EU development chief welcomes EBRD's sub-Saharan ambitions

BRUSSELS — The European Commission’s top development official weighed into the debate on the future of European financial institutions in Africa this week, saying she would welcome “as many as possible” operating south of the Sahara.

Her comments are unlikely to please the European Investment Bank, which is locked in a contest with the European Bank for Reconstruction and Development over who should lead the bloc’s investments in Africa.

EIB, which is owned by EU member states, already operates throughout Africa, financing €4.2 billion ($4.7 billion) worth of projects in 29 countries in sub-Saharan Africa between 2017 and 2019. EBRD, which is focused mostly on central and eastern Europe and counts the U.S., China, and Japan among its 69 national shareholders, is only present for now in North Africa, though its outgoing president, Suma Chakrabarti, is keen to get an expansion further south approved at a meeting of the bank’s governing board in May.

Asked whether she thought EBRD should expand into sub-Saharan Africa, Jutta Urpilainen, the EU commissioner for international partnerships since December, told reporters that “I would like to see plenty of financial institutions operating in sub-Saharan Africa because I think it’s clear that we are not able to reach [the] Sustainable Development Goals without [the] private sector, without more funding.”

The former Finnish finance minister added: “My personal opinion is that, as many as possible, we should encourage our financial institutions [to] also operate in sub-Saharan Africa. … That’s unfortunately not my decision to take, but this is my personal opinion.”

A feasibility study into the implications of expanding either EIB or EBRD’s work in Africa is due by the fall, with the terms of reference still under discussion between EU member states.

Pitching to EU ministers at the end of last year, Chakrabarti cast EBRD’s mixed ownership as a virtue in an era when multilateralism is under threat. By contrast, Werner Hoyer, president of EIB, portrayed his bank as the only way EU member states could achieve their wish for greater visibility and strategic autonomy on the world stage.

Speaking to reporters this week at the launch of the new commission’s blueprint for its work in Africa, Urpilainen called for greater coordination between European development actors.

“We should be more ‘Team Europe,’” she said. “I think we need to coordinate our work, within the commission, also of course with the External Action Service [the bloc’s foreign service], but also with the member states.”

The commission’s vision for European development architecture, released last month, sidestepped the debate between EIB and EBRD. Instead, it floated the idea of an amorphous “comprehensive coordination mechanism,” likely overseen by the commission, so “that the EU, its member states and the IFIs they hold shares in, collectively use their sizeable financial assistance capacity in a coherent way which promotes the EU’s values and strategic objectives.”