Odile Renaud-Basso

As I think we are a bit globally in a populist moment where support for international cooperation or support for development policies is less obvious. I think there is a bit of backlash on the globalization agenda, the multilateral agenda and so forth. But I really believe that on the other hand when you see the challenge that the world is facing and I was talking about pandemics with COVID but it's also true with climate change and with migration, being able to tackle some issues at the global level is extremely important. But there are common issues for humanity that are better addressed through cooperation and so forth. And I think it's important not to lose sight of that.

Thank you. Thank you for having me.

So I think very fundamentally part of my motivation comes from the fact that I've been raised in Algeria. So I was between three and ten I was living in Algeria. It was in the 70s. So after the independence of the country and my parents were working for the development of the country. My father was building steel. I think this gave me very early on an experience of what it means to live abroad, to work in different countries, very different culture and so forth. And then I was not necessarily thinking about working in development. But I was very much committed to work for public goods, public sector. So when I finished my studies, I went through the ENA school, which is a school for civil servants in France. I was very much interested by policy issues, politics, but also working. I mean always at some different point of my time I was thinking whether I should go working in the private sector or remain in the government, more in the public sector. I always decided, chosen to work in the public sector because I found that this was more in line with my values. Also, I was interested in designing public policies contributing to making the world a little bit better. And then at some point of time, I started to work on development issues. For example, I had the opportunity to chair the Paris Club, but also I did a lot of different issues. I spent quite a lot of time in Europe on European issues, but public sector and development issue were always commonalities in everything I've been doing.

Yes, I mean it's a very difficult relationship as we see, and progress sometimes some backtracking of the times. And I also seen the challenges of developing countries, a lot of hope in the 70s, a lot of project optimism and so forth, and then some challenges, domestic challenges.

No, I remember in 94 I joined the French Ministry of Finance. I started working in the desk which was dealing with some sub-Saharan African countries, the franc zone countries. And it was just after the devaluation of the franc, a 50% devaluation, depreciation of the currency from a fixed exchange rate a few months after. And we were putting a lot of financing programs in order to help Côte d'Ivoire, Senegal, Mali, Burkina Faso and so forth, to provide financial support to support social programs or specific projects in the countries to help the people who were facing a very big depreciation of the currency, loss of purchasing power and so forth. So there were a lot of social consequences and we were designing programs, working very closely with IMF and the World Bank to put in place the policies to help weathering the shock. And I remember that visit very vividly because I traveled in Côte d'Ivoire and in Senegal and discussing with the government and how we can provide support.

No, I remember seeing, for example, Abidjan, the great huge city, with on the one hand some big buildings because they had a big growth period with emerging dimension, but on the other hand some very poor areas where you have no electricity and so forth. And so the gap between the different parts of the cities and the different way of life and so forth were very striking.

I mean I think that for example when I was working in the Paris Club there were a lot of efforts put into taking steps to address the issue of debt burden, alleviate cost of debt services and so forth. So there were in the 90s some additional measures, additional debt treatment very often designed by the G7 to increase the level of debt reduction. And then at the end of the 90s it was the program of highly indebted countries, where it was really a very important level of debt reduction which was provided with the hope that this will really unlock some potential. There are some challenges, some remaining challenges, the trends today are not easy, but there has been also some progress and I think that we should not be too pessimistic about that. Of course, development has been quite uneven. Asian countries have been taking off more rapidly and in a more sustainable manner than sub-Saharan African countries. I think that there is some story of success in a number of countries that we should also keep in mind.

It was indeed very strange because I started in November 2020 and I came for first four days on the 1st of November and then in London nobody was in the office because people were working from home. But then a few days after I arrived it was a lockdown, so I had to go back to Paris. I came back in December and then a few days, because it was open again in London, and then three days after it was locked down again. So people had to rush out of the UK because otherwise they would be stuck for the whole Christmas time and so forth. So it was challenging because you couldn't meet people in person and starting in a new institution with a new environment when you don't see people in person is very challenging because you have the formal meetings. I missed a lot at the beginning because there were a lot of new countries I had never been traveling in, had never been working with in the scope of EBRD, and not being able to travel in person to see what the country looks like, to meet with the leadership of the country is also a bit challenging. But I think we found ways to overcome that and at the end of the day I think it was also an experience. And I think the big positive outcome first of all is that we learned to work from home and I think now it gives more flexibility. And also it showed something when we talk about multilateralism and the deep connection between countries, so there is no country standing alone and being able to be protected from such a thing as a pandemic. So it throws in very concrete terms common challenge, common public goods and so forth. So I think that's something we need to remember in times where sometimes multilateralism is challenged, that there are issues that you need to work on together and that no country alone can sort out.

So the EBRD is a multilateral development bank which has been set at the collapse of the Soviet Union and the post-Cold War environment. So in the early 90s, their shareholders are governments. So they gave us some capital and with this capital we borrow on capital markets in order to lend to clients. And the EBRD's main characteristic is that it's focused mostly on the private sector. So to support the private sector. The mandate, the original bank was really set up as a new institution in this new environment post-Cold War in order to support the transition of communist economies toward market economies and to help the country. So that's why the focus was on the private sector, to develop private businesses, to transform the institution, to create market regulators, competition, strengthening the banking sector and so forth, to facilitate democracy and market economies. And so we invest in projects in countries to support the private sector, to strengthen institutions, strengthen the rule of law and so forth. So we provide financing, mostly as I was saying, private sector, 75% in the private sector. We can still work with state on public companies or government but more marginally. And we also accompany this financing with policy advice, technical assistance so as to reform, for example, some sectors of the economy. So the value of a multilateral development bank like us is that we've got some capital. We've got shareholders give us original capital and then we were able to deploy 220 billion euros of investment over this 34 years we've been active. It's not like a subsidy and that's very important to understand because when we talk about development aid and so forth, people have the impression that it's from budget and that you need to pay always. So in our case, they give us some capital and we generate more capacities to invest in a self-sustained manner.

So it was a big shock because Ukraine was one of the core countries of EBRD investments since the beginning. We've been also extremely active in Russia. So I mean Russia was the largest country of operation for many years. We had stopped investing in Russia in 2014 when there were the beginning of the war with Crimea and so forth. So we suspended any new project in Russia since 2014. So we already saw all this tension with the Georgia war in 2008 and then the situation in Ukraine, but the full-fledged war was a big shock. So immediately we suspended any disbursement because Russia we had no new project but we could still disburse on some projects. So we suspended everything in Russia and Belarus and we thought about what kind of support we can provide to Ukraine. And this was a big challenge because for a bank investing in a war zone is challenging. So it took a few months to discuss with the shareholders and so forth to find the right approach. There were very strong shareholder support for the bank to be active in supporting Ukraine. And to this end we got a lot of support from shareholders including financial support in order to cover part of the risk. So when we for example give a loan, we extend a loan to a client in Ukraine, at the beginning we had some coverage with 50% risk covered by donor support from among our shareholders and this allowed us to start really providing some support. We focus for the EBRD on the real economy, so what we can do to keep the economy running. So it means support to infrastructure, railway, energy. We help a lot to buy energy capacity, gas storage capacity so as to be sure that there were some heating in the winter and gas production capacity. But also support to businesses and we provided a lot of working capital for liquidity support to businesses, either directly or working through the banks where we provide some risk sharing with the local banks that cannot take too much risk on their balance sheet, so we share 50/50. So we deployed and one of the challenges was to find the right instruments, the right level of risk we can take without undermining our own financial strength, but also what kind of instruments were relevant in order to be able to deploy quickly some funding. And I think that I'm very proud of what we've been able to do because we've deployed since the beginning of the war more than 7 billion euros in the real economy. And I think that for the businesses we've been working with and for the government for the infrastructure, it has made a big difference.

So, first of all, it was a challenge to decide. It was not easy to decide to go because the trip was planned, but then it was in October 2022 and then Russia started to bomb very heavily. So it was after the first waves of the offensive and so forth, but then Russia started to bomb very heavily the energy infrastructure and so forth. And I remember our risk teams were telling me, advising a few days before the trip was planned, advising not to go. And I said, well okay, everything is planned and so forth, before giving up let's wait and see. And finally we decided to go. What I found very impressive is that from here we had the impression that the whole country was in war. Of course, the country is in war, but then there is no fight everywhere. So it's not like you have the front line, but when you cross the country from Lviv to Kyiv, it's a 12-hour trip from the Polish border to Kyiv, and you stop for refueling gasoline and so forth, and everything looks normal. You have everything in the shops, everything is normal. So this contrast between the country in war and you know that there can be some bombs, but on the other hand life continues and you have restaurants open and people going outside and so forth. And it tells us a lot about the resilience of the people. I was very impressed. This first visit we were in a meeting with the prime minister and suddenly there were some alarms, so we had to move to the shelter in the basement, but the meeting continues and you continue working and talking as if it's part of life. So that's quite impressive. And I think the last visit I did it was even worse in terms of bombing. We spent more time in the shelter in the hotel. So it's not getting better from that perspective, I may say.

No, I must say I've never imagined that there would be a war so close to Europe. No, it was and this was also part of the shock, the invasion and so forth, but also the fact that we are back to, I mean that this could happen so close from us with all the ramifications also for the security of Europe and so forth. I think that was a big shock and there are a lot of ramifications still today, of course.

Yes. So the way I think about it is first of all we are already reconstructing because for example we've worked a lot on this energy infrastructure, railway infrastructure, where things are destroyed we rebuild them or we help rebuilding them quickly in order to keep the network, electricity network functioning and so forth. So it's not like things are destroyed and everybody's waiting, but really there has been a very striking agility to repair things quickly. This is emergency repair, emergency reconstruction. When there is a ceasefire and when broader scale reconstruction will be possible, then we are ready, I think, to step up our investment. And our shareholders provided a capital increase for the EBRD in order to be able to provide investment of around 3 billion euros per year in the reconstruction phase. This would be a doubling of our capacity to invest in the country. And then we will really step up and be able to support the private sector, to work also on some public sector projects. And a lot of things we are doing now are also helpful in order to prepare the capacity, for example of the government to deal with a much larger number of projects, building project preparation capacities, you need to be well organized to be able to do that in a streamlined manner, efficient manner and so forth. And these are foundations on which we are working now with the other MDBs.

So we have been always investing beyond strictly Europe because for example Central Asia and so forth, countries with post-Soviet situation where we've been investing. So we started in Kazakhstan, Uzbekistan, Kyrgyzstan, Turkmenistan and so forth in all these Central Asian countries already at the setting up of the bank. Indeed we were tasked to invest in new countries of operation at different phases. So Turkey for example is one country of operation since 2009. And then we had a further expansion in North Africa after the Arab Spring. And now the last decision is on sub-Saharan Africa, six countries. And I think the logic of these decisions is in each case it's countries which are not in the European continent strictly speaking but very closely related to Europe, European neighborhood in the broad sense. The stability, the growth of these countries has a strong impact on European stability, growth, prosperity. So I think that's the logic behind. And because we have this specific business model, this specific mandate to support the market economy, support the private sector, bring some policy work, we can bring something which is quite unique to the countries and which is very much needed. And I think that now everybody realizes how it's important, when development assistance is becoming scarce, the capacity to work with the private sector, attract private investment is seen as a very important element for development. And that's why the EBRD model has been so relevant. And I think that we've shown when we look at what we've been doing in North Africa, we started investing there in 2012 and in 10 years, 12 years we invested more than 22 billion euros, most of it in the private sector in Egypt, Tunisia, Morocco. So it increased the overall volume of investment from different MDBs and bilateral development institutions. So it really showed what we can bring in the market. We see that as an enabling element on top of our financing.

So I think there is a lot of things that the private sector can do, that multilateral development banks can do, but they cannot completely replace the cuts in bilateral funding, if only because some of what we can finance we provide loans. We do not provide grants. And for some countries, borrowing capacities are limited because of the debt level and so forth, and the repayment capacity is very limited. So for some activities, having grants is very important. So that's where there is a lot of things that can be done. We are trying also a lot with our funding to bring private investors at a broader scale, but there is so much we can do to replace. And you know, when you provide subsidies for vaccination campaigns or for NGO support and so forth, providing lending cannot replace. So I think it's important to continue to do as much as possible. I mean, for governments to remain involved in development support, we will do as much as we can, but we cannot replace some types of aid.

Yes, I think we are a bit globally in a populist moment where support for international cooperation or support for development policies is less obvious. I think there is a bit of backlash on the globalization agenda, the multilateral agenda and so forth. But I really believe that on the other hand, when you see the challenges that the world is facing, and I was talking about pandemics with COVID, but it's also true with climate change and with migration, being able to tackle some issues at the global level is extremely important because national solutions will not be able to address some of these issues. So there are a lot of things that can be done at national level and so forth, but there are common issues for humanity that are better addressed through cooperation. And I think it's important not to lose sight of that. Of course, international organizations need to be efficient, effective, and so forth. So there has been a lot of work done to ensure that we work efficiently, we work better together, we avoid duplication among different MDBs and so forth. So there is a lot of things that can be improved in the way we work, but I really believe that this agenda remains very important. And it's not by charity, but it's also in the interest of the countries which are contributing to development assistance, because it's a way to stabilize. If you have neighboring countries which are in a completely catastrophic situation with no development perspective, major pandemic and so forth, this will come to you. We've seen that. We've seen this huge migration wave when you have a big destabilization of a region or a country, civil war, drought, a major life challenge, this comes to you. So it's in the self-interest of countries to continue to provide support in order to help sustainable development in these countries. And this is the best way to guarantee long-term peace and prosperity, I would say.

I suppose I hope that the war in Ukraine will have an end sooner rather than later and in a sustainable way, and we will be able to finance the reconstruction of the country. And I really hope that we can have an impact also in the new countries in which we are going to invest, sub-Saharan Africa. It's a very different environment, very different challenge. But I hope that our projects, our financing, our contribution will also help these countries in moving up, growing faster and being able to catch up.

Thank you. Thank you very much.