EBRD’s growing focus on SEMED: “Economic reform enables us to invest more”

From Global Trade Review (GTR) | By Sanne Wass

The Southern and Eastern Mediterranean (SEMED) region is now the biggest region of operation for the European Bank for Reconstruction and Development (EBRD). Founded in 1991 after the collapse of the Soviet Union, the development bank initially focused on the nations of the former Eastern bloc, but has since expanded to support development in 39 countries, from central Europe to central Asia. Since entering SEMED – initially being Egypt, Jordan, Morocco and Tunisia – in 2012 in the aftermath of the Arab Spring, the bank has invested over €7.8bn in 179 projects in the region – ranging from wind farm developments in Morocco to supporting dairy producers in Egypt. 2018 has seen the EBRD expand to Lebanon and the West Bank, under the leadership of Janet Heckman, who took on the role of managing director for the SEMED region in February 2017. GTR met with Heckman in Cairo recently to speak to her about her focus areas and further expansion plans for 2019.   GTR: SEMED is now the largest region of operation for the EBRD. Why has it received such a big focus? Heckman: That’s correct. Last year SEMED was the largest; we did roughly €2.2bn of investments in what was then four countries we invested in: Egypt, Jordan, Morocco and Tunisia. Egypt was the biggest at €1.4bn. As a country, this investment from the EBRD was second only to Turkey last year, so very significant. This year it’s also looking like a very strong year, so we expect numbers to be in the same range. I think it’s because there has been a lot of economic reform taking place in the region. Particularly here in Egypt, for the last two and a half years you’ve seen a very strong reform programme, removal of subsidies in key areas, key investment acts being passed, bankruptcy and company laws, etc. When you have that type of reform, it enables us to invest more in a country because we believe the future of that country is strong. Another example is Tunisia, where in July we spearheaded a mission with the EU, the IFC and the African Development Bank to encourage Tunisians to continue on the reform path, and take the steps needed to ensure that the country is economically viable. One of the things I am proudest of this year has been that we were able to begin work in Lebanon and the West Bank. These are two areas where you really need trade facilitation lines, because of the perceived political risk in the region. It doesn’t just benefit the local banks; it really helps to open up the economy as a whole. It’s quite gratifying to see this.   GTR: Are there any specific programmes or projects you are particularly focused on at the moment? Heckman: We have a very strong programme in value chain development. Let me give you the example of Morocco – the country has really geared up for export and is now amongst one of the major centres globally for automotive components production as well as for aerospace components. The country put in the place the necessary infrastructure: the roads, the high-speed train, the Tangier-Med port and introduced proper incentives to attract multinationals to produce. Where we became active is in helping to finance local supply chain development. We’re working with the major multinational companies as well as the local companies who are investing, to help identify what type of supplies they can source locally. We then work with the local companies in the market to train them and bring them up the value chain. This is something we’re replicating throughout SEMED. We call it value chain financing, which is absolutely critical, because if a company can produce to the standard of global major companies like Ikea or Renault, then they are capable of producing under their own names in the local market. We also have a really great programme called advice for small business. It is funded by the EU throughout all of the SEMED countries, and we launched it in Lebanon in October. So far, we’ve advised more than 2,200 SMEs in the region. It includes advice on how to target export markets and tender for projects, as well as technical advice on how to gear your product for export markets. In that way we help small and medium-sized businesses with either local or international advisory services. This is absolutely critical. As part of this, we also have specific programmes geared towards women-owned SMEs. We work through the banks – it’s a combined programme – to provide financing to SMEs owned and operated by women. We help to train the banks, the credit departments, etc, on what the key factors for lending to women-owned businesses are, and then provide the technical advisory and mentoring to female entrepreneurs. We recently launched the programme in Morocco, in conjunction with the ministry of women and family.   GTR: What are the EBRD’s SEMED expansion plans? Heckman: Right now, our main plan is to expand within the countries where we are already operating, to do more in those countries. For example, in Egypt, we hope to open a third office this year. We’d like to do more in the regions of Egypt, namely outside of just Alexandria or Cairo, because those are the areas that need the most development. The same goes for Morocco: we opened our second office in Tangier, which covers the northern part of the country, and we hope to get approval to open later this year in the southern part of Morocco too, out of Agadir, where there’s a lot of agribusiness and a need for regional connectivity. When the time is right, we’ll also take into consideration other countries. Libya and Syria are both within our domain. I would personally love to be in Algeria – I worked there for four years with Citi, but we have to see after the elections what the political will is. Libya is another country that I could see the EBRD working in.   GTR: You mentioned earlier the EBRD’s expansion this year to Lebanon – what opportunities do you see in the country? Heckman: The Lebanese are extremely entrepreneurial, so naturally there are a lot of private sector opportunities. Initially, as we often do when we enter countries, we started with financial institutions, and we took an equity stake in Bank Audi. But then we’ve also signed trade facilitation lines and SME lending lines with other banks in the country. But the real opportunity is with private sector entrepreneurs and family groups in Lebanon.   GTR: Sub-Saharan Africa doesn’t fall under your domain, but with a growing focus on intra-African trade, does your work go beyond SEMED? Heckman: What we’ve noticed is that quite a lot of the companies we work with in North Africa, but also even in Lebanon and Jordan, are investing in Sub-Saharan Africa. Morocco is a key example of this. Attijariwafa Bank is present across Africa, and the corporates and companies have followed the Moroccan banking system, predominantly into the Ivory Coast, Senegal and Francophone Africa, because they see huge opportunities for growth. The EBRD has been involved in two events this year, working with our companies who are active in Sub-Sahara. One was the Africa Investment Forum in Johannesburg, and the other the Africa 2018 Forum in Sharm El-Sheikh. So we’re looking at how we can invest in companies which want to invest further in Sub-Sahara. The post EBRD’s growing focus on SEMED: “Economic reform enables us to invest more” appeared first on Global Trade Review (GTR).
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