EBRD Donor Report 2008 Real people & real change What’s inside Donor-funded activities and official co-financing 06 Regional activities 16 Key programmes and sectors 32 EBRD Donor Report 2008 What’s inside 03 Looking forward, the Bank will seek additional ways to increase its contribution towards meeting the needs of the region. 11 EBRD Donor Report 2008 What’s inside | 01 A wood carving from eastern Europe. Message from the President 03 2007 highlights and our countries of operations 04 30 Part 01 Donor-funded activities and official co-financing 06 Donor funding 08 Official co-financing 10 Activities in 2007 11 Sustainability 13 Investment impact 14 Donor visibility 15 Part 02 Regional activities 16 Early transition countries 18 Western Balkans 21 Russia 24 Ukraine 26 Belarus, Kazakhstan and Turkmenistan 28 EU member states and candidate countries 30 Part 03 Key programmes and sectors 32 Micro, small and medium-sized enterprise lending 34 Trade Facilitation Programme 36 TAM and BAS Programme 37 Sustainable Energy Initiative 38 Legal Transition Programme 40 Municipal and environmental infrastructure 41 Transport 43 Annex 1 44 Annex 2 46 Abbreviations and glossary 47 Contributors’ credits 48 20 EBRD Donor Report 2008 02 A decorated plate from south-eastern Europe. EBRD Donor Report 2008 Message from the President | 03 Message from the President Making progress together Over the past year we have shifted our The year 2007 was marked by a significant Looking forward, the Bank will seek additional attention increasingly to the needs of increase in the volume of technical ways to increase its contribution towards the poorer countries in the EBRD region. cooperation (TC) support from donors meeting the needs of the region. The Annual Our partnership arrangements with donors for projects in poorer countries, covering Meeting in Kiev in May 2008 is an excellent are focusing on the challenges these such sectors as municipal infrastructure, opportunity to forge new partnerships with countries face, across a wide range of TurnAround Management (TAM) and donors and other IFIs to address even more sectors and initiatives. But our collaboration Business Advisory Services (BAS) assistance forcefully the barriers and constraints that with donors also continues in central Europe to small businesses, micro-lending and affect countries’ enterprises and people’s and Russia, particularly in more targeted energy efficiency. Importantly, the TC lives. This underlines the importance of interventions, such as the environment programme provides expertise and knowledge good coordination, and we remain mindful and sustainable energy. transfer that acts as a catalyst for enabling of our signed commitments to the Paris Inadequate infrastructure, slow business investments to go forward and creating a Declaration on Aid Effectiveness for and employment growth and, in many better environment for business growth. assistance to poor countries. communities, extreme poverty are among At the Bank we are grateful for the After an important year for the EBRD the acute challenges facing countries willingness of donors to coordinate and donors in 2007, the management, Board eligible for Official Development Assistance, their work with us. Notable multi-donor and donors of the Bank look forward to such as Belarus, Moldova and Ukraine, initiatives such as the Northern Dimension working together and making further progress as well as others in the Caucasus, Central Environmental Partnership, the Early in the coming year. Asia and the Western Balkans. The EBRD Transition Countries Fund and the Western and its donors can do much to improve Balkans Fund have helped us bring greater people’s lives in these countries, and strategic focus to the Bank’s work, and we need to continue working closely complement the assistance provided together to bring about sustainable growth through bilateral donor programmes. and development. Sustainable development will be a priority area in coming years – can our countries of operations adjust to its challenges? The outlook is positive. Two years ago, the EBRD launched the Sustainable Energy Initiative to harness donor support for Jean Lemierre improved energy efficiency and increased President, European Bank for access to renewable energy. This initiative Reconstruction and Development has already achieved considerable success. But energy is just one of the issues that challenge sustainable growth. Reliable access to clean water to meet residential, commercial, industrial and agricultural needs is a growing concern. So, too, are questions facing governments and businesses about how best to adapt to climate change, and how to overcome the constraints to agriculture and food production. During the past year the EBRD has been able to contribute more from its own resources to complement the funds provided by donors. We now contribute to certain costs that were previously funded by donors, including overheads of the Project Preparation Committee, TAM and BAS headquarters costs, and parts of the work undertaken through the Legal Transition Programme and the EBRD’s Office of the Chief Economist. 04 | 2007 highlights and our countries of operations EBRD Donor Report 2008 EBRD Donor Report 2008 2007 highlights and our countries of operations Early transition Western Balkans Russia, Belarus, EU member states countries 09 Albania Kazakhstan, and Croatia 01 Armenia 10 Bosnia and Turkmenistan 19 Bulgaria 02 Azerbaijan Herzegovina and Ukraine 20 Croatia Making a real difference 03 Georgia 11 FYR Macedonia 14 Russia 21 Czech Republic 04 Kyrgyz Republic 12 Montenegro 15 Belarus 22 Estonia in 29 countries 05 Moldova 13 Serbia 16 Kazakhstan 23 Hungary 06 Mongolia 17 Turkmenistan 24 Latvia 07 Tajikistan 18 Ukraine 25 Lithuania 08 Uzbekistan 26 Poland 27 Romania 28 Slovak Republic 29 Slovenia 43% 43 per cent of TC funds in 2007 were for sustainable development projects see page 13 60% 60 per cent of TC funds in 2007 were committed in ODA countries see page 11 14 3.1m 22 3.1 million loans have been made to micro and small enterprises since 1994 see page 34 24 25 15 899 In 2007, 899 businesses were helped by the TAM and BAS Programme 26 see page 37 21 16 28 18 05 23 29 27 06 20 10 13 19 03 08 12 11 04 09 01 02 50% 17 On average, 50 per cent of loans to individual entrepreneurs in the ETCs go to women 07 see page 18 EBRD Donor Report 2008 01 Donor-funded activities and official co-financing | 07 Part 01 Donor-funded activities and official co-financing Donor funds are crucial to advancing transition in the EBRD’s countries of operations. Deployed in combination with the Bank’s human expertise and investment capital resources, these funds have a major impact on the development of the private sector and provision of basic infrastructure services. They also play a critical role in the transfer of skills and the strengthening of regulatory, financial and other institutions. The EBRD’s assistance programmes provide individual entrepreneurs and firms with access to otherwise scarce finance. 08 | Donor-funded activities and official co-financing EBRD Donor Report 2008 €1.27bn Since 1991, donor funding for the EBRD’s TC grants has grown steadily, reaching a cumulative total of €1.27 billion by the end of 2007. Chart 1 Flow of donor funds to Donor allocated EBRD projects and EBRD sign agreement Funds are transferred from donor to EBRD Projects for donor support are Donor funding identified Funding arrangements range from agreements with single donors for specific projects to programme-wide arrangements EBRD EBRD involving multiple contributors. Hungary allocates allocates TC joined the EBRD donor community in 2007, non-TC funding funding to an bringing the number of active donor (grants) to individual individual project countries to 29. projects such as the (such as an energy The EBRD uses donor funds to provide financing of works audit of a factory) or to assistance through: and equipment a framework facility • technical cooperation (TC) (such as an SME • investment grants credit line) • performance fees • risk-sharing facilities. These instruments help the Bank to address the range of challenges facing transition countries. They harness finance for a variety of programmes promoting, for example, small business growth, improved employment opportunities, better access to services such as clean water and drainage, lower industrial energy use, trade expansion or more efficient transport systems. They may also be targeted at priority EBRD objectives, such as sustainable energy. Chart 1 shows the basic flow of donor funds to allocated EBRD projects. EBRD Donor Report 2008 Donor-funded activities and official co-financing | 09 A traditional hat from the Kyrgyz Republic. Technical cooperation Rapid growth in TC activity and expenditure TC assistance (delivered through during the 1990s was targeted mainly Transition challenges programmes detailed in Part 3 of this at projects in central Europe and Russia. Donor support for EBRD projects aims Report) includes: Since 2000, TC assistance has been focused to address the key barriers to transition. consultancy services for feasibility on Ukraine and the less advanced countries • While the nature of the challenges studies as part of project preparation of the Western Balkans and the early varies from country to country, there procurement assistance during transition countries (ETCs), where • are several areas that are expected project implementation transition challenges remain significant. to be prominent in the coming year.