EBRD donors support infrastructure improvements and economic integration

By Volker Ahlemeyer

EBRD donors support infrastructure improvements and economic integration

The EBRD helps to build integrated economies as a key element of well-functioning markets. It supports investments into modern energy connections and transport infrastructure from the Western Balkans to Central Asia and the southern and eastern Mediterranean. Furthermore, the Bank has designed several financial instruments to support cross-border trade.

These activities are backed by EBRD donors and make a tangible difference: they improve people’s everyday lives; lead to higher quality, competitive products and services; help businesses grow and ultimately lead to sustainable economic growth.

Renewable energy and better electricity services

In 2016 our donors helped to boost the use of renewable energy, ensure energy security for and bring improved electricity services to rural areas.

In Mongolia’s Gobi Desert, for example, the EBRD supports the use of wind power. A US$ 750,000 grant from Japan will help national transmission company NPTG modernise an electricity substation near the site of a planned wind farm. It will connect the wind farm, expected to be co-financed by the EBRD and Japan International Cooperation Agency, to the central grid.

Another project allows more than 400,000 people to benefit from better electricity services in the Osh and Batken regions of the Kyrgyz Republic. The European Union and the EBRD are supporting Oshelectro to modernise derelict electricity transmission systems and to install an advanced metering system in about 18,500 households, which will lead to a significant reduction in electricity losses.

At the same time, the EBRD is working with its donors to improve energy regulation to create an environment conducive to private investments.

In Egypt, for instance, the EBRD Southern and eastern Mediterranean Multi-Donor Account* funded a technical cooperation project to support the New and Renewable Energy Authority (NREA) in preparing the Strategic Environmental and Social Assessment for the Benban solar site. The NREA will use the 37 km2 plot to implement solar projects with a potential total capacity of 1,800 MW. The assessment ensures that the large development planned in Benban is carried out in accordance with best international practice and in a manner which maximises the benefits for the local population and other stakeholders.

Improving global transport links

The EBRD also continues to improve major transport links to connect people and businesses. These are vital to ensure that goods can flow efficiently across borders, to provide enterprises with access to new markets and to integrate economies regionally and globally.

For example, in the Western Balkans the EBRD has worked with the EU and bilateral donors to modernise related infrastructure. In Albania a €36.8 million loan is helping to finance significant improvements to the rail line leading from the capital Tirana to the Adriatic Sea port of Durrës. The project also includes a new link to Tirana International Airport along the rail line to ensure better and faster connections between these key destinations. It is supported by a €35.4 million investment grant and additional technical assistance from the Western Balkans Investment Framework.

The Bank’s investments into the transport sector have benefited from technical cooperation activities to efficiently prepare, design and supervise construction works. These have been funded by various donors, including the European Union and the Central European Initiative.

Together with the European Union, we are helping business in Georgia, Moldova and Ukraine take full advantage of unrestricted access to the world’s largest market.

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New trade opportunities

In Georgia, Moldova and Ukraine, the EBRD and the EU strongly support small and medium-sized enterprises (SMEs) in their ambitions to trade abroad. The Bank started in May 2016 to provide €380 million in loans and trade guarantees to local partner banks and other financial institutions for on-lending to businesses, while the EU is making available €19 million for technical assistance, investment incentives and risk-sharing. This will help local SMEs to improve their product quality and services to meet EU standards.

The three countries signed Association Agreements with the EU that include the establishment of a Deep and Comprehensive Free Trade Area (DCFTA) between each country and the EU. Access to the EU market, the world’s largest, offers many new trading opportunities to businesses in the three countries. This is why the EBRD and the EU, under the latter’s EU4Business initiative, support them in many ways: access to finance, expert advice on how to grow their businesses and policy reform to improve the investment climate.

Mr Gigla Toloraira who runs World Nuts LTD, a company located in Western Georgia, which offers consumers hazelnut kernels and roasted hazelnuts, is one of the first beneficiaries of the DCFTA-related programmes in the country. “Gaining access to the European market of 500 million consumers is both a great opportunity and a challenge for small and medium enterprises in Georgia,” said Mr Toloraira.

“In order to fully exploit opportunities, we are in constant need of enhancing skills, expertise and financial resources. My company was lucky to be involved in a project that helped us introduce quality and food safety management practices that strengthen our company image on local and international markets.”

The EBRD and its donors are also supporting cross-border trade through the Trade Facilitation Programme (TFP). In 2016, for example, the Bank completed a project in Moldova that focused on studying the potential of factoring as an alternative method of financing for SMEs, with advisory services funded by Luxembourg.

*Donors of the Southern and eastern Multi-Donor Account include: Australia, Finland, France, Germany, Italy, the Netherlands, Norway, Sweden, Taipei China and the United Kingdom.