Rana Karadsheh Haddad, IFC: The green transition is a strategic priority for Romania

Recently, the position of Regional Director at IFC Europe was taken over by Rana Karadsheh Haddad, and her first visit outside Vienna was to Romania. Business Review took the opportunity to talk to Rana Karadsheh about IFC’s investments in Romania and the challenges the organisation sees across the world.

By Aurel Constantin

This is your first official visit since taking on the Regional Director role at IFC Europe. Why did you choose Romania?

Yes, this is my first visit outside Vienna. Romania was the immediate choice as it is the country in Europe where IFC has the largest exposure. We are also celebrating 30 years of the World Bank’s presence in Romania.

What’s your view of Romania following these three decades of development?

Romania is a very important country in the region and, as I mentioned previously, the country where IFC has the largest exposure in Europe. Today, our portfolio stands at EUR 1.5 billion, across a number of different projects. What we are here to do is support the private sector, as we know from experience that if the private sector grows, so does the economy. Since 2000, 80 percent of investment has come from the private sector, which demonstrates how important it is for the whole economy. Romania is now a strategic geopolitical player, so it is especially important for it to have a strong private sector. Of course, the public sector is also a critical partner in terms of alleviating risk and creating jobs efficiently. To attract private investments, countries need to have the right policies and incentives in place.

What are the key strategic areas that investments should be focused on today?

There are several important areas, but I will focus on the most critical. The number one priority is connectivity; I think physical and digital connectivity across the country are essential, as they facilitate trade in and out of Romania. Physical infrastructure is as important as digital infrastructure for the country. Second, of course, is the climate and the green transition. In terms of energy, Romania is a little bit different from its neighbours. But the one thing that the covid pandemic taught us was that economic and energy resilience were critical. At the end of the day, diversification is important as well. Resilience will come along with the green transition. So, we need to reinforce the strategic position that Romania finds itself in and, of course, support nearshoring. I was based in Asia for 10 years and I saw the shift in supply chains, so I know that nearshoring is key.

What investments has IFC made in the green transition?

The green transition is a strategic priority for us in Romania. We’ve marked a lot of firsts here so far, including the first blue bond in the EEC with Banca Transilvania, valued at EUR 100 million, the first sustainability bond with Raiffeisen Bank, and the first loan to a consumer finance company to create a portfolio of green bonds. All were dedicated to sustainability. In the last year, 75 percent of our investments have been green, out of total IFC investments that came close to EUR 460 million. There are plenty of opportunities and as people become increasingly aware of them, there will be more green projects to invest in. As the return on investment becomes clear, we’ll start to see conventional financing coming in and taking over.

With support from the government, Romania had a period when it managed to start a lot of green energy projects, most of which were wind farms. Do you think the government should find new ways to financially support these types of projects?

I wouldn’t want to comment on the details of the industry and the legislation in Romania, but what I can talk about is what I have seen globally. First, the cost of installing renewable energy projects has come down significantly over time. Second, these projects didn’t necessarily receive subsidies from the government but were partnerships in which the authorities provided the land or other non-financial components. There may have been some subsidies in the beginning, but things eventually changed.