'We have led the way on investment' in the Western Balkans

My dear friends, Prime Ministers of Albania, North Macedonia and Serbia, Ministers, business leaders, Ladies and Gentlemen.

Thank you for the invitation to speak today.

I want to share a few thoughts with you on the Western Balkans, their place in Europe, their long-term potential and some of the immediate challenges the region faces.

To begin with, I should stress that the Western Balkans countries have been part of the EBRD’s success story ever since the Bank was set up at the beginning of the 1990s.

We have led the way on investment there and on those countries’ integration with each other and with the rest of Europe.

We have applied our unique transition mandate to work across infrastructure, energy, and financial institutions, with both the public and private sectors.                                                                                         

This includes SMEs, which are the real backbone of this region’s economy and provide the largest share of employment there.

Our cumulative investment in the Western Balkans stands at more than €10 billion.

And that figure is going up by another €1 billion with every year that passes.

In fact this was a very special year for EBRD in the Balkans, as just last month we held our Annual Meeting in the beautiful city of Sarajevo, with 2500 delegates from around the world. Ana, Edi, Zoran were all there. 

In the run-up to the Annual Meeting I visited each of the Western Balkan countries to ensure the EBRD is continuing to deliver on their objectives.  We also of course discussed what they needed to do to impress the international investment community and get their economies moving forward.

We at the EBRD are determined to do even more – and to work with the governments, foreign and local investors to help create the conditions whereby we and others can invest still larger sums in the future.  To help these countries fulfil their potential and their destiny.

And our support for the region goes well beyond the mix of investment and policy reforms which is the EBRD’s trademark.

I am extremely proud to have chaired what was the historic, first ever gathering of the region’s Prime Ministers – and to have done so at our headquarters in London in 2014.

That Western Balkans Investment Summit effectively launched a whole new format for regional cooperation, known as the “Western Balkans Six at the Level of Prime Ministers”.  

We have been organising such Summits ever since every two years. So we would be very happy to see all of you at the next one, also at our HQ, next February.

That intensifying regional cooperation is one of the Western Balkans’ greatest recent achievements.

It is also testament to the vision and maturity and the political leadership in the region.

And the latest developments in this respect are most encouraging.

I am looking here at Zoran Zaev, Prime Minister of North Macedonia, in particular.

Here is a man who has shown the world what real statesmanship looks like.       

Together, he and his Greek counterpart Alexis Tsipras have provided inspiring examples of political courage, leadership and willingness to compromise in the interests of their countries, the region and us all.

The importance of the breakthrough Zoran has secured in normalising his country’s relations with its immediate neighbours is difficult to overestimate.

Amongst others it will benefit North Macedonia in the form of increased levels of FDI and foreign trade and the Western Balkans as a whole in the form of more positive investor sentiment.

Today’s forum is an opportunity for us all to celebrate the region’s many strengths – and to invite investors the world over to join us in realising its potential.

The region enjoys a stable macroeconomic climate and a favourable tax regime.

Its people are well educated, and many of them are talented entrepreneurs.

The fact that growth in the region has been picking up in recent years is also heartening.

And our economists expect growth to accelerate still more in most Western Balkans countries.

That is all good news.

But there are also three main areas where more can be done by both the Western Balkan countries themselves and the international community to help the region on its way.

They are: EU approximation; regional integration; and domestic reforms.

1. EU approximation

Conscious that I am the British President of a multilateral financial institution based in the City of London, I will start by reaffirming the case for EU membership for the entire Western Balkans.

I do so because the values of internationalism and integration, European values, are EBRD values too.

And because, in the Western Balkans, the EU serves as a transformative power, a key external anchor of and incentive for reforms, and thus complements everything we do as well.

We are very proud of the scale of our cooperation with the EU in the region, ranging as it does from co-investing through the Western Balkans Investment Framework to policy reform.                 

We welcome the European Commission’s latest Strategy for the Western Balkans, which reaffirms the region’s future in the Union and is very clear about the importance of delivering on commitments and maintaining credibility on both sides.

Clearly, decisions as to the next steps for EU approximation for Albania and North Macedonia are not the EBRD’s to take.  But I can say we at the EBRD stand with the Commission in its recent analysis which recommends the EU take those next steps.

2. Regional Integration

Turning to regional integration, I see this as a very powerful instrument for expanding trade in goods and services, increasing cross-border investment and, perhaps most importantly of all, encouraging the exchange of new ideas and innovation.

We all agree that in the Western Balkans advancing integration requires, first and foremost, improving its still sub-standard infrastructure and finalising key regional transport and energy corridors connecting the region together and with the rest of Europe.

The EBRD has been contributing a huge amount here by funding and co-funding practically all such major regional corridors.

But the gaps are still there.

And for now the biggest one is that of financing.

Even the Western Balkans Investment Framework, which I mentioned earlier and which is the most effective tool for pooling the resources that we have at our disposal, cannot today fill that gap on its own.

We need, in the best interests of the Western Balkans, to engage with the growing number of other non-European investors in the region.

And we need to make sure that they operate according to our high standards, standards which are right for the region too.

It is often easier said than done - and all three Prime Ministers know this - but it is worth the effort.

Critically, we also need to combine our funding with private investment sources. 

At the same time there is much more to regional integration than physical infrastructure alone.

At the last Western Balkans Summit at the EBRD we very much focused on what I call “soft connectivity”.

A key element of that is the creation of a single investment space.

This includes harmonising legislation, removing non-tariff barriers, improving both the depth and horizontal links of capital markets, digitalisation, strengthening the region’s business climate and promoting higher business standards ever closer to those of the EU, ensuring a level playing field for companies and facilitating foreign investment.

There are some good examples in this respect, starting with the work of the newly established regional Chamber of Commerce, whose Secretariat the EBRD was happy to fund and which is a co-organiser of today’s conference.

The first product we developed jointly was an online Regional Investment Platform, designed as a one-stop shop for foreign investors interested in the Western Balkans

EBRD has also funded the “SEE Link”, a platform bringing together South Eastern Europe stock exchanges, with the goal of creating regional infrastructure for trading securities.

And a few months ago we launched an online Western Balkans Business Registry to boost transparency and investors’ access to information.

The EBRD supported investors – both foreign and local - increasingly to benefit from the gradual emergence of a single economic space. United Group, Draexlmaier, MK Group or Balfin Group have expanded across the region. Yura, Siemens and others are establishing their local supply chain in the countries of the Western Balkans. And these are only some of the examples I could cite.

3. Reforms

But, ladies and gentlemen, we can attract much more investment – and when we do, it will be that much more effective – if, at the same time, we can also advance the cause of structural reforms.

There is currently a reform momentum across the Western Balkans.

In North Macedonia, the new authorities have achieved significant progress, which is not limited to the foreign policy breakthroughs I have already mentioned, from restoring checks and balances in the political system to improving public finance management.

In Albania, the government, in a difficult political environment, continues to implement comprehensive judicial reforms, consolidating independence and professionalism of the system of justice and strengthening the overall rule of law.

And in Serbia, the reforms of the last few years have led to macroeconomic stabilisation and improvement in labour market performance.

But there is much more to be done.

We need, for example, to help the Western Balkans countries create economies that empower local people – especially the young – to realise their dreams at home, in their own country, rather than abroad.

Too much home grown talent is lost to emigration and we need to create the conditions whereby it chooses to stay.

The governments in the region should focus on access to skills and employment, on entrepreneurship and access to finance and services that create new economic opportunities for all.

They should pay particular attention to women, young labour market entrants and those living in disadvantaged regions.

And, critically, they need to address the issue of the mismatch of skills, an area where the EBRD has been very active of late.

We need to help these countries to do more to develop a greener economy.

The EBRD is certainly delivering here as well – from our new Energy Strategy with its strong focus on renewables to our Green Cities Programme.

The Western Balkans has more capital cities that have joined this innovative Green Cities programme than any other region where we work.

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Ladies and gentlemen, that is another example of the forward thinking of the regional leaders and get up and go that I have come to associate with the six countries of the Western Balkans.

Anyone familiar with the region will know what I mean.

I urge everyone here to join us at the EBRD in helping the Western Balkans realise that potential.

Thank you very much.