EIB hits out at 'fake news' on its development record

BRUSSELS — A senior official from the European Investment Bank has labeled doubts about its credentials in least-developed countries and fragile states as “fake news” as it vies with the European Bank for Reconstruction and Development for an enhanced role in overseeing European development finance. Maria Shaw-Barragan, director of the global partners department at EIB, told the audience at a lunchtime event in Brussels on Tuesday: “There is some fake news on EIB and least-developed countries and fragile states, so I want to share data, statistics with all of you.” She cited EIB’s “active exposure in 42 out of the 59 least-developed countries or fragile states that exist in the world … which means that we do have experience in these countries.” “In terms of activity we have a lot of experience and we have had it for many years, this was not properly reflected in some reports lately.” --— Maria Shaw-Barragan, director of the global partners, EIB Last month, a group of experts convened by European Union member states — known as the “Wise Persons Group” — delivered a long-awaited report to EU leaders, presenting options for how EIB, EBRD, national development finance institutions, and European Commission can better coordinate their investments abroad, particularly in Africa. The group concluded that EIB and EBRD have “little or no experience working with low-income countries and countries with fragilities, which characterise the key region of sub-Saharan Africa.” In the wake of the report, the banks have been sparring at closed-door events around Brussels to highlight their bona fides in low-income countries. The nine experts, with experience across the relevant institutions, did not express a clear view on whether EBRD or EIB should take a greater role in European development finance, though they did note the strengths and weaknesses of each. The group found EIB’s “private sector investments are mostly low-risk and large-scale,” that “there have been no significant efforts to apply a more development-oriented approach” to the roughly 10% of EIB operations outside the EU, and that the bank is “not currently well equipped to take fully into account the development impacts of its lending operations, especially in sub-Saharan Africa, partly because it has limited staff on the ground outside the EU.” Shaw-Barragan hit back Tuesday, defending EIB’s record. “In the last five years we have been active in 24 out of the 44 least-developed countries and fragile states in the [Africa, Caribbean, Pacific] region,” she said. “And 40% of our volume in the ACP region is dedicated to least-developed countries and fragile states.” While projects to tackle climate change in China and India accounted for greater volume in the bank’s investments, Shaw-Barragan said this was to be expected as operations in LDCs and fragile states tend to be smaller due to issues of debt sustainability. “In terms of activity we have a lot of experience and we have had it for many years,” she said. “This was not properly reflected in some reports lately and I just wanted to share the information so that you are all aware of this.” Asked by Devex why she thought the Wise Persons report, which was championed by France and Germany as a way to authoritatively address the long-running tension between European development actors, underplayed EIB’s role in LDCs and fragile states, Shaw-Barragan said, “Probably because we are not very good at public relations at the EIB.” “We dedicate much more time [to] doing things [rather] than talking about what we are doing,” she said. “And we need to improve on this.” EBRD meanwhile won praise in the report for its “extensive presence on the ground” and “good record at both project and macro-economic levels, with good private sector and sub-sovereign experience and competent preparation of country strategies to support transition.” On Tuesday, Shaw-Barragan pointed to representatives from the European External Action Service — the EU’s foreign service — and DEVCO — the commission’s development department, explaining: “We ... do not publish country strategies or transition reports — whatever you want to call it ... because our strategies, our reports, our policy guidance comes from them.” She added that because 90% of EIB’s activity is inside the EU, “90% of EIB staff are not talking about [development outside the bloc]. But the 10% that are working in these countries, I can assure you are extremely knowledgeable and are talking about this all the time.” Members of the Wise Persons Group defended their evaluation of the banks’ work. “We never said that EIB has not invested in poor countries,” Monique Barbut, a member of the group with experience in senior roles at the United Nations and French Development Agency, told Devex Wednesday. “We say that it does not have a culture of development … It’s not because you do a project of €10 million [$11 million] in Burkina Faso that you are a development agency. That’s the problem: EIB has the same model of intervention everywhere.” “When you do smaller projects which are conceived differently, you can’t do it from Luxembourg,” Barbut added. “There is no human infrastructure which can take on these questions at EIB for the moment.” “The question is, is EIB ready to change its model of intervention? Basically, one can’t imagine that you don’t have engineers, sociologists ... professions which are very different from the projects that you do when you intervene in France or Poland.” Another expert member, former EBRD chief economist Erik Berglöf, told Devex that after reviewing data on each player’s portfolio and conducting hearings with their representatives, the Wise Persons Group was “unanimous” in its verdict on individual institutions, adding that it is now for EU member states to decide next steps. EBRD did not escape criticism in the report. With its initial mission of helping former Soviet states in central and eastern Europe transition to market economies now coming to an end, the London-based bank is considering whether to expand further south into sub-Saharan Africa. However, the experts wrote, “it is unclear whether [EBRD’s] good record in delivering impact in mostly middle-income countries can easily be extended to countries with significant institutional fragilities and particular challenges related to private- and public-sector activities and in development areas different from those involved in transition strategies.” EBRD declined to comment for this article.