The bank began investing in earnest in Jordan, Tunisia, Egypt and Morocco in 2013, having established operations in all four countries over the previous two years. The bank is preparing to admit Libya as its latest member and shareholder during the 2014 annual meetings in Warsaw, following a request from the Libyan government in December 2013, a precursor step to establishing full operations in the country.
At the annual meetings last year in Istanbul, the EBRD said that it anticipated it would be lending up to €2.5bn per year to the region by 2015. After investing less than €500m in 21 projects last year, Gacek admitted that the bank is unlikely to hit that target until 2016 at the earliest, after the process of building operations, hiring staff and making contacts took longer than originally anticipated.
Egypt, the largest economy in the region, remains locked in political turmoil. A democratic election in 2012 that brought in Mohammed Morsi, a candidate representing conservative Islamic group the Muslim Brotherhood, was followed by a military coup in 2013. Since then, an at times violent crackdown on the Brotherhood has seen hundreds of the organisation’s supporters sentenced to death without proper trials. The coup’s architect, former army chief Abdel Fattah el-Sisi, is expected to win elections scheduled for this May.
Analysts have warned that the continued presence of the army in public life in Egypt — including in the management of much of the private sector — creates big governance challenges for investors.
“Transition takes time and needs patience,” Gacek said. “Egypt has committed to go back on the roadmap... We stand ready to support the economy [after the elections].”
Despite the disruption, the EBRD has funded major projects in the country, including a €140m loan to the government for the renovation of two power plants, and €15m to Nestlé Egypt earlier this year.
Gacek rejected suggestions that Egypt’s turbulent politics and apparent backsliding on reform meant that the bank should curtail its ambitions for the country.
“We have demonstrated over our 20 years of experience that we are able to support countries in their progress and their economic commitment through difficult times. We are needed in difficult times,” she says.
Lobby groups, including CEE Bankwatch, a coalition of non-government organisations that monitor’s the EBRD’s investments, say that the bank is yet to prove itself in the region.
“To date, we are not persuaded that the bank is making a real positive difference in Egypt by investing in big corporations like Nestlé and approving loans to state companies at the time when state oppression and massacres are still commonplace,” says Kuba Gogolewski, the group’s SEMED co-ordinator.