The EBRD, international development and Uzbekistan

Introduction

Good morning.

It gives me great pleasure to be here today to talk to you about the Bank I have the honour of serving as President.

And about how you can help us invest in changing lives here in Uzbekistan, in Central Asia and beyond. 

Thank you all for the invitation to speak and for hosting us.

It has long been an ambition of mine to visit your country and I am very glad that my wish has finally come true.

A young bank

First, if I may ask, is there anyone in the audience who is 25 or 26 years old?

Congratulations, you are the same age as the European Bank for Reconstruction and Development, the EBRD.

Last year we celebrated our 25^th birthday.

So we are a young bank.

We were founded in 1991 to help build a new post-Cold War era in Central and Eastern Europe and what was then the Soviet Union.

Uzbekistan was part of the EBRD story almost from the start.

It has been one of our shareholders since 1992.  

As you may know, more recently there has been a pause in our relationship.

That pause is, I am glad to say, now over. There is a new beginning between the EBRD and Uzbekistan.

A different Bank

The EBRD is a multilateral development bank.  Like the World Bank and regional development banks for Africa, Asia, and Latin America. 

We are owned by governments, 65 of them, plus the European Union and European Investment Bank. 

But we are very different from other multilateral development banks in three ways that reflect the historical moment when the EBRD was created, the end of the Cold War.

First, we work only in countries committed to multi-party democracy, political pluralism and market economies.

No other multilateral development bank has such an explicitly political and economic mandate.

What is important here is the direction of travel.  A country has to be on the journey towards markets, democracy and pluralism. 

It does not necessarily have to have reached the final destination – whatever that would be for democracy and markets – to receive our support.

Second, our constitution lays down that 60% of our lending must be to the private sector.  That figure currently stands at 80%. 

No other multilateral bank, with the exception of the International Finance Corporation, an arm of the World Bank Group, has such a deep knowledge of working in the private sector for development purposes.

And third, we are project-based, providing loans and equity, for investments in a wide variety of sectors. 

We do not, unlike the other multilateral development banks, fill budget or current account deficits.  Because of our projects, we know a lot about sectors and companies.

We began operating in what had been the command economies of eastern Europe and the ex-Soviet Union.

But the transformations we helped bring about there were such a success that before long other countries wanted us to work with them too. And our shareholders were strongly supportive of our doing so.

So we are now investing in 36 countries, among them Mongolia, Turkey, Egypt, Jordan, Morocco and Tunisia and – temporarily – Cyprus and Greece, as well as those we began working in at the start of the 1990s.

We were pioneers back then.

And over the years we have helped shift thinking and led the way in a number of important areas:

• leveraging the private sector to achieve development outcomes;

• devising financial instruments to build sustainable infrastructure;

• launching long running programmes to help small and medium-sized businesses, thus creating new jobs, enhancing skills and driving growth;

• promoting sustainable energy, reducing waste and lowering carbon emissions;  and

• advancing the cause of energy security based on the private sector and the blending of grants and loans.

We are a powerful catalyst for foreign direct investment and the channelling of equity and private financial flows into emerging markets.

And, yes, we are focussing on inclusion and bringing more women and other excluded groups into the workforce.

Over time we have also learned a lot about the role of an effective state in encouraging the development of open and sustainable market economies.

We now combine a private sector focus on project financing with extensive work on policy reform with the governments  in the countries where we invest.

That is because improving the investment climate and standards of governance is absolutely essential for economic development.

The upshot of all this is that we are delivering huge impact on the ground.

Last year, notwithstanding the challenging environment for all emerging markets, our investments amounted to a record €9.4 billion and we financed 378 individual projects.

Our strategy and the six transition qualities

Our current strategy, as approved by our shareholders, puts us in a much better position to meet the challenges of the future.

Last year we updated the definition of ‘transition’ which is at the core of our mandate.

Our new vision of what a successful modern economy actually looks like is informed by years of hands-on experience in this field.

And also an awareness of how the world is changing – and how we need to change with it.

So, as we see it, the qualities that our countries need to embrace in their economies are as follows:

They need to become:-

• More competitive because greater competition means lower prices, more innovation, and better value for consumers, as well as more growth.

• Better governed because good governance and the rule of law promote trust, fairness and cohesion in societies, and encourage investment and competition.

• Greener because a genuinely sustainable economy must protect natural resources and the broader environment for the benefit of all – including those not yet born.

• More inclusive because economic growth must benefit entire societies, without leaving any groups behind.

• More resilient because sustainable economies need to be able to withstand turbulence and shocks which we know can be painful.

• And they have to be more integrated because integration, within and across borders, empowers both entrepreneurs and consumers, promoting competition and resilience and motivating better governance.

Central Asia and the EBRD

The importance of ‘integration’ brings me to Uzbekistan and its place in Central Asia and the wider regional economy.

We have been committed to market transition in Central Asia right from the start. 

Indeed, nowadays it really is one of our most important regions.

Our total investment in the whole of Central Asia, which we define as Kazakhstan, the Kyrgyz Republic, Mongolia, Tajikistan, Turkmenistan and Uzbekistan, now stands at well over €11 billion.

We are also very actively engaged in Central Asia in supporting policy reform on green energy, diversification, the investment climate and the role of the private sector.

The list of our projects and the different sectors we are active in is long and I encourage you all to research what we have been doing in more detail on our website.

So, without burdening you with an exhaustive list, I would draw your attention to our success in empowering female entrepreneurs in Kazakhstan.

To what we have done to rehabilitate the Qairokkum hydropower plant in Tajikistan.

To our work on municipal infrastructure in the Kyrgyz Republic and with SMEs in Turkmenistan.

We are the largest investor in renewable energy in Central Asia, as we are in all our regions in fact.

We’ve brought wind power to Mongolia and solar and wind power to Kazakhstan.

And Mongolia is a great example of another EBRD strength: we move quickly and hit the ground running.

Mongolia is not one of the countries we have been investing in since we were founded. We only started working there in 2006.

But over the last decade we have had real impact in diversifying its economy, encouraging  sustainable growth and promoting infrastructure building, especially through the private sector.

As you can see, if the right conditions prevail, we can step up our engagement in a country at speed.  “More for more” as we call it.

Kazakhstan, for example, was always an important partner of ours. 

But the Enhanced Partnership Framework Agreement we agreed with the Kazakhstan government in 2014 has been an absolute game changer, allowing us to scale up investment there to record levels two years running.

And, to round off our whistle-stop tour of the wider Central Asian region, I want you to turn your attention to China.

China is our newest shareholder and its membership of the EBRD, finalised last year, is going, I hope, to be a major spur for more investment in your region.

As is its ambitious One Belt One Road initiative.

The same is true of the launch of the new Asian Infrastructure Investment Bank.

We’ve been working closely with the AIIB ever since the idea of such a bank was first mooted – and well before its inauguration last year.

And our first joint project with them, announced last summer, is a shining example of what we can all do for the greater good of the region as a whole.

It’s an ‘integration’ project, upgrading the motorway between Dushanbe and your country.

You, Uzbekistan and the EBRD

I mentioned earlier that the relationship between Uzbekistan and the EBRD is a longstanding one.

And that the pause in that relationship is now over.

I am very glad to be here this week at the invitation of your President.

And to be visiting with the full support of the EBRD’s shareholders.

We are a young bank.

Just as you are a young country.

Young in that you only recently celebrated the 25^th anniversary of your independence.

But, of course, old as far as your history and your contribution to world culture are concerned.

But Uzbekistan is young in another sense, demographically.

Its future belongs to you and your generation.

Indeed, I am sure that you and your peers can achieve great things beyond Uzbekistan too, in Central Asia and further afield as well.

Of course, to some extent, the audience for my speech today consists of Uzbekistan’s  future policy-makers and its business executives.

But I am convinced that you can make a major difference to your country, both now and in the near future.

And, who knows, maybe you can help us in our work.

We at the EBRD could not achieve all the amazing results I summarised earlier without the very active cooperation of the best and brightest in the countries where we invest.

Those results are very much down to the quality of the 2500 people working for us, both at our headquarters in London and in the countries where we operate.

In fact, the EBRD is a whole multicultural world in its own right, with the people working for us coming from 65 different countries, including Uzbekistan.

We are a bank, yes. But, as I hope I have made clear today, we are far more than just a bank.

Our financial results are important to us, of course.

But our top priority is investing in changing lives.

We recruit bankers, lawyers, economists and risk and procurement specialists.

But we are also on the lookout for public policy experts and people who can work with us to help the small business sector.

And many other specialists for a whole host of different roles.    

Conclusion

As a young man, I studied development economics and my first experience of working in the field was in sub-Saharan Africa.

I have not spent all my adult life in development. 

But not for one moment do I regret my initial choice of specialisation.

Indeed, in many ways, now is a more exciting time than ever to be involved.

The recently adopted Sustainable Development Goals set out an ambitious but credible programme of change for the whole world in the years ahead.

But one of the intellectual satisfactions of working in this area is the way development thought and practice shift over the years.

When I spoke about development recently to your contemporaries at the LSE in London, in Tokyo and Baku, I told them that we, the so called professionals, can’t know all the answers.

Sometimes I’m not sure we are even asking the right questions.

So we look to you, students especially but also academics or concerned citizens, to help us.

You can make a very real contribution to the future prosperity of your country and the development agenda yourselves.

There are many ways of doing so.

You could work within government, arguing for and pushing through the reforms your country needs.

If you do, please remember the state’s vital role in delivering the right conditions for private businesses to thrive. 

Some of you may be considering another pathway, that of the private sector, small businesses even. 

The private sector generates wealth, creates new opportunities for men and women and fosters sustainable and resilient economic growth. 

But, and here I revert to my role as EBRD President and development veteran, I do urge some of you to give serious thought to a career with us.

I hope that I have conveyed some of the excitement I feel about what we do, day in day out.

Our achievements over more than a quarter of a century have been nothing less than inspiring.

Whatever the future holds for you, whether you choose to deploy your talents here or elsewhere, make no mistake.

We at the EBRD are ready to support Uzbekistan – and all the other countries across the three continents where we work.

Thank you very much.