bne-IntelliNews: An Interview With EBRD President Sir Suma Chakrabarti

“It means a very great deal, institutionally and also for me personally”. That’s how Sir Suma Chakrabarti, President of the European Bank for Reconstruction and Development, reflects on EBRD’s 25th Anniversary Annual Meeting, which opens today in London.

“The 1989 fall of the Berlin Wall was a crucial moment, the tearing down of the iron curtain – I remember it vividly,” Sir Suma tells bne-Intellinews. “The EBRD was then set up quickly, to help transition former Soviet-bloc countries away from communism and towards open-market economics – it’s been a fantastic story”.

Keen to highlight “4,500 EBRD projects across numerous sectors” over the last quarter of a century and “more than ¢100bn of lending”, he stresses the EBRD’s “huge emphasis on enterprise” with some 80pc of current lending focused on the private sector. “That makes us distinctive among the multi-laterals and gives us our edge, something of which I’m proud”.

Having been at the opening ceremony at the EBRD’s London headquarters in April 1991, what does this Bengali-born former British Civil Servant think would surprise the founders about today’s EBRD?

“Perhaps that it’s still going,” he says, only half in jest. “Back then, there was lots of optimism that transition could be completed in a decade or so,” he recalls. “We’ve since found transition is far from linear and full of challenges, with people losing as well as gaining”.

While pointing to the “enormous net benefit overall”, Sir Suma acknowledges “tough times, not least since [2008] financial crisis” which saw reform efforts stall. “Countries began to get ‘Stuck in Transition’,” he says, harking back to the title of the famously candid 2013 edition of the EBRD’s Annual Transition Report, published soon after he became President.

“We’re getting back on track,” says Sir Suma. “In 2015, we recorded the highest number of positive reform indicators for a decade, with countries including Kazakhstan, Georgia and Serbia all now pushing ahead, as are some commodity producers who now realize, amid volatile prices, they must diversify more quickly”. The EBRD’s founders would “perhaps be surprised transition takes longer than they thought,” he ventures. “But we’ve learnt a lot since 1991”.

How has the EBRD changed over the last 25 years? “Obviously, our footprint is much bigger – originally just in Central and Easter Europe, we now operate from Morocco to Mongolia,” he says. “Our business model has been successful enough to spread well beyond our traditional region – with our private-sector expertise relevant not just in transition economies but mixed economies too”.

Nodding to early scandals relating to an allegedly lavish cost-base, Sir Suma insists the EBRD offers “taxpayer value” for the shareholder nations that fund it. “We’ve provided enormous value to those governments which originally capitalized us, and our aim is never to go back to those taxpayers” to ask for another capital increase. “We use the resources we’ve been given to do bankable projects with healthy financial return, making us self-financing – that’s how we’ve been for many years now, and long may that continue,” he says.

“Our projects not only bring real impact on the ground, helping to foster growth and systemic change, but we also often promote tough policies and say difficult things, when they need to be said – we don’t shy away from that”.

China became the 67th EBRD member in January, just five months after Beijing expressed interest. Sir Suma describes this as a “win-win”.

“The Chinese like our private-sector focus, we get the world’s second-largest economy on board and they get to tap into our country- and sector-specific expertise,” he says.

Sir Suma sees “no clash” between China’s membership and Article One of the EBRD’s charter, requiring the organization to work with “multi-party democracies” only. “That stipulation applies to the countries we lend to, not those providing the funding,” he says.

“China remains hugely under-invested across our region and, while our countries of operation have been reaching out to Chinese investors, a big investment gap remains,” says Sir Suma. “The EBRD can do a lot to help bridge that gap, and that’s the biggest win from China’s entry”.

So will the EBRD still exist in another 25 years? “If we’re still around because our core countries haven’t achieved a full transition, that’s would be disappointing,” he says. “But if we’re operating as our business model is successfully meeting new challenges, that that would be a sign of success”.

As for this London Meeting, “the big theme is obviously growth,” observes Sir Suma. “We need to keep encouraging small-and-medium-sized enterprise, promote good governance and help build more infrastructure,” he says. “The name of the game is to keep doing all we can to keep sparking and driving job-rich growth”.

 

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