Shareholders of the European Bank for Reconstruction and Development will be asked in May whether to give the bank the green light for expansion into sub-Saharan Africa, the bank’s president told Reuters. Set up in 1991 to help ex-communist countries of eastern Europe shift to market economies, the bank is also interested in expanding into Algeria should the new government request to join the institution. Majority owned by G7 top economic powers, the EBRD has widened its geographic scope in recent years to 37 countries including Egypt, Tunisia and Morocco in Africa. The London-based development bank has in recent years harboured ambitions to expand its footprint into sub-Saharan Africa, but faced resistance from some of its top shareholders.
“As a management we think there’s a case for limited and incremental expansion into sub-Saharan Africa and we be will putting that case to our shareholders,” President Suma Chakrabarti told Reuters. “We have not decided on countries. We have been looking at types of countries as the first thing to decide is if there’s a case for expansion.” Chakrabarti’s term as president comes to an end in July after the 69 shareholder countries, that include the United States, Britain, Germany, France, Italy and Japan, in May vote on the EBRD’s strategy for the period 2021-25 and a new president.
The bank, which invested a record 10 billion euros across its regions in 2019 and aimed to invest a similar amount in 2020, had sufficient capital of 30 billion euros to fund any expansion plans, he said.
EBRD could play a part in helping Algeria, including reducing the role of the state in the economy and diversifying it away from a reliance on oil and gas revenues, he said. Protests have rocked Algeria since last year and forced veteran Abdelaziz Bouteflika to resign as president in April, with his replacement Abdelmadjid Tebboune elected in December in a vote largely rejected by protesters.
“Algeria needs to send an application letter,” said Chakrabarti. “Lets see if the new government wants to engage with the international sector.” Along with Libya, Algeria is one of the few corners of the Arab world where the bank has not expanded operations in the wake of a spate of civil unrest starting in 2011.
Elsewhere in the Middle East, EBRD is also providing funding in Lebanon, grappling with a severe economic and financial crisis that is choking off foreign currency supplies needed to pay for imports. Since starting operations in Lebanon two years ago, the EBRD has signed six trade credit programme arrangements with six local banks to provide $220 million to help fund the import of key commodities. “The new government will have to look at serious fiscal and structural reforms and there’s serious economic change that they have to address,” he said.
