Austrian Development Bank: paving the way to achieving the SDGs | Q&A with Sabine Gaber

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© OeEB | C. Häusler

Q&A with Mag. Sabine Gaber, Member of the Executive Board, the Development Bank of Austria, AG (OeEB)


| Oesterreichische Entwicklungsbank AG – (OeEB) – the Development Bank of Austria – celebrated its 15th anniversary this year. Congratulations! 

Thank you! Indeed, OeEB was founded in 2008 as the official Development Bank of Austria during the financial crisis and operates as a 100% subsidiary of Oesterreichische Kontrollbank (OeKB), the Austrian Export Credit Agency. Despite being the youngest national European Development Finance Institution, we rank as Europe’s seven-largest development bank. We began with a team of five and have expanded to a team of seventy. To date, we have successfully executed 500 projects in the private sector in developing countries worldwide and manage a portfolio of 1.7 billion euros. About 40% of our portfolio investments are directed towards projects addressing climate change. Currently 60% of our new commitments in 2023 are climate related investments.

As a development bank tasked with financing sustainable investments in the private sectors of developing nations, we play a pivotal role among a diverse array of stakeholders in Austrian development policy. Our collaborative efforts reinforce one another, collectively contributing to Austria’s commitment to supporting developing countries in achieving SDGs and addressing global crises such as inclusion, gender, climate change, poverty. Increasing levels of socio-economic inequality, gender inequality and growing climate and ecological emergencies will be major contributors to rising social tensions and make it more difficult for democratic governments to deal with the ongoing challenges.

 

| What are OeEB’s focus sectors and development priorities?

Regarding focus sectors and priorities, our initiatives aim to bolster the private sector within designated countries. We have selected specific thematic areas emphasising renewable energy, supporting companies keen to integrate circular economy approaches in their work or optimise resource and energy efficiency, financial inclusion, and infrastructure. We highly value the strengthening of micro-, small-, and medium-sized enterprises (MSMEs) as they are crucial job providers in developing countries and efficiently contribute to poverty reduction. In terms of infrastructure, we intensely focus on water infrastructure, such as wastewater treatment plants. For example, we conducted a highly successful and award-winning project in India, of which the UNO is notably proud. We primarily focus on constructing strategic infrastructure outside Europe, particularly climate and energy-related projects. Additionally, we prioritise efforts in poverty reduction, which is critical. It is essential to consider the Global South when it comes to development and mitigation issues since global warming knows no borders.

Across all our projects, we aim to emphasise two overarching cross-sectoral issues: climate protection and gender equality. We additionally endorse projects that extend beyond these thematic focus areas, particularly when they demonstrate a substantial developmental impact or when foreign trade interest significantly contributes to the development of the private sector. Our focus remains on evaluating our projects’ environmental and social implications, guided by international environmental and social standards. We work closely with international and national experts to ensure proper ecological footprint measurement at the portfolio and transaction level.

Furthermore, finding global consent on what energy sources are efficient for what industries will be essential. While until 2050, it is expected that solar energy will be the primary source, hydrogen will also be necessary for providing energy; however, due to its energy intensity, it is only feasible to use it limited for certain industries (e.g chemical and steel industry) without other alternative energy sources.

The expansion of renewable power generation capacities and power transmission grids is important in combination with electricity storage systems. All technologies that can contribute to negative CO2 emissions must also be examined (e.g Carbon Capture and Utilization). In addition to technological progress and digitalization, the protection of biodiversity is of utmost importance, as the preservation of CO2 reservoirs such as forests makes a significant contribution to achieving climate goals.

Another key role we play is to de-risk potential investments to ensure that developing countries remain attractive for private investors and companies to gain access to otherwise unavailable financing.

Among other methods, we measure the overall development impact quality of our portfolio using the Development Effectiveness Rating Tool (DERa). DERa is assessing five categories: creating decent jobs, generating local income, environmental stewardship, developing markets and sectors, and benefiting local communities. DERa enables OeEB to determine the current and expected impact of a potential customer and results are included into our investment decision and used to advise our customers in achieving development goals where further measures are needed (e.g. implementation of an Environment and Social Action Plan).

 

| What role does collaboration play in OeEB’s work?

OeEB has collaborations with DFIs (Development Finance Institutions) and MDBs (Multilateral Development Banks) focused on the private sector development in developing countries. In Europe OeEB is part of the EDFI Association known as the European Development Finance Institutions (EDFI). Together all 15 EDFIs have a consolidated committed portfolio of EUR 51,2 bn. in 2022 in developing countries.

OeEB is also leveraging synergies with its shareholder OeKB AG and utilizes its connections with Austrian institutions and companies and their expertise having also a special product for Austrian and EU companies active in Africa and LDCs (African Austrian SME Investment Facility+).

EDFI (including OeEB) act also as implementing partners of EU guarantees under the European Fund for Sustainable Development Plus (EFSD+). Thanks to the risk sharing support from the EU, the DFIs are enabled to deliver development finance solutions in higher risk projects than they would otherwise be able to do and DFIs are in the position to mobilize private capital from investors ready to invest in higher risk projects as well.

A notable instance of collaboration is the Gutmann OeEB Impact Fund. The first joint project between OeEB and a private bank (Bank Gutmann, Austria) with new investment possibilities for private institutional investors in developing and emerging countries. The Gutmann OeEB Impact Fund, supported by 48 investors, mobilized EUR 72 mn. to enhance living conditions in developing and emerging countries while generating financial returns.

 

| What is the outlook for OeEB in terms of further developments?

We are currently working on our five-year strategy (2024 – 2028) in coordination with our Members of the Supervisory Board and key stakeholders, primarily the Austrian Ministry of Finance and the Ministry of Foreign Affairs, and we remain committed to achieving the Sustainable Development Goals. Our plan involves expanding the climate-related issues to encompass green finance, addressing mitigation and climate adaptation. In the past, our investments were also directed towards a Biodiversity Fund that provided funding for hotspots in Latin America. It’s crucial to note that such projects do not necessarily operate commercially. Establishing carbon sink facilities is essential to combat climate change, as without land and water effectively, we have nothing. In our next development cycle, we will assess which projects are feasible and vital in addressing the biodiversity issue adequately.

Poverty reduction remains a focal point for us, for instance, in Sub-Saharan Africa, supported and de-risked by the EU guarantee mechanism to instil confidence in other investors for collaborative investments.

 


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| brief bio

Ms. Mag. Sabine Gaber studied International Business Administration and, throughout her professional career spanning over 25 years, has implemented numerous complex project initiatives within internationally operating commercial banks and as a board member of the Development Bank of Austria, AG (OeEB). Currently, she is engaged in the strategic execution of private sector projects in developing and emerging countries, focusing on generating developmental impacts that can be implemented socially, environmentally, and economically sustainably. These projects particularly contribute to the realization of the Sustainable Development Goals. Ms. Gaber, as a board member of OeEB, is part of the European Development Finance Institutions (EDFIs) and is also involved in various international project groups, strategic EU initiatives, and serves as Vice President of the Austrian Chapter of the Club of Rome.

 


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