Rebuilding Ukraine, Uzbekistan’s gradual opening up and sub-Saharan Africa dominated the agenda at this year’s EBRD meeting in Samarkand. Anita Hawser reports.

The European Bank for Reconstruction and Development’s (EBRD’s) annual meeting returned to Uzbekistan recently for the first time since 2003, when the meeting’s usual focus on infrastructure investments and the private sector gave way to concerns about the country’s poor human rights track record under former president Islam Karimov.

That historic meeting resulted in the multilateral development bank gradually winding down its investment activities in Uzbekistan and a decade-long absence from the country. But the bank started reinvesting in Uzbekistan again in 2017 and at this year’s annual meeting in Samarkand, a new Uzbek government led by reformist president Shavkat Mirziyoyev was eager to stress that “today’s Uzbekistan is not yesterday’s Uzbekistan”.

He spoke about a new Uzbekistan ready to open itself up to the world, one that was making progress in terms of abolishing forced labour and child labour, and is putting in place legal and regulatory reforms, including judicial independence and administrative courts to protect the interests of citizens. “Creating an atmosphere where corruption in society is not tolerated has become one of our top priorities,” he asserted.

That must have been music to the ears of the EBRD, which is the only multilateral development bank which has multiparty democracy as part of its remit. But it wasn’t enough to quell the concerns of non-governmental organisations (NGOs) like Bankwatch, which insists the EBRD’s current approach still relies too heavily on its clients – both public and private – to assess and manage risks, with minimal mechanisms for affected communities to verify whether human rights are being respected or not. 

It was a question that popped up during the official press conference with the EBRD’s president, Odile Renaud-Basso, during the meeting in Samarkand. Ms Renaud-Basso said the EBRD takes the human rights question very seriously and is continuously monitoring the situation and engaging with the authorities. 

The EBRD also met with the Civil Society Organisation – comprising NGOs, think tanks, labour unions, community-based organisations, women’s groups and business development organisations – during its annual meeting in Samarkand, which Ms Renaud-Basso described as an “open and useful meeting”, and part of an ongoing dialogue. 

Uzbekistan is working on World Trade Organization accession, and government officials at the EBRD meeting said they want to create a good environment for exporters and importers. Some of the biggest investors in Uzbekistan include companies like Abu Dhabi’s Masdar, which has invested in major renewables projects in Uzbekistan, including the largest wind farm in central Asia.

the cost of reconstruction in Ukraine could reach as high as $411bn

Mohamed Jameel Al Ramahi, Masdar’s CEO, said it would not have been able to do what it has done in the country without working hand in hand with multilateral development institutions like the EBRD, the Uzbek government and investors, to ensure renewables investments are “going to the right destination”.

But while almost 4000km separates Samarkand, a city on the ancient Silk Road route, from Ukraine, the war there still managed to dominate the agenda at the annual meeting. “Ukraine is the bank’s top priority,” said Ms Renaud-Basso. 

The EBRD is the largest institutional investor in Ukraine, having committed to deploy €3bn in 2022–23. But recognising that additional shareholder support will be needed for the bank’s reconstruction efforts in Ukraine, the multilateral development bank announced that a proposal from the board of directors on the scope of EBRD support for Ukraine, and a potential paid-in capital increase, would be submitted to governors for a final decision by the end of this year.

The latest international needs assessment, based on wartime damage in 2022, suggests the cost of reconstruction in Ukraine could reach as high as $411bn.

EBRD governors agreed that paid-in capital is the most efficient, effective and fairly shared instrument to provide such support, noting that a €3bn–€5bn paid-in capital increase would enable investment of the nature and scale outlined without the need for systematic donor risk-sharing in 2024 and beyond.

The bank is currently expanding its support for municipal authorities around Ukraine. In December, with support from the US, it lent €25m to the city of Lviv, in western Ukraine, and, with support from the EU and the US, is providing Khmelnytskyi, a city that became home to thousands of displaced people, with €10.6m to improve its public transport system by renewing its trolleybus fleet. 

Investing in the future of Ukraine

The war in Ukraine rages on, but so do the reconstruction efforts. 

Matteo Patrone, managing director, eastern Europe and the Caucasus at the EBRD, says public and private sector companies in Ukraine are already considering how to resume operations and rebuild facilities that have been damaged.

He expects the EBRD to close a transaction soon with Ukrzaliznytsia, Ukraine’s railway company, of which €100m is allocated for track rehabilitation. “We are also preparing two projects with the Ukrainian road agency,” says Mr Patrone. 

“One is for the rehabilitation of a road which connects Lviv in the west of the country with the Polish border. There is also another road that we will help them rehabilitate, from Lviv to another point on the border with Poland. These transport routes will help diversify the logistics flows from the Black Sea, which are very vulnerable at the moment, towards western Europe.” 

Mr Patrone says many companies in Ukraine are reacting in a courageous and very nimble way to keep the real economy operating. “Nobody can do enough [by themselves],” he says. “So there will need to be a joint effort conducted by the official sector, the private sector, including of course foreign direct investors and portfolio investors.”

Fiona Hill, senior fellow for foreign policy at the Brookings Institution, told the EBRD’s annual meeting that despite the damage that had been done to Ukraine’s grain storage and infrastructure, Ukraine could start to generate some revenues from agricultural exports.

“We could start to think about getting Ukraine’s agricultural sector back up and running,” she said. “Thinking about investments in grain silos and storage and other transportation through ports like Gdansk in Poland or further afield like Rotterdam – we could start getting that moving again. That’s the secret. Start planning now rather than worrying about whether the public sector funding will keep flowing, because if it doesn’t look as if Ukraine is getting itself back on track again, they’re less likely to get public funding.”

That’s the secret. Start planning now rather than worrying about whether the public sector funding will keep flowing

Fiona Hill, Brookings Institution

Ms Hill said she knows private sector investors who invested in Ukraine before the war and would like to invest again.

But no one is under any illusions as to just how challenging the task ahead is. According to the EBRD’s latest Regional Economic Prospects report, a five-year recovery in Ukraine would require extra investment of around $50bn a year from inflows of capital from abroad, including private capital.

A swift recovery is not the norm for most economies impacted by armed conflict, according to its report, with most economies not recovering to their pre-war trend level of income per capita, even in the long term. However, the report says 29% of economies do achieve their pre-war trend level of gross domestic product (GDP) per capita within five years.

For Ukraine to recover within five years, its economy would need to grow by 14% a year throughout that period. This would raise average GDP to $225bn from around $150bn in 2022, in constant prices, according to the EBRD.    

The EBRD expands its remit into sub-Saharan Africa 

Ukraine may be the EBRD’s top priority, but at the meeting in Samarkand, governors also approved a limited and incremental expansion of the bank’s statutes to allow for investment in sub-Saharan Africa and added Iraq to the bank’s southern and eastern Mediterranean region (SEMED).

The expansion of the bank’s remit to sub-Saharan Africa is the third in the bank’s more than 30-year history. The decision comes after four years of deliberations, Ms Renaud-Basso told the press conference at the bank’s annual meeting last week. 

“I’m fully convinced we can add value based on our unique mandate focused on the private sector and the green transition to existing development partners in the region,” she said, underlining the historic dimension of the decision taken in Samarkand, which she says will shape the future of the bank in the coming years. 

The decision is also a signal, she says, that the global community has not lost sight of the need to support sub-Saharan countries and Iraq in their economic development as the bank already does in many other countries.

We can support Ukraine, support our countries of operation and develop new investment in sub-Saharan African countries and Iraq

Odile Renaud-Basso, EBRD president

In the past, the EBRD has been criticised for expanding its focus beyond its original remit of investing in and building market-oriented economies in central and eastern European countries following the collapse of the Soviet Union. 

According to a 2019 report by the Center for International and Strategic Studies, the EBRD has extended its regional focus significantly from the original 23 recipient countries and progressively expanded its reach into Mongolia (2006); Turkey (2009); Jordan, Tunisia, Morocco, Egypt and Kosovo (2012); Cyprus (2014); Greece (2015); and Lebanon (2017).

But Ms Renaud-Basso insisted it was not a zero sum game. “We can support Ukraine, support our countries of operation and develop new investment in sub-Saharan African countries and Iraq.” 

While other development banks are already active in sub-Saharan Africa, Ms Renaud-Basso says the EBRD brings its unique policy reform agenda, focus on investing in the private sector and the capacity to invest in smaller projects, as well as bigger ones.

The bank expects to start investing in sub-Saharan Africa in 2025 in renewables, the private-sector and small and medium-sized enterprises, but it will need to amend its statutes to allow for a limited and incremental expansion to the region. “This is a structural process which will take time for countries to ratify,” says Ms Renaud-Basso.

From 2025 to 2030, the EBRD will be able to invest in up to six countries in sub-Saharan Africa. Its mandate and business model will fit most appropriately in Benin, Côte d’Ivoire, Ghana, Kenya, Nigeria and Senegal, should they wish to apply. These six countries will be formally notified of the governors’ decision.

Iraq will join the bank’s SEMED region (Egypt, Jordan, Lebanon, Morocco, Tunisia and the West Bank and Gaza), with which the country has strong economic links. 

The EBRD started investing in the SEMED region in 2011 and has invested close to €19bn in 363 projects supporting the private sector and sustainable development.


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