Advocacy groups oppose larger North Africa role for EBRD, EIB
23 March 2011, Reuters
A loose coalition of advocacy groups is urging shareholders of two European Union-backed banks to halt plans to expand lending in North Africa as too little attention has been paid to the democratic credentials of recipient countries.
Non-governmental organisations (NGOs), including EU-funded CEE Bankwatch Network, issued a joint statement on Tuesday calling for an investigation into whether lending by the European Investment Bank (EIB) has resulted in illicit gains by families linked to North African rulers.
The EU’s lending arm is expected to step up investments in the region in the coming years to accelerate political transition in countries such as Egypt and Tunisia where popular revolts have toppled decades-long rulers.
Activists, however, say such plans should be put on hold.
“The EIB has not so far produced any evidence that its loans have actually benefited local populations and not corrupted leaders and businessmen even in more stable political circumstances,” the NGOs said.
The EIB has invested in North Africa since 1979 but civil society activists say the lender concentrated too much of its investments on the energy sector.
Between 2006 and 2010, the energy sector accounted for about 93 percent of the 1.85 billion euros lent by the EIB to Egypt and 46 percent of lending to Tunisia.
“Looking at these figures, it is not clear whether and how the EIB has avoided contributing to the concentration of wealth among political elites in these countries,” the activists said.
“On the contrary it has helped to increase sectoral economic concentration and partly to secure energy to Europe.”
EIB spokesman Nick Antonovics said the bank has reviewed its portfolio of North African investments for links to repressive regimes targeted by EU sanctions but its review has not uncovered any misuse of its funds so far.
“Yes, we’ve invested a lot in the energy sector but that’s not oil for Europe but rather for local energy needs..We’re not financing oil fields here but power projects,” he said.
The civil activists also oppose a proposal that would see the European Bank for Reconstruction and Development (EBRD) extend its traditional eastern European lending remit to Egypt.
Activists say the London-based development lender has yet to demonstrate how its investments can reduce poverty and advance gender equality.
The European Commission hopes to persuade the EBRD’s other shareholders, which include Japan and the United States, to include Egypt in the lender’s countries of operation, currently numbering 29.
“When discussing the bank’s possible role in North Africa, it would be…relevant to consider the EBRD’s experience and contribution in still authoritarian states in the Caucasus and Central Asia,” said the NGOs.
“The economic reforms and liberalisation supported by the EBRD in resource-rich countries, such as Azerbaijan, has translated in unsustainable dependence on commodities exports, but not in improved democracy, transparency and pluralism,” the activists said.
EBRD spokesman Tony Williams said the bank remains committed to furthering democracy in its countries of operations.
“The bank calibrates its investments in countries where democracy is limited, restricting our financing very much to private sector through small micro-lending enterprises. This is a reflection of our commitment to democracy,” he said.
Institution: EBRD | EIB