The European Bank for Reconstruction and Development is eyeing expansion into sub-Saharan Africa and new parts of the Middle East in the coming years that could raise its lending by as much as a third, its president told Reuters.
Set up in 1991 to invest in the ex-communist economies of eastern Europe and owned mainly by big Western governments, the EBRD has been rapidly expanding over the last decade to operate in more than 30 countries from Morocco to Mongolia.
But with capital still abundant, the bank is looking to advance further south and plans to get the ball rolling when its shareholders gather in Jordan next month for their annual meeting.
Suma Chakrabarti, who has led the EBRD for six years, said there would no decision made at the upcoming meeting on the expansion but said he aimed to kick off the discussion.
“The debate is starting with our shareholders: ‘Would you like us, gradually, incrementally to go to a few more places maybe in sub-Saharan Africa in particular?’” Chakrabarti (pictured) said in an interview.
New countries of operation would have to be democracies or at least committed to becoming a democracy, and they must also aim for the kind of market-based economies that the development bank has always focused its efforts on.
“I would be surprised if we didn’t get some positive noises because there are quite a lot of countries who have very strong commercial links into the neighbouring countries of the Maghreb and Sahel,” Chakrabarti said, referring to the area from the top of Africa to the bottom of the Sahara desert.
If shareholders give the nod next month, it would take around a year of analysis on what would be required financially, he added. If that all works out, the final green light could then be given at its 2020 annual meeting.
The move would represent the latest evolution from the EBRD’s post-Soviet era roots and come as Cold War-style tensions between the EBRD’s main Western shareholders and Russia — for a long time the bank’s largest market — are rising.