director for the region. She started her full-time role at the end of last month after leaving her former position as the EBRD’s head in Belgrade. In total, the bank is hiring around 100 people for its new geographic remit, according to a spokesperson for the bank.
Gacek, who will be based in London, says: "By the end of summer, all four offices [in Cairo, Amman, Tunis and Rabat] will be fully functioning."
"Since last year, our teams have been travelling to all the countries, and have made assessments of the most urgent needs and how we could respond to that", she says. We hope we can present the first project for approval in September."
Gacek says this first project is likely to be financing of small- and medium-sized enterprises, potentially through loan facilities to the local banking sector. She says the EBRD will provide technical support to help banks identify and evaluate potential borrowers. The EBRD might lend directly to SMEs in agribusiness and manufacturing in these countries and might directly finance projects in the electricity sector, possibly this year.