EBRD’s Africa push met with scorn in Sarajevo

Plans by the EBRD to enter sub-Saharan Africa have been criticised by delegates at the annual meeting for taking on more responsibilities at a time when they have not completed their tasks in their original areas of operation

  • By Elliot Wilson, Jasper Cox
  • 08 May 2019
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The EBRD’s plans for a harder and faster push southward into sub-Saharan Africa (SSA) has run into opposition from some delegates at the bank’s annual meeting in Sarajevo.

They told GlobalMarkets the multilateral bank should focus on markets in Central Asia and the Western Balkans, which struggle to attract private sector investment and suffer from a paucity of infrastructure and good financial and economic management.

Senad Softic´, governor of the Central Bank of Bosnia and Herzegovina, told GlobalMarkets the EBRD should focus its money and attention on “Bosnia, not Africa”.

“We live in a global world [but the EBRD] should focus on European countries. Europe should be the priority, then the rest [of the world],” he said. “Can you imagine if they move into all of Africa, how much slower the process and pace of development and reform in the Balkans would be?”

Dmitry Pankin, president of the Black Sea Trade and Development Bank, went even further. “It’s a totally wrong decision,” he said. “Maybe it’s a very important area of activity for Europe, for the European Union. I can understand very well that Europe has a lot of problems with sub-Saharan Africa, immigration, and this issue should be resolved.

“But the [original] idea was totally different. It was a bank made especially for helping the transition in central and Eastern Europe from a planned economy to a market economy. Is it possible to say that this task is completed? Maybe for some countries like Czech Republic, like Poland, it’s more or less OK, but we can see how many problems we have in the Balkans, how many problems we have in eastern Europe, especially Ukraine, Moldova.”

Sergey Verkashanskiy, executive director for the Russian Federation, Belarus and Tajikistan at the EBRD, told GlobalMarkets the move was contingent on the multilateral mending its relations with Moscow before embarking on a new adventure.

“You cannot start on a major geographic expansion without having your legacy issues sorted,” he said. The EBRD halted all lending to Russia in the wake of president Vladimir Putin’s annexation of Crimea in 2014. “A step further, into sub-Saharan Africa, will require special deliberation on the part of shareholders. We are quite cautious. It would be very much gradual, and a case has to be made for this extension.”

2020 vision

Officials told GlobalMarkets that a decision would be made in 2020, with its expansion into the sub-Saharan region not taking place before the start of 2021 and the beginning of a new five-year operational cycle at the EBRD.

The gradual migration south would have seemed wildly unlikely a decade ago, but in the intervening period, the development bank has rolled out operations in seven southern and eastern Mediterranean (SEMED) economies, including Morocco, Tunisia and Egypt, investing in private sector lenders and corporates, and in the build-out of much needed energy grids at least partially powered by renewables.

So successful has this roll-out been that Egypt has become the bank’s largest single market of operation, with an outstanding portfolio of €3.5bn ($3.9bn), 56% of which is in the private sector.

Janet Heckman, managing director of the SEMED region at the EBRD, told GlobalMarkets she was “very optimistic about the whole region”. She added: “We have clients in Tunisia, Egypt and Morocco who see sub-Saharan Africa as ripe for investment opportunities.” 

Branko Babic, head of public affairs at the economic department of Bosnia’s ministry of foreign affairs, said it was crucial to support sub-Saharan Africa “so that it can function, and so that people aren’t coming over the sea on rubber boats.

“The whole of Europe is affected by what is happening in a region that isn’t stable, isn’t financially viable. If the region is not prospering, we will have constant problems. There is no way for sub-Saharan Africa to become prosperous without our support.”

First, North Africa

For the bank’s president, Suma Chakrabarti, and the board of governors, a more near-term challenge is to focus on adding three new sovereign states to its sphere of operations — Algeria, Libya and Syria.

Of the three, Algeria, which will host its presidential elections on July 4, is widely expected to be the next market to join the bank’s fold. “We would very much like Algeria to be a member, though the political situation …[means]… one needs to wait until the time is right for them to be ready for our investment,” said Heckman.


Following the publication of this article, we are happy to make clear that the official statement of BiH, presented at the annual meetings of the EBRD in Sarajevo, is such that it fully supports the plans to study the possibilities for the expansion, as confirmed by voting in favor of the Resolution of the Board of EBRD Governors.

  • By Elliot Wilson, Jasper Cox
  • 08 May 2019

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