Devex Invested: Will EBRD expand investment in Africa?

Could the European Bank for Reconstruction and Development finally expand further into Africa? The move would be in line with the bank’s mission, according to its new leader, Odile Renaud-Basso.

As EBRD holds its annual meeting this week, Renaud-Basso speaks to my colleague Vince Chadwick about why expansion plans are on hold; one of its newest members, the United Arab Emirates; and a review of its Belarus investments after the country forced down a civilian airliner to arrest a dissident in May.

• While European Union member states are calling for more investment in low-income countries and fragile states, EBRD has considered expanding into more advanced economies in sub-Saharan Africa, including Kenya and Senegal. Renaud-Basso tells us the bank hasn’t yet made decisions about locations — it will do so by next year — but it will go where there are private sector players.

• “The logic of the EBRD since it was created, and its expansion, is all related to stabilization of the European neighborhood. I don't see any role for the EBRD in Asia or in Latin America. In my perspective, it's not in our DNA and in our mandate,” she says, adding that Africa is key to European stabilization.

• So what’s the holdup to expansion on the African continent? Discussions on the “complex” issue were paused as a result of the COVID-19 crisis. But the bank’s shareholders have different views on whether the move is a priority, whether the bank has the necessary capacity or capital, and whether the risk would be worth taking.

Read: A conversation with ERBD President Odile Renaud-Basso

Lighting up the world

$35 billion a year.

That’s the amount of investment needed to meet Sustainable Development Goal targets on global electricity access.

For Devex, Anca Gurzu takes a look at recent United Nations discussions about mobilizing private finance for energy generation and access.

A double standard?

As many development finance institutions phase out funding for gas projects as part of climate commitments, vocal opposition is emerging from lower-income countries arguing that the move is inequitable. Nigeria’s environment minister warned last week that an international push to stop funding for gas projects in sub-Saharan Africa is threatening the region’s ability to decarbonize in a fair way.

But activists are concerned that the climate commitments from the World Bank, and others, don’t go far enough to end this funding.

ICYMI: Portuguese secretary: Europe should not 'impose public policy' on Africa

What do you think? Will the private sector continue to finance gas projects if DFIs step away? Should sub-Saharan Africa, which accounts for a fraction of 1% of global emissions, not invest in gas projects? Let me know at adva.saldinger@devex.com, and we may share your thoughts in an upcoming edition of Invested.

Solar and wind power

Investors are still betting on solar and wind energy companies, despite the fact that some clean energy exchange-traded funds have suffered double-digit losses this year, according to The Wall Street Journal. Though investment interest seems somewhat resilient, I wonder if it will remain so in the long term if performance doesn’t catch up.

Investing in agro-processing

Kenya’s government has committed to boost investments in agro-processing, as part of an effort to cut down on the massive amount of food waste that occurs when smallholder farmers fail to find a market for their goods.

Local processing facilities could be a solution. But some small-business owners and experts say that government efforts to launch six private sector-driven agro-processing zones are slow, and a lack of finance makes starting those businesses difficult. Export and import policies present additional challenges. David Njagi reports for Devex.

Investments of interest

• The African Entrepreneur Collective, Aequalitas Capital Partners, and Property Point Venture Catalyst are each receiving up to $150,000 to test models that would catalyze investment in small and growing businesses headed by women. We’ll be watching to see if the models help create innovative financing and effectively target support to women-led businesses.

• The International Finance Corp. will provide $100 million to OCP Group, a phosphate-mining and global fertilizer company, to help expand its value chain in Africa. The investment will increase the availability of fertilizers locally in several African countries and aims to build sustainable food systems. It will include farmer development programs and requires OCP to enhance corporate governance and promote gender equity.

Update, June 29, 2021: This article has been updated to clarify that the EBRD is looking into investing further into Africa