Esma Sultan Mansion, Istanbul, Turkey
Celebration of the EBRD's first ten years in Turkey
Thank you all for joining us to mark the EBRD’s first decade in Turkey.
A special welcome to our Governor and Alternate Governor, Berat and Bülent, and their teams for everything they have done to strengthen our relationship and support our common cause, building on the work of many illustrious predecessors.
It is a great joy to meet our partners and friends, and to celebrate in such splendid surroundings. The Bosphorus has seen many generations of business people who connected the world through trade and knowledge exchange – which is what we do today.
- The Start of the Story
But EBRD’s relationship with you started much earlier than a decade ago.
Turkey was, of course, one of our founding shareholders, back in 1991, when the country was spreading its wings as an economic power. Turkey wanted us to provide investment and policy support to the newly liberalised economies of emerging Europe and ex-USSR – and we did.
Turkish companies were also investing and helping those economies modernise, then as now bridging East and West.
Our decision to launch operations here was a historic one. Turkey was the first time we expanded outside our original remit beyond the ex-communist bloc. This decision at the time was not without its critics.
We are all here today because we have shown that the decision ten years ago was absolutely correct:
Let me now turn to these ten years we have been on the ground here in Turkey. The scale of what the EBRD does in Turkey is striking.
In only four years we went from zero to €1 billion of investment annually, with even larger volumes later.
- More than €11.5 billion invested to date.
- In almost 300 projects.
- 97 percent of that investment has been in the private sector.
And green finance accounts for two thirds of this year’s business volume.
A decade after we began investing in its economy, the notion of an EBRD without Turkey as a key country of operation seems unthinkable.
It is by far the largest economy we currently work in.
Our portfolio here is much bigger than anywhere else where we invest.
For four years in a row, Turkey was our largest country of operations and one where we achieve the highest transition impact.
We listen to companies and their needs in order to target our strategy. We lend in local currency and promote deepening of local capital markets.
We have engaged with our host government on policy. To give just two current examples: we work together on the vocational skills that are much needed by the private sector; and we look into how the agriculture sector can become more competitive by tackling the subsidy regime.
Together, we made a difference for other economies in the region. Turkey is so pivotal in linking East and West – not only because of its location, but because of its own knowledge and successful experience of transition.
We are proud to help Turkey further integrate into regional trade flows and sharing its financial and commercial expertise more widely.
And we have proven that the EBRD’s business model and its focus on the private sector can deliver change in many different kinds of countries.
In 2012 we began operations in Egypt, Morocco, Tunisia and Jordan. Lebanon followed suit. And other countries in the region are reaching out.
Our experience in Turkey has been a major factor of our success in the Southern and Eastern Mediterranean.
Turkey is not afraid to expand to more difficult markets, in Central Asia or Sub-Saharan Africa, which need new investment and know-how.
We at the EBRD share this philosophy and appreciate the support of the Turkish authorities in taking this forward.
Reconstruction and development, which are in our name, are best delivered on the ground by creating mutually beneficial opportunities.
From Çanakkale to Gaziantep, from Samsun to Mugla, but also in Izmir, Ankara and Istanbul, and in nearly every sector of the economy.
We have supported SMEs, the backbone of any economy, via loans, by taking equity stakes and through local banks. And also directly though advice and financing!
I saw for myself what difference such work can make when I visited the Opus3a vinyl record store in Cihangir, one of our clients, earlier on this trip and spoke to Ayse Nur, the lady in charge, about the way our help had transformed her business.
We have worked with such household names as Ford Otosan, Arçelik, Şişecam, Migros, Şok, Sütaș and many others who are with us today to increase their sustainability, enhance innovation, improve corporate governance, create new opportunities for women and train young people in the skills required by the labour market.
We have utilised the public-private model we had developed in our earlier markets for the construction of the Eurasia tunnel under the Bosphorus and the building of state-of-the-art hospitals.
We have backed large, private Turkish corporates such as Anadolu Group and Tab Gıda to expand and reach new markets abroad.
And, of course, we continue to support municipalities and communities hosting refugees through initiatives providing SMEs with finance and know-how and encouraging economic inclusion.
We have supported private businesses through good times and tough times.
We have worked with more than a hundred large Turkish companies and tens of thousands of small ones, through our credit lines and advisory services, to raise standards of quality and energy efficiency, to create more jobs for women and young people across Turkey, and to improve lending to entrepreneurs.
Turkish business, with its centuries-old talent for trade and innovation, has proved a fertile laboratory for testing and refining new EBRD financial products to be rolled out here and elsewhere.
- A Partnership that Endures
All of that, ladies and gentlemen, is just the start of the story. Everyone who works with us knows that the EBRD looks to the long term.
We are not fair weather friends.
The launch of our work here 10 years ago was a direct response to Turkey’s invitation just as emerging markets recovered from the financial crisis.
And we have stood shoulder to shoulder with our Turkish partners during the turbulence of more recent times as well.
Our presence and engagement continued uninterrupted during and after the difficult days of the coup attempt, which the Turkish people bravely resisted.
Turkey has shouldered a huge responsibility by hosting the world’s biggest refugee community. It has been an example for many other countries. Turkey has also been an essential partner of the EU in managing migration flows.
Turkey needs strong international support to be able to continue doing so, in a challenging region, where geopolitical tensions are never far away.
The EBRD remains as committed to Turkey as we have ever been. Our commitment is undeterred by the currency’s volatility.
Last year, at the height of the volatility, we invested €1 billion in Turkey.
This year so far we have financed projects worth more than €550 million, and we continue to deliver much of our financing here in Turkish lira, to protect companies from foreign exchange risk.
Let me give you just three examples from 2019.
We invested in lira bonds issued by Migros, the supermarket chain, to help it reduce foreign currency exposure – and to finance their sustainability improvements.
We extended a long-term local currency loan to Arcelik, again to reduce the forex risk – and to help it produce refrigerators and washing machines which are more energy efficient.
And most recently we have provided a large syndicated loan to the city of Istanbul for the construction of a new metro line, helping Europe’s biggest city get to work and back home to loved ones as efficiently as possible. We began discussing financial support for this last year, at a time when it was very difficult to interest commercial lenders in such projects.
- Looking Ahead
We have just unveiled our new Country Strategy for Turkey, agreed with the Government here. It focuses on:
- strengthening the resilience of the financial sector;
- developing Turkey’s knowledge economy;
- accelerating Turkey’s shift to the green economy.
- promoting inclusion and gender equality in an economy where the rate of female participation in the labour force lags far below the OECD average and access to finance for women is also limited.
We are looking at new approaches we can take to projects in Turkey. We can extend the PPP model to new sectors and municipal services.
We will continue to develop Islamic financial instruments that can galvanise the economy both in Turkey and elsewhere.
We will also continue, in parallel with our investments, to pursue change through our work on policy reform, cooperating with ministries, parliament and regulatory bodies to promote inclusion and skills, develop capital markets and increase energy and resource efficiency.
And we will, of course, continue supporting Turkish companies as they expand in other EBRD countries and further afield as well.
Dear friends, over the ten years we have been working in Turkey we have had major impact on the private sector and the economy as a whole.
But all this impact has not been one-way traffic. Turkey has had a major impact on the EBRD too.
I would like to thank Turkey becoming not only a shareholder, not only a country of operations, but now also a donor of the Bank.
And a donor not just for its own domestic projects: these funds will be put to work in Romania, Azerbaijan, the Kyrgyz Republic and Moldova too.
Once again, Turkey is not just focusing on its own needs, but thinking how to make its partners and neighbours stronger.
Moreover, we welcome Turkey’s active engagement in shaping EBRD’s own Strategic and Capital Framework, which will determine our priorities for the next five years.
Ladies and gentlemen, there is much to celebrate in the achievements of the first 10 years of our work together.
Many, many people deserve recognition for their role in our joint successes here.
Of course, nothing would be possible without you, our partners and clients. Thank you for your drive, expertise and business vision.
A final word must go to my colleagues, Arvid, his predecessors, and the great EBRD teams in Istanbul, Ankara and London have done and are doing an incredible job – thank you colleagues for your work every day and for this great celebration tonight.
Thank you very much.