Emerging Markets and the EBRD Region

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Delivered by: 

Sir Suma Chakrabarti, EBRD President




The Israel Business Conference

Sir Suma Chakrabarti speaks at the Israel Business Conference

Thank you very much for inviting me here today.
The relationship between the European Bank for Reconstruction and Development and Israel, a founding shareholder of the Bank, has always been close.  And today, I would like to call on you to help make it closer still.
In the past 23 years, since the EBRD was set up, we have invested in projects worth more than €730 million with Israeli companies.
Each year, we invest more than €8 billion Euros in our countries of operations and we would like more of that money to go to projects involving Israeli firms – deepening our already good relationship.
Our Countries of Operations are not always the easiest to invest in but we have over two decades of experience in navigating them – skills that we would like to put at your disposal.
You have something to gain from that and so do our countries.
Over the next few minutes, I hope to persuade you that there are plenty of opportunities and we would like to work with you to make the most of them.

We have just finished marking the historic moment which triggered the setting up of the EBRD – the fall of the Berlin Wall in 1989.
25 years ago, last month, the history of Europe changed dramatically, opening up new opportunities.
The international community decided that a development bank, the EBRD, was needed to spur change- helping former communist countries change from communism to capitalism, helping to foster open market economies, helping to underpin the growth of democracy where previously there had been only dictatorship.
What began in central and eastern Europe has since grown, as the Bank’s geographical mandate has been enlarged.
Over the past 24 years, the Bank has gained a reputation for developing the private sector in the countries where it invests. With between 70 per cent and 80 per cent of our projects in the private sector, the EBRD’s unique business model and skills are in high demand.
It is a measure of that demand that the international community has, several times, agreed to expanding the regions of operation.
We now operate across a vast swathe of land, stretching from Mongolia on the Chinese border to Morocco on the Atlantic Ocean. Our operations stretch across three continents, Asia, Europe and Africa. We are today a semi-global bank covering a huge part of the earth’s surface.
Our last major expansion took place after the 2011 Arab spring when we were asked to get involved in Egypt, Jordan, Tunisia and Morocco – the countries that we refer to as the southern and eastern Mediterranean region.
Over the past three years, we have invested some €1.5 billion of our own funds in those four countries and next year we expect to add another billion to that.
By investing in the economies of this region, including two of Israel’s direct neighbours, we are hoping that economic improvement eventually leads to more regional stability.
These countries contain many young people who are demanding jobs and economic opportunities.
Their demands were, of course, a contributory factor in the revolutions in Egypt and Tunisia.
Trying to do something to meet those demands is crucial but it will be a very long term project. 
Each year, the eight or nine billion euros that we invest directly, in more than thirty nations, attracts much more than that investment in our projects. For each Euro that we put in, another two Euros is invested from private companies and other sources. The total is a significant volume of funding which can really contribute to change in our countries and prove profitable for private investors.
We are owned by 64 countries from across the world, not just Europe, and by the European Union and European Investment Bank.  It is the political backing that we have enables us to engage in deep policy dialogue with governments in the nations where we invest, not just to enable the promotion of change but also to offer a very large measure of political comfort to those companies which invest with us there.
So, what does this mean in practice for Israeli companies?
Let me give you an example of a project that we have undertaken with an Israeli firm in the past few months.
We have just agreed an €8.7 million loan to the Fishman Group to help to develop a high technology park in Minsk, the Belarus capital.
Fishman are designing, developing and building the first phase of the technology park, which includes a large office complex.
The new hub will promote the IT and software industries in Belarus. It will provide the right environment, housed in state of the art energy efficient buildings.
We are helping that Israeli company, using our money and experience of the Belarus market, to invest in what should be a profitable business.
It is not just the Fishman Group which benefits from these efforts. Through this project, we are also furthering our mission as a development bank. In this case, Belarus also benefits. The project is another way of helping Belarus to develop its private sector.
To give you another example, we have given a €43 million loan to property developer, GTC, part of Israel’s Kardan group, to develop a brand new commercial centre in the Bulgarian city of Stara Zagora.
The 36,000 square metre commercial centre will serve more than 170,000 people in a fast developing city.
Again, the project benefits an Israeli firm but also develops the Bulgarian economy. It will bring a very different retail experience to the city and will act as a benchmark for other shopping centres in the region.       
I could give many other examples of our interactions with Israeli companies. EBRD investments with Israeli companies have been especially strong in Russia, Romania and Kazakhstan but the geographical spread is wide.
Israel has historic links with many of these countries and, when coupled with our operational experience, it adds up to a formidable combination.

Many of our countries have come a long way since the fall of the Berlin Wall. There are some star performers such as Poland but even those where development has been slower are unrecognisable as the same countries which existed under communist rule.
They often have skilled, well-educated workforces and consumer demand is growing in a way that makes them attractive destinations for private sector investors.
When communism was swept away, many thought that transition would be completed in a decade or so, we now know that it is the work of decades and will take a long time yet.
We are dedicated to furthering economic progress in these countries, putting energy into the transition process to promote growth.
You can help us to do that and profit at the same time, as the examples that I mentioned illustrate.
In your neighbourhood, the southern and eastern Mediterranean, we would like Israeli companies to consider investing with us in Egypt, Jordan, Tunisia and Morocco.
We understand that for a whole variety of reasons that is not easy for Israeli entrepreneurs but part of our role is to make that easier.
By investing with us, you get the political comfort of being supported by an International Financial Institution, backed by more than 60 governments.
We are able to have direct conversations with governments in those countries.
I travel often to this region and, it’s clear - your neighbours could benefit from Israeli firms’ skills in sectors such as agri-business and technology. There are good business opportunities there for you and we can help to mitigate risks.
In the end it is in Israel’s interests to see economic growth in the neighbourhood, growth which can eventually help to underpin regional stability.
I have talked a lot about how Israeli firms can benefit from working with us but let me identify one further area where our countries can benefit from Israel.
In our latest Transition Report, Innovation in Transition, Israel’s example is cited frequently as a role model that many countries in our region would do well to follow.
The report says that our countries would develop faster if companies there innovate.
In order for that to happen, the right policies also need to be put in to place.  Policies that improve the investment climate, institutions that ensure sustainable and sustained development.
Our countries of operation also need better secondary education, better application of new technologies, professional training, enhanced management practices, and policies that alleviate credit constraints.
Innovation is, of course, at the heart of productivity growth.  And Israel is at the heart of innovation.  As I saw this morning when I visited the SOSA Innovation Hub here in Tel Aviv, where I met Jewish and Arab Israeli entrepreneurs developing ideas to tap the fast growing Arabic internet market. 
Eventually, we would like all of EBRD’s countries of operation to be as economically successful as Israel.  To adopt key characteristics of the Israeli development model, tailored to their local circumstances.
Israeli companies can help us to help our countries of operation – we look forward to working with you even more closely, investing even more of our money alongside yours, in the years ahead.  You can make a safe and sound return on your investments, and these countries can speed up their economic transition. 
Thank you very much.
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