25 years of donor partnerships

By Lucia Sconosciuto


Almost €5 billion of donor funding in support of operations, policy reform and systemic change

As the EBRD celebrates 25 years of activities aimed at advancing transition to open-market economies in countries spanning from Morocco to Mongolia, it is also celebrating its partnerships with donors that make the Bank’s work possible.

 

 

The first-ever donor funding in support of the Bank’s activities was in fact signed on 1 April 1991 by Norway and the USA for environmental and legal reform projects — a few days before the EBRD had even been officially established.

The joint engagement of the Bank and its donors has made a real difference to millions of citizens and entrepreneurs in the EBRD region. As countries across the region rose to the challenge of building a new economic system, often from scratch, the Bank and its donors supported their efforts to establish a new model of development built around the citizen and not the state. This work – and donors’ support for it – continues.

Together with donors, the EBRD promotes private sector development in open, competitive markets based on the rule of law, a sustainable approach to modernising infrastructure and industries based on the efficient use of resources, and an environment that is conducive to growth.

Continuous donor support allowed the Bank to be, at first, a pioneer in the region, and then an advocate of the region’s potential integration into the global economy.

From donor-funded technical assistance for skills transfer to grants used to boost the Bank’s lending capacity, the EBRD’s offer to the countries where it invests today includes various instruments. These comprise risk-sharing facilities that support financial institutions and their potential clients, or concessional co-financing, which mobilises funding for projects at affordable repayment terms.

Thanks to many donor-funded programmes, for example, firms and residents in the Caucasus have more access to finance and advice for investments in energy savings. Bankers in the Western Balkans can take more risks and they have expanded their client base as a result. In the southern and eastern Mediterranean (SEMED) small businesses, and in particular those lead by women, have greater access to finance and to the guidance of experts who help them improve the performance of their companies. Municipalities in Central Asia are learning how to invest in vital infrastructure upgrades following international best practice in procurement, implementation, environmental and social policies and tariffs.

The commitment of the Bank’s clients to improve through donor-funded projects does not only make individual companies more successful and resilient. Their performance in competitive domestic and international markets and the way they conduct their business and provide their services are indeed the basis for advancing the transition process and for the way that national economies and the lives of ordinary people can change for the better. This is the outcome the EBRD and its donors have been working towards right from the outset.

With this goal in mind, donors have to date supported EBRD activities through funding agreements totalling almost €5 billion. About one-third of all of the EBRD’s projects have benefited from donor funding in some way. The European Union is the Bank’s largest contributor. Bilateral donor partnerships, however, have been the bedrock of the Bank’s external support, offering steady levels of contributions year after year. Today they include a rising number of donors from the EBRD regions such as Kazakhstan, Turkey and Albania.

From Morocco to Mongolia, from Egypt to Estonia – our EBRD donors provide funds that support common activities and act as a catalyst for investments.

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“Financial contributions and the number of initiatives reflect the robust relationship we have developed with our donors who have supported us all the way,” says Camilla Otto, EBRD Director of Donor Co-Financing. “This also shows that the Bank’s partnerships with donors are not only about financial resources. Over the years, donors prompted the EBRD to introduce new concepts, policies and priorities with a positive bearing on the Bank as a whole.”

Climate-related funds such as the Climate Investment Fund and the Global Environment Facility remain an important element of donor engagement with significant growth in the past five years. The accreditation of the EBRD to the Green Climate Fund in 2015 is a further important step enabling the Bank to play an important role in the emerging global climate finance architecture and deliver high-quality projects.

Donor-related activities have closely followed the evolution of the needs of the countries where the EBRD invests and the Bank’s strategic directions.

Since 2004, donor resources have been pooled in multi-donor funds focusing on priority regions and sectors, adding strength to the Bank’s work on the ground. For example, that same year, the Bank and its donors started focusing on developing vital infrastructure and the financial sector in early transition countries (ETC) as a priority under the ETC Initiative. The latest addition, the Ukraine Stabilisation and Sustainable Growth Multi-Donor Account, was set up promptly at the end of 2014 in response to the country’s immediate economic requirements.

An additional donor tool, the EBRD Shareholder Special Fund (SSF), was established in 2008 to complement donor funding drawing from the Bank’s net income. Over the years the SSF has become a vital tool in supporting EBRD activities and made vital contributions, for instance, to the Chernobyl Shelter Fund. Donors also made a strong contribution to the rapid start of the Bank’s operations in the new SEMED region, providing a total of over €260 million since 2011.

Donors provide funding that supports the EBRD’s increased focus on policy dialogue to improve the business climate in countries where the Bank invests and our mission to promote more inclusive economic development, for example with the Bank’s Gender Strategy, adopted in December 2015.

“The partnership with donors has been crucial in our first 25 years and remains crucial for our region. The Bank’s ambitious plans for the coming years indicate that more support from traditional and new donors will be key for the success of our transition mission to continue improving people’s lives,” Ms Otto added.