First Vice President of the European Bank for Reconstruction and Development (EBRD) Jürgen Rigterink recently paid a visit to Armenia. In the exclusive interview to Banks.am, Rigterink talks about the process of productive Armenia-EBRD cooperation and new plans.

You have served as First Vice President at EBRD since 2018. How do you assess cooperation with Armenia in both public and private sectors over that period?

Since I became first vice president, it’s my first visit to Armenia, but I was here before some years ago. This is also the first visit after Velvet Revolution.

It’s not very often that people speak so highly of a government after over a year and moreover, that they see tangible results already. I think people do already see that’s one of the focus areas of this government is to decrease corruption. People already are noticing that and hearing this from these people it a very good start, because that means that in general, there are high hopes of improving the business department.

As you might know, we have invested so far EUR 1.3 billion or a little bit over that in Armenia and this year we actually will be adding again to that. We expect to sign up to maybe over EUR 100 million at the end of the year. Only this morning (on September 23 – Banks.am) I was very fortunate to sign two transactions. The first one is Amber Capital EU-Armenia SME Fund which is not only important for improving the private equity industry, but also capital markets-related. The other one was on the energy side: we signed a third tranche with EA energy network of Armenia, so that shows that we continue to invest.

I think it would be only fair to say also a few things on IT, because that is very important for your government and also very important for us as EBRD. Only this afternoon we visited TUMO Center for Creative Technologies. We are very-very impressed by what we’ve been seeing, knowing that about 20 percent of the children in Yerevan have access to the center. I haven’t seen that in actually almost any other country.

We also visited PicsArt, because we partly financed them. It is magnificent to see the young people doing actually something which can be seen in the world.

A few days ago Private Equity Investment Fund was launched in Armenia with support from the EU and EBRD. Given that the fund’s priorities include helping SME beneficiaries increase competitiveness and promoting their internationalization, which areas of Armenia’s business sector have the potential of competing internationally?

I don’t think you should limit it to a particular sector. The fund indeed invests in SME’s and with these investments they will be able to increase that capital. And if successful they actually will get outside financing as well. It is a kind of catalyst and indeed we would like to do this for SME’s that are looking outside Armenia. I think it’s very important for the economy that you grow your exports to other parts of the world. But this can be in anything; it can be in the ICT sector, as I already mentioned, but it can also be something completely different sector, e.g agriculture.

Armenian enterprises will receive consultation on capacity development in the framework of EBRD’s Advice for Small Businesses program. What are the pre-conditions, implemented in the course of this program, which will help the businesses secure sustainable development?

In the advisory program, we don’t necessarily give loans or financing. That also means we don’t necessarily make money and we don’t profit from it, but we do this indeed to help these smaller companies to grow. I think one of the most important preconditions, not only for smaller business but for any business to work with EBRD, is for a company to be very transparent, be a good citizen, pay taxes, etc. This is not true for all small companies, but we believe that if we engage with the client, it should have the highest environmental standard, social, corporate governance standards and so forth. We need to be convinced that this is part of DNA for them.

So, we’re not only working with perfect clients, because I think there are no perfect clients either in Armenia or elsewhere, but we’re always trying to find a way to improve these clients.

In the framework of cooperation with Armenia, EBRD also focuses on the development of manufacturing enterprises that generate added value. What do you think the Armenian Government and private sector should do in that area?

In general, and this is not only the manufacturing system, in order to create a well-functioning and efficient and effective economy the government of Armenia or any other country needs to ensure that it has stable and predictable business environment. And then, of course, make sure that the economic and monetary sides are all there, but it’s for a government to actually make sure that conditions give companies, private and foreign investors the confidence to come in into a country or sector. This is why we believe it’s so important that that during the upcoming months the solution to the Lydian issue can be found.

As a shareholder in Lydian, EBRD has not voiced its stance on the operation of Amulsar mine. The issue is among the most relevant on the Armenian agenda at the moment. What is your position regarding Amulsar?

It is a very complex situation. For every project, we need to carefully balance the economics of a project with the potential risk both from the social and from the environmental sides.

When EBRD enters into a project, in all cases we feel comfortable that the highest standards are met on environmental and social sides. Therefore, our engagement with Lydian also means that we feel comfortable that this company has met and will meet going forward all the standards set here in law and the international standards.

We do understand that there are parties which have serious concerns about it. Therefore, we do understand that for them to take the right decision it takes more time, and I think it is in the interest of all parties that they take as much time as needed to come to the right decision.

The decision is needed, because if you want to attract foreign investors it doesn’t matter what you want as long as they feel that there is a stable investment climate that they can actually rely on.

Having said that, I think we are very close to a conclusion. I think what the government has been doing and asking for an additional external study to confirm what the company (Lydian – Banks.am) has been saying is true, I think that was wise. The Prime Minister himself actually also visited the area and spoke to the people concerned themselves. We believe that the government did many things right.

EBRD provides loans to certain Armenian banks for lending to small businesses with the purpose of increasing energy efficiency in Armenia. Where is Armenia in terms of adherence to EBRD Green Economy Transition approach and what joint efforts still should be made in this area?  

It is a question we rarely get.

The economy is going through certain phases. When you look at the general energy production, we’re just at the start of making Armenia a greener economy. This is also why it’s so important that before the end of this year we actually will sign and finance the largest solar project, a solar power plant with an installed capacity of 55 MWac. The investment is roughly USD 55 million in total and maybe 15 or 17 million or something like that we will allocate before the end of the year. That’s related to the first start of greening the economy.

But for greening the economy you can not only produce greener electricity, you can reduce current electricity consumption.

We do not have the networks and the clients and the contacts, so this is \ why we try to use banks for this kind of programs.

Which areas of cooperation with Armenia will EBRD focus on in the next 5 years?

We would like to continue to invest in the banking side, but also on the energy side I mentioned. We would like to see more of the renewable energy side, also update energy efficiency, agriculture, ICT and manufacturing. And, as I mentioned, also try to engage more with the government on larger infrastructure projects.  

Gayane Yenokyan talked to Jürgen Rigterink