From supporting privatisations to promoting policy dialogue and fostering the knowledge economy
Over its quarter century of existence, the EBRD has invested €11 billion in manufacturing and services and €3.75 billion in information and communication technologies. These investments have been made across its longstanding countries of operations including those in central and eastern Europe and also in newer regions such as the southern and eastern Mediterranean (SEMED).
The Bank has played a major role in developing the private sector by supporting local and foreign corporate clients as well as small- and medium-sized enterprises (SMEs) with debt, equity financing and advice. It is often the single-largest investor across sectors and countries of operations, willing to take risks where others will not and to become a long-term partner to its many clients.
Numbers are just one way to tell the story of the EBRD, the Bank that has had to change and adapt just as much as its clients have. In its early years of investments in industry, commerce and telecommunications, the Bank supported privatisations in central and eastern Europe and Russia at a time when countries were opening to foreign investors. This was a complex task that required the EBRD not only to finance projects but also to bring in foreign direct investment and engage in policy dialogue to connect the private and public sectors.
The EBRD’s mission of developing open and sustainable market economies is captured in the history of its relationship with Ukraine’s Gostomel Glass Factory.
Established in 1912 in the town of Gostomel, near Kiev, Ukraine’s largest glass container producer was privatised in 1993, just two years after the EBRD was established. The EBRD became involved in 2002 when it invested US$ 17 million to finance a major upgrade of Gostomel’s production facilities. This financing contributed to the construction of a new glass melting furnace and three new lines for the production of beer bottles.
With its financing, the EBRD supported a local company which was committed to improving and adopting international standards. It also contributed to a more competitive sector, enabling a local producer to meet a large proportion of the anticipated increase in demand. Further EBRD financing and the involvement of a foreign investor have contributed to turning the Gostomel Glass Factory (now JSC Vetropack Gostomel Glass Factory) into a leading, regional manufacturer of glass bottles.
Today, the majority of EBRD investments across industry, commerce and the telecommunications sectors are with local companies. Many projects are regional and contribute to the economic and political stability of the often fragile regions the Bank invests in. Through its projects, the EBRD promotes the development of a strong private sector that generates sustainable and inclusive growth and contributes to the emergence of a knowledge economy.
Using the knowledge economy to boost productivity and competitiveness is the purpose of the Bank’s Knowledge Economy Initiative, established in 2014. Many countries where the EBRD works are counting on knowledge to revitalise growth. Investments in information technology and telecommunications are seen as critical in developing economies that are able to grow through innovation. The EBRD uses investment and related activities to foster innovation policies, the development of information systems and infrastructure such as broadband, technological upgrades for industry and financing for small, innovative technology companies, for example through the Bank’s Venture Capital Investment Programme.
Through the Knowledge Economy Initiative, the Bank, for example, provided €50 million to research the development of energy-efficient, smart TV sets by Turkish electronic producer Vestel Elektronik. The Bank also engages in extensive policy dialogue and provides technical assistance to help improve the regions’ innovation policies, including telecommunications regulation.
Over the past 25 years the EBRD has taken risks across regions and sectors while maintaining a solid balance sheet and delivering strong results. The transition to open and sustainable market economies hasn’t been easy. There have been bumps on the way and there will be more in the future. But for the many companies that have grown with EBRD financing, having a reliable partner has made all the difference.