How we engage for change

Access to potable water, proper sanitation and solid waste disposal, energy saving transport, greener district heating and road maintenance are services that deeply affect the quality of life. In the EBRD countries of operations millions of people in urban areas cannot yet rely on existing municipal and environmental infrastructures (MEI). The Bank and donor community therefore work with local governments and private operators on the provision of modern, efficient services for citizens.

Institutional reform and investment are of great importance in the transition to a reliable municipal sector, and technical cooperation (TC) is key to overcoming weaknesses in the operational and financial delivery of services, skill shortages and poor regulation.

The Bank in 2013 committed TC funds in excess of €23 million from donors, including the Swedish International Development Cooperation Agency (Sida), the Taiwanese government and the EBRD Water Fund, for 88 assignments supporting project preparation and implementation, including procurement and corporate development.

Innovative assignments helped the EBRD and KfW develop the Municipal Infrastructure Development Fund. It provides financing and TC support to municipalities and utility companies in the Western Balkans through local banks. The Fund helps smaller municipalities attract finance for investments and assists commercial banks with the management of sector risk. The TC component is financed by Austria and Switzerland.

In Ukraine the Eastern Europe Energy Efficiency and Environmental Partnership (E5P) continued to boost energy-efficient investments with significant grant and TC contributions. With the E5P’s expansion to Armenia, Georgia and Moldova in October 2013, the donor community raised an additional €60 million, with the European Union making the largest pledge. Other donors include the Czech Republic, Estonia, Lithuania, Norway, Poland, Romania and Sweden.

Similarly, the Northern Dimension Environmental Partnership (NDEP) is providing grants and leveraging loans to improve water, wastewater and district heating infrastructure in north-west Russia. As a result, St Petersburg’s water authority inaugurated the Northern Sewage Collector Tunnel in 2013, increasing the level of wastewater treatment, which will reduce pollution in the Baltic Sea. In 2013 Germany and Norway contributed additional funds to the NDEP.

In the MEI sector in 2014, the EBRD will continue to combine investments, grants and innovative TC projects, engaging for example in climate change mitigation and adaptation measures and integrating gender equality considerations in its operations. The Bank will focus on Central Asia, particularly the water sector in Tajikistan, and continue to seek investment opportunities in the SEMED region.

Municipal and environmental infrastructure 459kb

Water and wastewater infrastructure 213kb

In the power and energy sector donor funding has enabled the EBRD to help address the twin challenges of persistent high energy intensity in the region and the need to reduce carbon emissions.

Donor support has focused on upgrading existing infrastructure, including improving energy efficiency, strengthening regional and national connections which enhance energy security, promoting renewable and low carbon technologies and developing the sector’s legislative and regulatory frameworks.

Projects have been closely linked to energy investment programmes, enabling clients to comply with the Bank’s Environmental and Social Policy and implementing operations to the highest standards. Donor support has also been particularly important in policy dialogue, especially on renewable energy legislation and promoting regional market development.

The development of the Coordinated Auction Office in South East Europe is a good example of this strategy. Electricity trade in this region has been hampered by the fact that each national electricity company manages its own cross-border connections. In 2012 transmission operators decided to set up an office to manage cross-border capacity for electricity trading in the entire region, which is being supported by €660,000 of funding from the EBRD Shareholder Special Fund (SSF). Good progress was made in 2013 in moving from plan to reality, and the first auctions of electricity are expected to take place in mid-2014.

Support from donors also helps the Bank promote investments in the EBRD early transition countries. In Tajikistan funding from Austria is backing a rehabilitation investment in the Kairakkum hydropower plant. In Georgia TC funding from the EBRD SSF is helping the country’s energy regulator to revise the tariff methodology to best-practice standards.

In the southern and eastern Mediterranean (SEMED) region a TC project under way in Morocco, which is funded from the SEMED Multi-Donor Account is supporting the liberalisation of the medium voltage network. This is expected to increase private sector power generation in the region significantly and to promote renewable power in particular.

Power and energy 627kb

Modern transport networks and services are essential to mobility and increasing the opportunities for commercial development. That is why the EBRD has more than doubled its annual investments in the transport sector over the last five years. In 2013 these amounted to €1.1 billion. By blending donor-supported TC funds with investments, the Bank can engage with its clients on sector reform and facilitate the development of more sustainable national and regional transport systems.

During 2013 the Bank mobilised a total of €8 million in TC funding for assignments in three main areas:

• Assisting clients in reforming and restructuring the sector by introducing market-based structures and more efficient management. For example, with funding from the EBRD SSF, the Bank is commissioning a review of the standards for construction and maintenance that govern road sector activities in Tajikistan.
• Promoting sustainability in the sector by helping to introduce best practices in, for example, energy efficiency and road safety. The EBRD SSF-funded Sustainable Transport Technical Assistance Programme, for instance, is helping Bank clients to integrate energy efficiency programmes in their investment plans.
• Supporting investment preparation and implementation, with an emphasis on knowledge transfer. TC projects under way in 2013 ranged from the preparation of a detailed design for rail rehabilitation investment in FYR Macedonia to engineering supervision for road construction in Albania – both funded by the WBIF.

In line with the EBRD’s Transport Sector Strategy, donor-funded projects will continue to target reform, sustainability and the efficient delivery of large-scale infrastructure projects. They will focus, in particular, on strengthening road safety in the Western Balkans, on advisory services for public-private partnerships (PPPs) and, in the rail sector, on implementing energy efficiency action plans across the Western Balkans and the ETCs.

Transport 204kb

In 2013 donors provided €2.9 million in TC funding to partner financial institutions for MSME finance facilities. TC projects were active in Belarus, Russia, Kyrgyz Republic and Turkmenistan, with funding from the EU NIF, the Russia Small Business Fund, the EBRD SSF and Japan, respectively. Two new microfinance clients in Kazakhstan and Mongolia were also supported by EBRD SSF technical assistance funding.

EBRD partners also benefit from long-standing facilities such as the Western Balkans Private Support Facility, funded by the European Union and the EBRD SSF, the EU-SME Finance Facility in Romania and the Turkey MSME Lending Programme, backed by the EU and US Agency for International Development. In 2013 the latter programme was further expanded to incorporate the Turkey Agribusiness Financing Facility. This is increasing access to medium and long-term funds for successful agribusinesses, while continuing to expand the MSME portfolios of partner institutions in the less advanced east of the country.

Furthermore, €600,000 was made available by donors (mainly the EBRD SSF) to the Trade Facilitation Programme targeting exporting and importing SMEs as well as corporates.

The EBRD’s Local Enterprise Facility (LEF) has been an effective instrument for supporting small business for the past seven years. It helps successful entrepreneurs to expand or restructure their businesses through equity-driven investments (in which the Bank owns minority shares). The LEF operates in the Balkans, SEMED region and Turkey, supporting companies whose needs are not sufficiently addressed by existing financing sources.

Since its inception, the LEF has attracted significant donor support, in particular from Italy, and also the EBRD SSF and SEMED MDA. The Facility mobilises donor support through risk sharing and TC grants for project implementation at the pre- and post-investment phases. The work of the LEF is being integrated in the new Enterprise Expansion Fund (ENEF), a component of the Western Balkans Enterprise Development and Innovation Facility (WBEDIF).

Local Enterprise Facility 593kb

In addition to improving their access to finance, the EBRD helps small and medium-sized enterprises (SMEs) acquire the know-how that can transform their businesses through its Small Business Support (SBS). SBS draws on the expertise of local consultants and international advisers on business strategy, quality management, export promotion or energy efficiency to help small enterprises reach their growth potential.

All projects – numbering more than 1,400 per year – are on a cost-sharing basis. Through SBS the EBRD is also building a competitive market for business advice in each country of operations through training courses, seminars and other activities. This work is only possible thanks to continued support from donors including the European Union and over 20 bilateral contributors, and its impact is clear. In 2011-13, 71 per cent of enterprises increased turnover and 59 per cent increased the number of employees, resulting in the creation of over 25,400 new jobs. Moreover, in the same period, 67 clients secured finance from the EBRD and 594 from local banks, including 216 EBRD partner banks.

Ongoing innovation is an important part of SBS strategy, which in 2013 developed a more comprehensive approach to supporting women entrepreneurs through the Women in Business programmes. Two such programmes were launched in Egypt and Turkey with support from the MENA Transition Fund and the European Union, respectively.

SBS also continued to support export promotion in Kazakhstan, Kyrgyz Republic and Tajikistan through a programme for Central Asia supported by the United States. Through SBS, and with funding from Austria, the Bank launched a new training programme for consultants on energy efficiency in buildings and industry in Romania. Also, SBS has been working with partners in Croatia, Egypt and Kazakhstan to build sustainability capacity and transfer methodology. The Bank is expanding its SBS activities in Egypt, Morocco and Turkey and extending its geographic coverage in Russia and Ukraine. Further Women in Business programmes are also planned in Armenia, Azerbaijan, Belarus, Georgia, Moldova, Turkey, Ukraine and the Western Balkans.

Small Business Support 169kb

The EBRD strives to promote sustainable development and ensure that its activities have a positive impact on the people and environment in the countries where it works. This strategic approach is underpinned by the Bank’s Environmental and Social Policy. It is also backed by donor-funded TC projects, which help the EBRD address environmental and social issues, including health and safety, by promoting best practice, transparency and accountability in these areas. Technical cooperation also helps the Bank be a more effective partner in international cooperation and policy dialogue initiatives.

Over the last 10 years, the EBRD has carried out more than 150 TC projects and framework programmes focusing on environmental and social issues, with total funding of approximately €20 million from donors, including the European Union, SEMED MDA and the EBRD Shareholder Special Fund (SSF).

In 2013 TC funding of over €275,000 supported projects, including one aimed at tackling the high rate of work-related road injuries in Moldova. The Bank worked with the Automobile Club of Moldova and other stakeholders to organise a workshop in the capital, Chisinau, for regulatory authorities, state police, ambulance services and private companies such as Japanese motor manufacturer Toyota. It helped develop participants’ capacity to manage road risk within business operations, to minimise accidents and injuries and to share best practice knowledge and experience.

Other projects included promoting sustainable environmental development in Mongolia, advancing road safety awareness in Ukraine and exploring how to ensure that retail developments for urban regeneration in Egypt and Jordan respect local culture and heritage in order to stimulate investment, tourism and public and private co-operation.

Read the EBRD Sustainability Report

The EBRD’s Legal Transition Programme (LTP) aims to improve the investment climate in the countries where the EBRD works, by helping to create a transparent and predictable legal environment. Its activities range from assisting governments with the drafting of new legislation to designing new institutions (for example, pledge registries) and training public officials and judges. LTP activities in 2013 were financed largely by the EBRD SSF, but bilateral donor input remained instrumental to the programme. Funding from the Czech Republic, Italy and Luxembourg helped organise training courses for judges in Albania, Moldova, Mongolia and Montenegro, so raising the standards for contract enforcement in these countries. These programmes, together with EBRD SSF-financed judicial training, benefited over 900 judges in 2013 (including 200 in Mongolia and 150 in Albania).

Donors also supported institution-building activities. With Austrian funding, the Bank was able to boost institutional capacity at the Centre for Public-Private Partnership in Serbia, while in the Kyrgyz Republic the Bank used funding from Finland to organise regulatory training sessions for telecommunications officials.

The Slovak government provided financial assistance to promote public procurement reforms in the Commonwealth of Independent States and Mongolia under an EBRD-United Nations Commission on International Trade Law initiative, which was also active in 2013 in Armenia, Kyrgyz Republicand Tajikistan. In addition, Slovak funding supported Georgia and Moldova’s accession process to the World Trade Organization’s Government Procurement Agreement.

In 2014 the LTP will intensify its support for small business development, particularly in relation to corporate governance, secured transactions, restructuring and access to public contracts. More judicial capacity-building programmes will be launched, also covering the SEMED region.

Legal transition programme 214kb

Economic research is a core activity of the EBRD to understand problems and policy challenges across its region of operations, to identify its strategic priorities and to support its operations.

In 2013 the Bank published two major research reports: Diversifying Russia, funded by Japan and the EBRD SSF, and the Transition Report 2013. Also, the fifth round of the Business Environment and Enterprise Performance Survey (BEEPS V), with funding by the EBRD SSF, was completed in Russia and rolled out in all other countries of operations, including the equivalent enterprise survey in the SEMED region. Meanwhile, the SEMED Life in Transition Survey, supported with funding from the SEMED MDA, was launched.

Also in 2013 the Bank started a randomised controlled trial (RCT) to measure the long-term impact of access to credit on female entrepreneurship in Morocco, while in Tajikistan an RCT is analysing EBRD capacity training for improving the professionalism and work quality of commercial judges. In the Kyrgyz Republic the Bank is assessing the economic impact of its investment in water infrastructure improvements at household level. All these studies are funded by the EBRD SSF.

For 2014 Bank research will focus on the impact of financial integration on stability and access to credit for small businesses, on firm productivity, governance and innovation, on political economy and economic inclusion and on the impact of EBRD operations on firms and households.

Over the past few years the Bank has made significant progress in integrating gender considerations into its operations. In 2013 it launched the Strategic Gender Initiative, outlining how it will address gender equality gaps and promote women’s socio-economic empowerment, equal opportunities and participation in the labour market.

For example, the EBRD SSF is providing financial assistance to 14 financial institutions in Azerbaijan with the aim of increasing the number of female loan officers and business clients. The project, which started in 2012 and is expected to finish in 2014, has helped to identify practices that dissuade women from participation and the changes required to secure their involvement. Based on its findings, a workshop was designed to train senior managers, loan officers and human resources staff of the participating institutions as to how to increase the proportion of women in the workforce and among their micro, small and medium-sized enterprise (MSME) client bases.

In 2013 donors supported several other gender-related initiatives in Jordan, Kyrgyz Republic, Serbia and Turkey. In the Kyrgyz Republic, for example, a TC assignment funded by the EBRD SSF helped promote equal access for women and men to all municipal services in the capital, Bishkek. Another assignment supported a training programme in Turkey to increase the financial, legal and managerial literacy of female entrepreneurs. Other donor contributions in 2013 included €850,000 for the Gender Advisory Services Framework from the TaiwanBusiness-EBRD TC Fund, the SEMED Multi-Donor Account, and the SEMED Cooperation Funds Account, and €300,000 from the Climate Investment Funds, targeting gender equality considerations mainly in Kazakhstan, Turkey and Ukraine.

Promoting gender equality at the EBRD 398kb

In 2013 the EBRD amended its methodology for assessing the transition impact of its projects to take into account economic inclusion, which is an integral part of development. The Bank now measures the extent to which economic institutions, markets and education systems offer economic opportunities to individuals, regardless of their specific circumstances such as gender, place of birth or, for young adults, social background.

Although this applies to all EBRD countries of operations and sectors, economic inclusion is a particular priority in the SEMED countries, where youth and female unemployment are very high, and in south-eastern Europe and Central Asia, where regional disparities are especially stark.

TC activities are vital to integrating economic inclusion considerations into projects that improve access to employment and services, promote skills transfer to women, young people or regions and support clients wishing to introduce more inclusive corporate standards and practices.

For example, in 2013 the EBRD provided a €60 million loan to help finance the construction in Jordan of a new shopping, hospitality and entertainment complex that will form the centrepiece of a major urban regeneration scheme in Amman, the capital. With 21 per cent of young people disengaged from education, employment or training, and with only 17.6 per cent of women participating in the workforce, inclusion gaps in Jordan are large. With TC funding from Korea, the project will support the client in offering young people and women a range of training and work placement opportunities in retail, facilities management, hospitality and related services.

Similarly, TC funding from Luxembourg in support of an investment project to rehabilitate local roads in Serbia will help create apprenticeship opportunities for jobless young people in remote parts of a country with the highest rates of youth unemployment in the EBRD region.

Other examples include water projects that improve health conditions for remote communities in Egypt and the Kyrgyz Republic, and the extension of credit lines specifically aimed at women entrepreneurs in Jordan and Turkey. Donor support will play an increasingly key role in the development of further inclusion projects.