May 9, 2018 / 11:43 PM / a year ago

UPDATE 1-EBRD finds resistance to Africa expansion plan

* Development bank to decide on expansion in 2020

* Plans met with resistance from some major shareholders

* Preference to up efforts in existing countries of operation (Adds detail, background, quotes from shareholders)

By Marc Jones

DEAD SEA RESORT, Jordan, May 9 (Reuters) - The European Bank for Reconstruction and Development will not take a decision on expanding into Sub-Saharan Africa before 2020, the bank’s president said on Wednesday, after his plans were met with resistance according to a number of shareholders.

Speaking at a news conference at the bank’s annual meeting, EBRD head, Suma Chakrabarti, said he would see if the governments that act as shareholders would give the green light for exploratory work on an enlargement at next year’s meeting.

He had told Reuters last month that the bank was looking at a push into sub-Saharan Africa and other countries in the Middle East, with the possibility of getting the final approval at the 2020 meeting.

“The decision on further expansion will not be taken before 2020 at the earliest,” Chakrabarti told reporters after the key decision-making session which overran by around 90 minutes.

The EBRD already operates in more than 35 countries, from Morocco to Mongolia and Estonia to Egypt, but the idea of going deep into Africa had raised concerns about a possible overreach.

At the same time the bank’s management feel it has plentiful capital and its approach of investing alongside private sector partners can complement what other development banks already do in the region.

“The idea is not dead in the water, but it won’t be a blitzkrieg,” a minister from one of the bank’s shareholders told Reuters on the condition of anonymity.

Another official also at the session echoed the view, saying that a host of large shareholders including the European Union, Germany and France had all voiced serious reservations.

“If you just look at the numbers the consensus just wasn’t there,” a third official added.

What was agreed on though was that the bank would start to up its spending in those countries in which it already operates from the start of next year.

Some minor expansion could also still happen before the key 2020 decision. Iraq requested EBRD membership just under two weeks ago so could happen relatively quickly, while Algeria is another that could also possibly be fast-tracked.

Chakrabarti said last month that the overall expansion plan, including Sub-Saharan Africa, could see the bank’s annual lending jump by almost a third to as much as 13 billion euros ($15.41 billion) from its current average of around 9.5 billion.

$1 = 0.8439 euros Reporting by Marc Jones, additional writing by Sujata Rao in London; editing by Diane Craft

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