By Matteo Patrone, Vice President of Banking, European Bank for Reconstruction and Development (EBRD)

Amove into Africa might seem counterintuitive for a development bank named the European Bank for Reconstruction and Development (EBRD). However, the EBRD, established after the fall of the Berlin Wall a generation ago to help build market economies in Eastern Europe, has grown in the intervening three decades, learning to apply what it learned from that first transition to a series of new countries.

The EBRD’s latest transition has been several years in the making, but 2025 marks the launch of our activities in sub-Saharan Africa. The bank appointed a dedicated managing director for the region in September 2024, and five local offices are opening in Benin, Côte d’Ivoire, Kenya, Nigeria and Senegal this year. Ghana is expected to follow suit in 2026. The EBRD will bring its distinctive private-sector-focussed business model to broaden access to finance, promote local enterprises and foster sustainable growth, contributing to the transformation of these economies.

Twenty-first-century Africa is a growth story. Since 2000, the continent has experienced strong economic expansion and improvements in social indicators, accompanied by lower inflation rates. GDP (gross domestic product) per capita has nearly tripled since the start of the century; soaring investments in sectors such as telecommunications, finance and infrastructure have created new economic opportunities for ordinary people. Success stories include Côte d’Ivoire, which has been growing at an average annual rate of more than 6 percent since 2011. Access to electricity has doubled in Kenya in the last decade, and financial inclusion has increased across all of our new countries during that time. According to the EBRD’s latest “Regional Economic Prospects” report, the African countries where the bank is starting work performed strongly in 2024 and early 2025, supported by growth in services, agricultural exports and extractive sectors.

These advances notwithstanding, Africa’s growth remains volatile, and the overall momentum has slowed since 2014. The slowdown began well before the global pandemic of 2020-21 and has its roots in a variety of challenges, including climate shocks and infrastructure gaps; overreliance on commodity exports and external debt-servicing pressures; and political instability and exclusion. Most countries can benefit from the demographic dividend of a young population, but this will require skills development and job creation—and faster private-sector growth to facilitate both.

However, the continent’s long-term fundamentals remain promising, and support for reform-minded economies and their dynamic enterprises is more critical than ever. Key African states are at an inflection point, whereby renewed momentum to create opportunities for people and businesses is possible, but they could benefit from more investment and targeted policy support. All this highlights both the potential of the EBRD’s new countries of operation and the imperative of decisive reforms to weather the challenges.

This is where the bank comes in. Its unique operating model should put the EBRD in a strong position to help co-create solutions to some of the problems Africa faces today. This is because the EBRD works on two tracks in parallel: both investing in bankable projects and offering support for policy reforms to foster more enabling institutional and business environments in the countries where it works. Such a context can allow private-sector companies to flourish, leading, in turn, to accelerated growth—a virtuous circle.

Improving the business climate is especially important for the continent’s young population. By 2030, the number of people under the age of 30 living in Africa is expected to exceed one billion, representing 65 percent of the continent’s population. This booming youth population will need jobs and incomes to generate a demographic dividend that boosts growth, but it risks becoming a jobless generation. Today, in Kenya alone, young people already contribute more than $530 million a month to the economy through informal businesses, illustrating the vast potential for private-sector growth and promoting formalisation. Harnessing their tremendous energy and creativity to help power tomorrow’s economy will be a key marker of African success over the next generation.

The strategic shape that EBRD support will take in Africa reflects what we have learned across our 42 countries of operations on three continents. The EBRD’s work over the next five years will focus on strengthening economic governance, human capital and equality of opportunity, and energy security through investments in the green transition. This work will be amplified by deploying digital technology and boosting the mobilisation of private-sector capital, both directly and indirectly.

We are demand-driven, so we follow the investment priorities of the governments and enterprises in the countries where we work, and we are open to adapting our focus areas as we learn from our partners. Based on our conversations with African stakeholders thus far, the broad trend we foresee is that EBRD investments will concentrate primarily on boosting private-sector growth—especially that of micro-, small- and medium-sized enterprises (MSMEs), strengthening value-chain integration and improving productivity.

Working with SMEs is a key component of the EBRD’s business strategy to stay directly relevant in Africa, and its approach to SME development is unique. Not only does the bank directly and indirectly finance €1.24 billion to more than 200,000 SMEs each year, but it also advises more than 2,400 small businesses annually, helping them shape their development to become more bankable.

MSMEs are pivotal in driving economic growth and employment in developing countries and emerging economies, contributing significantly to GDP and job creation. However, their potential is hindered by a persistent financing gap—a market failure restricting their access to essential capital for growth and innovation. This stifles their efficiency and growth, reflecting a broader market inefficiency in allocating resources to where they can be most impactful. Approximately 65 million, or 40 percent, of formal (M)SMEs in developing countries cannot get credit, resulting in an unmet financing need of $5.2 trillion every year, according to the World Bank. This is equivalent to approximately 19 percent of these countries’ GDPs and demands a strong response. Multilateral development banks such as the EBRD are well positioned to address such market failures because they promote fair growth and inclusiveness.

While good governance—the foundation stone of a healthy private sector—is front and centre of our mission, fostering human capital and inclusion will also be an especially important consideration in Africa. We have a strong track record of improving gender equality and fostering more inclusive business practices and regulatory standards across Central and Eastern Europe, Central Asia and the Mediterranean. The African context will prompt us to reflect in a new way on how to best address disparities and connect peripheries to the centre, whether through social-inclusion programmes or infrastructure. Human-capital development and inclusive financial systems will go hand in hand with the enhancement of sustainable infrastructure.

We want to invest in sustainable-energy access for all, so tomorrow’s companies and citizens can have access to clean and secure locally produced energy. In parallel, we will also help catalyse investments in climate adaptation—dealing with the consequences of climate change.

We also bring to our work in Africa some impressive experience of working in fragile countries—those facing protracted conflicts, weak state capacity or vulnerability to climate-related shocks. We have supported governments and enterprises in managing issues related to displaced populations. For example, the EBRD has implemented innovative programmes in the Southern and Eastern Mediterranean to marry up long-term infrastructure and private-sector development projects with the inclusion of refugees in countries such as Jordan, where the population of nine million has in the past decade been swelled by the arrival of more than one million refugees from neighbouring Syria.

In today’s uncertain global environment, Africa is not alone in facing macroeconomic uncertainties. In the countries where we will be working, we will be on hand to offer guidance in negotiating them. A likely consequence of our work in Africa is that we will become even more local, seeking to mobilise local capital and understand local markets even better, thereby amplifying local impact and building resilience to global headwinds. One of our focus areas is lending in local currency, thereby partially insulating, for example, an Ivoirian tech firm, a Nigerian bank or Senegalese women farmers from international uncertainties as they scale up their activities.

Our contribution to countries with strong extractive industries may involve supporting some aspects of those industries. However, it will be geared towards helping them diversify and digitalise their economies so they can become more resilient and develop additional sources of income. The potential for leapfrogging through innovation is demonstrated by Kenya’s M-PESA mobile money-transfer system, which has transformed the country’s financial landscape since its launch in 2007. Initially designed for basic money transfers, M-PESA now enables secure digital payments, savings, microloans and even government cash disbursements. This has significantly boosted financial inclusion, empowered SMEs through digital finance and positioned Kenya as a fintech (financial technology) leader.

Does Africa need the EBRD? The continent already hosts plenty of multilateral development banks, development finance institutions and other international partners. However, the EBRD’s entry into Africa provides an additional option for countries with growth rates that necessitate carefully tailored capital and evidence-based policy cooperation. The EBRD aims to engage in a manner that is additional to and complementary with, not repetitive of, what other international organisations are doing. Supporting the private sector and focussing on governance is in our DNA, and we have more than three decades of experience across continents. There is plenty of scope for everyone to bring—and pool—their expertise.

The partnership agreement we recently made with the African Development Bank (AfDB) to jointly support African SMEs is a good example of a cooperation that allows us to be stronger together for the benefit of African economies than two banks operating separately.

The AfDB will bring its unparalleled experience of the African business environment to the shared platform. For its part, the EBRD will contribute its expertise in fostering SMEs from North Africa, Eastern Europe and other regions. Together, we will be better placed to accelerate entrepreneurship, including by identifying new instruments to support SMEs in accessing the debt and equity financing they often struggle to find. Such joint efforts can help SMEs on the continent to be both more bankable and more investable. We aim to accelerate the engines of growth for SME-led markets by collaborating with the AfDB and other willing national and international partners to remove the constraints African entrepreneurs too often experience.

Business communities are already excited about the EBRD’s arrival. A recent article in Launch Base Africa advised African startups to expect “patient capital with a purpose”—alerting them that the EBRD had evolved beyond its traditional mandate of funding infrastructure and now also acts as a direct equity investor in high-growth technology companies. The bank’s focus areas for the region align neatly with the pain points being addressed by many African startups, it added.

As we begin our work in Africa, I am excited for several reasons. I’m excited about the entrepreneurial spirit I see in the countries in which the EBRD is starting to operate, the interface between technology and business emerging from these markets and the potential for cross-border fertilisations between regional neighbours drawing on each other’s strengths. For instance, the Port of Cotonou in Benin, which is currently undergoing modernisation, will also cater to neighbouring countries, stimulating regional trade. I’m excited too about governments that are committed to reform and want the private sector to play a much larger role in their economies.

The opportunities are there. We stand ready to help African businesses seize them.