The EBRD isn't working - job creation still not central to investments

Kurt Bayer, until recently Austria’s executive director at the European Bank for Reconstruction and Development, has for several years maintained an interesting blog covering issues such as the Eurozone crisis and development finance more generally. Following his departure from the EBRD, might we start seeing a few more revealing insights from Mr Bayer about life – and some of its frustrations – at 1 Exchange Square, London?

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A recent post from mid-February appears to indicate that a bit more candour about the EBRD could be in the offing at Bayer’s blog.

Ruminating quite widely over certain aspects of the EBRD’s business model that have clearly exercised him and fellow EBRD board members over the years, Bayer turns to discussing the extension in 2011 of the EBRD’s regional mandate to cover four ‘Arab Spring’ countries: Egypt, Morocco, Tunisia and Jordan.

Explaining that there had been “widespread agreement (also in EBRD) that the Arab Spring revolutions had been more social, anti-poverty rebellions than democracy-oriented ones”, and that therefore “employment creation” should be “a guiding force of financing” in the new region, Bayer spells out what is needed in this context:

“For this you need to pay attention to employment effects of EBRD’s loan and equity operations, you need a conceptual framework how to deal with employment creation and anti/poverty private investment, in short you need more of an economic strategy, going beyond creating sustainable businesses.”

Alas, in preceding paragraphs, Bayer also acknowledges an oversight that has always seemed rather odd for a bank that has the word ‘development’ as part of its name:

“Today, there has not yet been a study of the employment effects of about 60 bill (sic) Euros worth of EBRD financing; employment effects, as a main indicator for material well-being, are not part of the project documentation, are not reported. Clearly, this is a major gap in EBRD’s reporting system.”

Bayer’s comments here bring to mind the G8 communiqué from May 2011 announcing the new role that the EBRD was being invited to play in the Middle East and North Africa (MENA) region: 

“To fast-start EBRD support to and leverage its experience in private sector development and job creation in the region until the ratification of the extension is completed, we will work with the EBRD towards the creation of a dedicated transitional facility, to allow the bank’s operations to start as early as possible to the benefit of prospective recipient countries...” (emphasis added).

According to the G8, then, back in 2011 the EBRD’s toolkit did contain ‘job creation’ – just don’t tell Kurt Bayer. But do tell protestors in Tahrir Square, Cairo and elsewhere in the region that the EBRD is coming and it will be able to leverage new jobs.

When exactly the EBRD will be able to provide concrete, reliable numbers about the employment effects of its investments, not only in MENA but also in eastern Europe (20+ years after commencing operations there), remains totally unclear. It would be nice to think, though, that the EBRD itself could be a bit more upfront with the public on this key issue. It might help to dispel suggestions that it has been called in to execute a neoliberal agenda in countries where so many took to the streets to get rid of neoliberal policies and practices.