EBRD Announces $26m Investment Portfolio For North Africa

The EBRD's 2011 Annual Meeting in Astana, Kazakhstan, 20-21 May 2011

VENTURES AFRICA – The European Bank for Reconstruction and Development (EBRD) has announced plans for a 200 million euro($260 million) investment aimed at enhancing growth, with special focus on development of SMEs, in the North African region.

The Bank announced yesterday that its Board of Directors (representing the Bank’s shareholders) has approved a first wave of investments intended to assist the economic recovery of “emerging Arab democracies”, following the political upheavals and changes that have taken place in the North Africa and Middle East regions, referred to as the “Arab Spring”. The Bank considers that the region – in particular Morocco, Tunisia, Egypt, and Jordan – have demonstrated substantial progress in terms of positive political and economic change, and as such wishes to provide further financing to the countries to promote the positive trend.

The EBRD stated that it intends the newly approved funds to be primarily put towards growing the financial sector in the beneficiary countries, and noted that a particular goal envisaged for the monies is “providing SME finance via banks and equity funds”. Funds will also be allocated for infrastructure projects – with a view to ensuring sufficient water distribution and waste water treatment – , and for developing the energy sectors of the respective states.

While the EBRD has said that it intends to gradually increase funding for the North Africa and Middle East region to 2.5 billion euros ($3.2 billion) by 2015, yesterday’s announcement was confined to three specific projects that have been given the immediate go-ahead.

The Bank has pledged 20 million euros ($26 million) to the Maghreb Private Equity Fund III - which is sponsored by AfricInvest-TunInvest: a well-reputed local private equity firm in North Africa. The funds provided by the Bank for this project are intended to finance equity and equity-related investments for SME businesses in the region.

The second offer of finance confirmed yesterday sees two equal loans of 10 million euros ($13 million) each to be provided to Moroccan Bank Société Générale Marocaine de Banques (SGMB). This financing is once again to be used to provide lending-services to micro-businesses, and SME clients.

The third investment given the go ahead will provide Jordanian InvestBank with a 30 million euro ($39 million) trade finance line which will support the bank’s development as it in turn provides financial assistance to the Jordanian SME market.

It is expected that further investment projects in Egypt will be given the all-clear by the Board in the near future.

Launched in 1991, the EBRD initially had a remit limited to helping ex-Soviet countries convert to a functioning market economy; however it recently expanded said remit to cover the new democracies emerging from the Arab Spring.