EBRD president is looking to expand into sub-Saharan Africa
The European Bank for Reconstruction and Development (EBRD) is considering an expansion into sub-Saharan Africa, President Sir Suma Chakrabarti tells the Financial Times. Sub-Saharan Africa requires additional funding to meet the development and climate change goals set in 2015, he said. The bank’s solid capital base and “specialty in lending to private business…could help make a big contribution to meeting globally agreed sustainable development and climate change,” he said, adding that every EUR 1 the EBRD lends attracts EUR 2.30 in other investments. Chakrabarti explained that even if the bank were to “invest a further EUR 500 mn a year in its 37 existing countries of operation…that left ample scope to expand ‘gradually’ into countries in sub-Saharan Africa that were committed to market democracy.” The EBRD president intends to pitch his proposal during the week’s IMF and World Bank Spring Meetings that wrap up on 22 April.
Shareholder resistance is expected, particularly from northern and eastern European countries, who may want the bank to remain focused on its core market. “It took the personal involvement of Barack Obama, former US president, to ensure agreement to expand the bank in 2012 into Egypt, Jordan, Lebanon, Morocco and Tunisia after the Arab spring,” notes the FT. Chakrabarti says, however, that the EBRD has demonstrated the efficiency of its business model and approach, after expanding into Turkey, Mongolia, the Middle East, as well as Cyprus and Greece, “without damaging lending to eastern Europe or diluting its unique democracy-promoting mandate.”