The Taj Mahal Palace, Mumbai, India
Good morning, ladies and gentlemen, and welcome to the EBRD’s first ever business forum in India.
We have organised this event for a whole host of reasons, not least to celebrate India’s joining our Bank as a member.
So let me start by congratulating India on becoming our 69th shareholder.
I was delighted to hear from Secretary Garg just now that the final formalities have been completed.
With India part of the EBRD, three fifths of the world’s population is now represented on our board.
But what of our business relationship between EBRD and the Indian private sector?
In mountaineering terms we have reached base camp.
To reach the summit of our potential co-operation we need to look at the relationship between the EBRD and Indian business – and how we can ascend together.
- Our Partnership and Potential
This forum is the fruit of the partnership between the EBRD and the Federation of Indian Chambers of Commerce and Industry - with support from Exim Bank of India.
When I signed our joint EBRD-FICCI Memorandum of Understanding in Delhi last November I stated that the EBRD is a natural partner of Indian business.
The days when we as a Bank were active only in Eastern Europe and the former Soviet Union are long past.
The days when India was a closed economy are now a distant memory too.
That was the India of my childhood. And, believe me, that certainly was a long time ago!
Since the creation of EBRD in the early 1990s we have invested over €120 billion euros in more than 5000 projects.
And the lessons we learnt from our older countries of operation we now apply in new ones, including those that were never command economies in the first place.
Today we are active in nearly 40 countries on three continents. We have left the foothills far behind us.
As we have moved up, our horizons have expanded.
As have those of Indian business.
When we look out – and up - we see the potential clearly. We want to work with the business leaders of the world’s largest democracy to chart a new course up the mountain of the global economy.
- What does this mean for Indian companies?
India is becoming a member of the Bank but not a country of operation.
This reflects both the fact that Indian companies are already important players in our markets and the fact that there is so much potential to grow this even further.
This is not just my view. Or just that of the Indian Government view. It is the view of 68 other shareholders who voted unanimously to have India inside the tent.
Lets start with what we have now. Several of the companies here today are already active in our region with EBRD support: Mahindra, Tata, Jindal and SREI.
Hemant Kanoria, Chairman of SREI, who is here today, summed up the benefits of working with the EBRD a few years ago, saying:
“If Indian companies want to expand to markets that are not yet well known to them, the best way to do that and make a safe and sound return on the investments is to do so in partnership with EBRD.”
Hemant knows what he is talking about, with SREI – headquartered in my home city of Kolkata – having successfully partnered with EBRD in our region of operations.
Now we want more Indian companies to join us
For our clients we can offer the full range of instruments: loans, equity, leasing facilities, trade finance and much more. We tailor the instrument to the project. And those mega projects can be small, supporting SMEs for example. Or of a mega size – huge mining, infrastructure and energy projects. My colleague Jean-Marc will tell you more about the range of our offer later.
- Why EBRD?
So let me now spend a few minutes on the bigger picture: on what makes EBRD a special and very different multilateral development bank.
We focus on the private sector. Our constitution requires that at least 60 percent of our lending has to be to the private sector. That figure is usually between 70 and 80 per cent in any one year.
We are the only multilateral development bank other than the Washington-based IFC with such deep knowledge of the private sector. We are publicly-owned but run like a business – and for business.
Our name identifies us as ‘European’ but we are not an EU bank. With our HQ in London, we have shareholders from every continent and we invest from Morocco to Mongolia, Estonia to Egypt. Nearly forty countries of operation in total, now in three continents. And more often than not, we are the largest institutional investor in those countries.
Our network of resident offices on the ground in those countries are not just in capitals but often in second tier cities also even closer to our clients. This gives us unrivalled market intelligence that you can benefit from.
The scale of our investments and local presence also gives us voice and credibility with host governments in our countries of operation. To push on behalf of our clients, sometimes to sort out problems within government blocking investment. Remember also our preferred creditor status. This can provide political and financial comfort in new markets when you invest with us.
This, together with knowledge of local market conditions, means we are able to provide you – our potential clients – with a deep understanding of the risk profile of the countries where we operate.
Local presence also means we can and do engage intensively with the host governments to push through reforms. Reforms of the investment climate that will make it easier for you to enter new markets on a more level playing field.
We are also often ahead of the curve in taking up investment opportunities and identifying high return prospective investments. We are past masters at exploiting “first mover advantage” to the benefit of our clients. One example: we moved early into the field of climate finance and are now recognised as leading experts in mobilising investment in that area, renewables being a case in point.
Indeed, we achieved our target of green investment accounting for 40 percent of our annual business volume three years ahead of our 2020 deadline.
And that’s the other element in our make up that makes us different from many publicly owned multilateral entities: we deliver, we scale up, and all at speed.
Last but not least, our mandate is, at least in part, political.
Article One of our constitution lays down that the countries where we work have to be committed to multi-party democracy, political pluralism, and market economics.
That doesn’t mean our countries of operation have arrived at the station called “democracy”. But it means they have to show commitment to the journey and also to the creation of sustainable market economies.
That should resonate especially strongly here in the world’s largest democracy with a vibrant, increasingly market-based, economy.
- What have we achieved?
And so, with this unique combination of institutional and business strengths, what has EBRD actually delivered?The record over 27 years is one of growth and high performance.
Last year, we invested €9.7 billion, a new record, in a total of 412 projects, another new record. That included doing everything from helping finance the largest solar site in Africa, in Egypt, to supporting female entrepreneurs across 17 countries.
And as any good bank should, we made money in the process. Our net profit last year was €772 million, which was reinvested in our business. That reflects our focus on bankable investments, not charity.
At the same time, our triple A ratings were confirmed once again, with one agency stressing our “excellent levels of solvency and liquidity”.
- What does the future look like?
So, today I should like to invite you to be part of this success story too. To take the mountaineering metaphor further, I want everyone here to feel you can rope yourself together with us and that EBRD can be your Sherpa up the mountain into new markets
If you are already a partner of ours, I believe we can do even more business together.
If you are not, it is time you became our partner. Take a fresh look at the business opportunities our regions have to offer. You will hear from our economist Ralph de Haas later this morning.
Take Kazakhstan in Central Asia as an example. A country to which Prime Minister Modi recently led a business delegation from India.
Recently, I co-chaired the Kazakhstan Foreign Investors’ Council with President Nazarbaev.
The EBRD has helped transform that country so that it is now well on the road to middle-income status.
Take Ukraine, where we are the largest foreign investor. Over the last few years we leveraged our close relations with the government to reform the investment climate and develop a sustainable future.
Then take a look at the Western Balkans, a large part of which is the former Yugoslavia, with which India had a historic bond. The Western Balkans is another region where EBRD invests more than any other multilateral development bank.
And it was thanks to the EBRD that the six prime ministers of that region, with its difficult history, agreed to share a stage for the first time ever.
They did that first at our headquarters in London only four years ago. And they were back in our office in January for the third time.
The EBRD has been so successful that, on four occasions our shareholders have expanded our geography. Most recently we expanded to the Southern and Eastern Mediterranean: Egypt, Jordan, Morocco, Tunisia, Lebanon and the West Bank.
Only last month we were in Jordan for our Annual Meeting: this is a country where we have gone from zero to seven billion euros of investment in just a few years.
In his address King Abdullah described EBRD as a ‘true partner in Jordan’s economic journey’.
We can be ‘true partners on your journey’ too in the Middle East and North Africa. Indeed, India is already the 11th largest source of foreign investment in that region. Work with us and get India in to the top ten in the Middle East and North Africa.
Ladies and gentlemen, the key point is that there is a striking overlap between the regions where we work, India’s interests as a global player and, I believe, your companies’ own future.
After all, it is striking that around one eighth of India’s outward foreign direct investment already goes to EBRD regions, with Turkey, Russia, Hungary and Kazakhstan the stand out destinations of these investment flows.
- How can we work together even more closely?
That growing interest in EBRD regions was, I know, one of the reasons the Indian government applied for membership of the Bank last December.
Becoming a shareholder also brings with it a seat at the table of a highly successful, modern development bank.
The only development bank, other than the AIIB, whose membership is still growing.
And it also gives India and Indian business a direct stake in our mission and its achievement. And direct and free access to EBRD’s knowledge of sectors, themes and countries of value to you.
I have already cited our excellent financial results from last year.
But we judge our performance as much on the quality as the quantity of our investments.
Our investments are designed to foster sustainable and inclusive growth, the sort of growth that will guarantee you the best return on your investments over the long run.
We are focused on clients and partners whose projects we finance will usually carry at least two features of a modern market economy.
Projects that will help our countries become more competitive because greater competition means lower prices, more innovation and better value for consumers.
Projects that will improve their standards of governance because the rule of law promotes trust, fairness and cohesion, as well as the political legitimacy of the market economy.
Projects that will make their economies greener because a genuinely sustainable economy should protect natural resources and the environment in the interests of all.
Projects that will help our countries become more inclusive so that growth benefits entire societies, with no groups left behind.
Projects that will strengthen these countries’ resilience because, with progress sometimes vulnerable to reversals, sustainable economies need to withstand turbulence and shocks.
And projects that will help to integrate these countries more into global and regional markets, empowering entrepreneurs and consumers within and across national boundaries.
We call these our six transition qualities. And these are all, I expect, high on your wish list of qualities you want to see in the economies you are considering investing in. If your ideas for investment in EBRD countries of operation carry two such features, then come to us and we will be honoured to work with you.
I hope this gives you a clearer sense of how we at the EBRD and you as captains of Indian industry can make common cause.
In conclusion we should remember there is an even more important story to tell here. The EBRD – with all its investments and other work – is part of the global push on sustainable development.
Our shareholders, India among them now, have committed to an ambitious plan for people, the planet and prosperity in the shape of the 17 Sustainable Development Goals.
And to deliver it by 2030.
And we are also all working to deliver the Paris Climate Agenda which aims to limit global warming to below two degrees Centigrade.
India has a lot to gain but also potentially a lot to lose if we don’t get this right.
We will not be able to meet either of these challenges without mobilising much larger volumes of private finance than we have in the past. And that private finance rightly expects a return.
The EBRD approach of mobilising private sector finance therefore now stands centre stage of the world’s development architecture.
In other words, only you – and others like you, working with us – can help deliver affordable and clean energy, decent work and economic growth, sustainable cities and communities, and more innovation and better infrastructure, to name just a few of the development goals we share.
As India has now become a part-owner of EBRD, I hope more Indian companies will become our partners in realising that vision together. And getting to the mountain peak together.
Thank you very much.