The two members of the OeEB management board, Andrea Hagmann and Michael Wancata, discuss impulses for development from the private sector and the contribution made by their own institute.
What does private sector development mean to OeEB?
Michael Wancata: Building up the private sector is an important engine for development. As a development bank, we provide a jump start: We finance private sector projects in developing countries. Companies there often lack access to urgently needed capital - both financing and equity. Investments in such projects create jobs; these projects increase tax revenues and bring foreign currency into the country.
Why can't normal banks take on this role?
W: The risk is too large for commercials banks, for example when a geothermal power plant is being built in a country like Nicaragua and a 15 year term is needed for the loan. Local banks are unable to offer terms longer than two or three years. It is also difficult to get financing for such projects in developing countries on the international capital market. The risks are too great. That is exactly what development banks are for.
Does the OeEB as a development bank also do other work that contributes to the development of the private sector?
W: We also have a different approach than commercial banks because the establishment of international environmental, social, transparency, and corporate governance standards plays a large role for us. For that purpose, our project partners can take advantage of our Advisory Programme to get know-how from a consultant financed by us.
How does that help the poor population?
Andrea Hagmann: When you ask people what they need to get out of poverty, they say: a job. Job creation makes a huge contribution to the reduction of poverty. Studies show that private sector projects are especially effective for this purpose. The private sector generates 90% of jobs in developing countries.
Where is OeEB active?
W: Principally, we can act in all developing countries and emerging markets. However, we focus our commitments in regions that are particularly interesting to Austria - for example, because Austrian development work is particular active there, as is the case in the region between the Western Balkans and the Caucasus, or Central America. The primary focus is on the financial and infrastructure sectors. Commitments in the financial sector give us a spread that could never be achieved with individual projects managed from Vienna.