Banking on the future
After decade of operations in Turkey, EBRD says its is ready for new investments
The European Bank for Reconstruction and Development (EBRD), a major investor in Turkey that focuses overwhelmingly on the private sector, has unveiled a new strategy for Turkey which will guide the Bank’s investments and policy work in the country for the next five years. In the period between 2019 and 2024, the EBRD will focus on strengthening the resilience of Turkey’s financial sector and development of capital markets, developing the country’s knowledge economy, promoting economic inclusion and gender equality in the private sector and accelerating the country’s shift to the green economy and supporting regional energy connectivity.
During a visit to Turkey for the 10th year anniversary of the Bank’s Turkey branch, EBRD President Suma Chakrabarti said: “There are many exciting new frontiers for the EBRD and the Turkish private sector to explore together. As a development bank with a proud record of innovation, we are well placed to take a leading role in this. The EBRD is not merely a fair-weather friend. We also look to the long term. Today we are as committed to Turkey and supporting its private sector as we have ever been.”
The President’s visit and the launch of the new strategy mark 10 years of the EBRD’s solid contribution to the Turkish economy. The EBRD started its work in Turkey in early 2009 as a direct response to the country’s invitation, just as the global financial and economic crisis hit emerging markets hardest.
11.5 billion euros were invested for 300 projects
Over the past decade, the Bank has been focused on investment in sustainable energy, improving infrastructure, strengthening the competitiveness of the private sector, including small firms, as well as deepening local capital and local currency markets, while promoting greater job and training opportunities for women, young people and people in remote areas.
To date, the EBRD has invested 11.5 billion euros in 300 projects and mobilized 2.3 billion euros from external sources for these ventures. Half of the Bank’s investments in Turkey support the “green” economy and promote the sustainable use of energy and resources. Annually, they help save an equivalent of 11.3 million tons of CO2, an impact similar to taking 2.4 million passenger cars off roads. The Bank has financed – directly and via loans to Turkish partner banks – 3 GW of installed renewable capacity in wind, solar and geothermal projects. This equals seven per cent of the total installed renewable capacity across the country.
Reaching 850 SMEs
To support the growth of small and medium-sized enterprises (SMEs) 2 billion euros of EBRD finance was provided, mostly by extending long-term funds to more than 20 financial institutions in the country: banks, leasing companies and factoring firms.
In addition, the EBRD, with the help of donors such as the European Union, Czechia, South Korea, Taipei China and the Republic of Turkey itself, offered advisory support to 850 SMEs across the country, helping them grow and create over 4,000 new jobs.
Twenty thousand women entrepreneurs received financing, advisory support, training and mentoring through the Bank’s flagship Women in Business program supported by the EU and the Turkish Ministry of Labour and Social Security.
Shareholder in 30 Turkish companies
The Bank boosted almost 30 Turkish companies by becoming a shareholder. It has also invested in nine Turkey-focused equity and venture capital funds enabling them to invest 1.1 billion euros in local firms. Several regional funds where the EBRD is a limited partner have invested almost 800 million euros in equity of Turkish businesses.
The Bank has extended finance to some of the largest industrial companies of Turkey, raising their environmental and social standards, allowing them to invest more in research and development and in the exploration of new markets, encouraging training of young people and creating more career opportunities for women.
Over 2.6 billion euros of EBRD finance was devoted to agriculture and all the steps required to bring agricultural goods to market: production, processing, packaging and distribution. The Bank has also helped develop an innovative tool for loan officers in Turkish commercial banks, which has helped them efficiently approve and disburse 460,000 agricultural loans worth a total of 2.6 billion euros.
Legal framework for PPP projects
The EBRD has also played a key role in developing Turkey’s infrastructure. It has helped design a legal framework which allows for greater private sector involvement in the infrastructure, including private-public partnership schemes. The Bank has deployed this model to finance the construction of the Eurasia tunnel under the Bosphorus Strait and the construction of state-of-the-art hospitals.
Eight EBRD-financed new health campuses across the country will add a total of 13,462 new hospital beds to the Turkish healthcare system, where the number of beds per 1,000 people used to be only half the OECD average.
Furthermore, 8 Turkish cities, including Istanbul, Izmir, Gaziantep and Çanakkale, were able to improve their residents’ quality of life thanks to new infrastructure financed by the EBRD, including public transport, water services and waste management.
Supporting a nascent bond market, the Bank has invested in 8 Turkish-lira denominated bonds issued by local companies tapping capital markets for finance. It has also subscribed to two infrastructure project bonds and three covered bonds backed by residential mortgages and issued by local banks. Over the past 10 years, in its investor role, the EBRD has facilitated five initial public offerings by Turkish companies, one of them on the London Stock Exchange.