Addressing the urgent need for economies to embrace rapid technological change and overcome the challenges exposed by the Covid-19 pandemic, the European Bank for Reconstruction and Development (EBRD) today adopted its inaugural digital approach to advancing transition.
EBRD President Odile Renaud-Basso said: “I am delighted that the EBRD is launching its first digital approach. It puts technology at the service of transition in the economies where we invest. Digital development can accelerate the recovery and help to build back better, more sustainable economies and more inclusive societies. We are hugely encouraged by our shareholders’ strong support and ready to implement our plan.”
The document sets out a comprehensive framework on how the Bank will use its three instruments – investment, policy engagement and advisory services – to support the digital transition in the economies where it invests.
The Covid-19 pandemic turbocharged the shift online in the EBRD’s regions, as it did around the world. Digital technologies offer a unique opportunity to shape a recovery from the Covid-19 pandemic that is sustainable and inclusive.
Advances in digitalisation will also support addressing climate change and building a net zero economy. The EBRD’s Green Economy Transition Approach 2021-2025 recognises that digital solutions offer the potential to reduce greenhouse gas emissions by 16.5 per cent, underscoring the link to another of the EBRD’s strategic priorities.
Green cities can become smart cities with the right digital infrastructure, enabling more efficient and responsive public services as well as a start-up culture that grows the next generation of companies and creates high-skilled employment through global networks.
Meanwhile, the Bank’s forthcoming Strategies on Gender and Equality of Opportunity will aim to bridge a growing digital divide at a time when access to modern technology has never been more critical.
As the 2021-22 EBRD Transition Report shows, 73 per cent of individuals in the EBRD regions use the internet, compared with 90 per cent in advanced economies. The affordability of fixed and mobile internet is still a barrier. While only 56 per cent of consumers in the EBRD regions report using digital payment methods, in advanced economies, the number stands at 96 per cent. Gaps also exist between urban and rural areas.
This why the EBRD identified digitalisation as one its three priorities in its Strategic and Capital Framework (2021-25). The new digital approach will enable the Bank to focus on:
- Establishing the foundations for digital transformation: The EBRD will develop enabling legal, regulatory and institutional frameworks, as well as implementation capacity. This includes promoting innovation, supporting healthy competition in digital markets, promoting cyber security, safeguarding energy and financial stability and ensuring appropriate data protection.
- Promoting adaptation among enterprises and governments: The EBRD will support investments enabling technology and knowledge transfer, the digitalisation of products and processes in local companies and the digitalisation of financial institutions through technical assistance and financing.
- Supporting innovation and new market entrants: The EBRD’s support could include regulatory sandboxes for start-ups and accompanying digital government services, an increase in Star Venture Programmes and bespoke advisory services for high-potential start-ups, accelerators and incubators over a wider geographical area. Venture Capital and Equity Funds will also be stepped up.
In line with its mandate, the EBRD will focus on the private sector. However, the Bank also recognises the important role of the public sector in helping to unlock the potential of digitalisation. Partnerships with other multilateral institutions and donor support will be critical to the successful delivery of the new approach.
The new approach will also build on the EBRD’s existing know-how and expertise in the telecommunications and information technology sector. Successful investments include support for the rollout of an energy efficient 5G network in Poland, increasing the availability of cashless payment in Turkey and the financing of an e-commerce platform in Romania.