Dar es Salaam. Mr Thomas Östros is the Vice President of the European Investment Bank (EIB), the lending arm of the European Union (EU) is in Tanzania for engagements with the government and the private sector.

EIB relations with Tanzania date back to 1977, when they funded road construction, water infrastructure, and energy sustainability.

Mr Östros agreed to sit down with The Chanzo for a brief interview to expound further on his visit to Tanzania and his bank’s plans to strengthen partnerships with the country and the African continent. The following are the excerpts from the interview. Slight editing has been made to enhance readability:

The Chanzo: Mr  Östros, welcome to The Chanzo.

Thomas Östros: Thank you very much, thanks for having me.

The Chanzo: Yeah, thank you. We know you are very busy, but you agreed to sit down with us for this interview. We thank you very much. Is this your first time coming to Tanzania?

Thomas Östros: No, it isn’t. I was here actually in February [2023] at the European Union-Tanzania Business Forum, which started off a very nice cooperation with local banks in Tanzania. 

We signed the cooperation agreements, and now I’m here to follow up on how the money we’re providing to local banks is reaching individual small and medium-sized companies, preferably women-led companies and preferably in the blue economy.

So, that is one of the reasons I’m back now: It’s important to do the signature, but it’s also important to follow up when it comes out in the real economy, in the real society.

The Chanzo: So, you are familiar with the country?

Thomas Östros: A little bit. I wouldn’t exaggerate, but you know, I’m Swedish.

Sweden and Tanzania have a long relationship. So, I have followed Tanzania’s developments since I was a kid, but I’m happy to be here. It’s only the second time.

The Chanzo: What stands out the most for you about Tanzania? I mean, what do you like the most about the country or its people?

Thomas Östros: It’s a fantastic, beautiful country with this ancient connection via the sea to the rest of the world, not only the African continent. [It has] an amazing history [and] amazing people. I would like to come here privately and see a little bit more and have time to travel around, and I will do that for sure. My wife always tells me that we must go, just my wife and I.

The Chanzo: So, have you had the opportunity to travel across the country?

Thomas Östros: No, I haven’t. I was in Zanzibar last year. I will also go to Zanzibar [on July 4], a beautiful part of the country. It is amazing.

The Chanzo: So, in a very layman’s language, what does the European Investment Bank do? I mean, it’s a bank like other banks, right?

Thomas Östros: We are the world’s largest multilateral development bank. That means that we have a rather big balance sheet that can support project lending, and we have excellent financial engineers [and] bankers. 

But we also have in our bank excellent civil engineers, medical doctors, expertise in the environment, and so forth, so that we can evaluate together with partner countries what type of projects would be really good and impactful. So, we have both the balance sheet and the knowledge that we want to share with our partners.

The Chanzo: So, apart from following up on the agreements you signed during the European Union-Tanzania Business Forum, you are also in Tanzania to convince our government to borrow more from your bank and other private sectors – because I know you lend both to public and private sectors?

Thomas Östros: Yes, and we are working on a pipeline in Tanzania, both in the corporate sector, continued small and medium-sized businesses, but also public sector investments, and I am very happy and proud to be able to meet the President of Tanzania on [July 5], but also the President of Zanzibar on [July 4], and visit now companies which we are supporting, because I think we are now about to create a very nice cooperation here.

The Chanzo: So, is it among your activities when you meet these leaders to pitch on behalf of your bank?

Thomas Östros: Yeah. And I will tell and inform the people I meet that we have now reached 10,000 small and medium-sized companies in Tanzania with our support to local banks, 3,000 women-led companies, [and] 900 companies in the blue economy, so we are really starting to have a very nice impact. 

But we are also very happy that one of the long-supported water and sanitation projects in Lake Victoria is about to be finished, so we have reason to celebrate what we have done fully.

The Chanzo: Why would a country like Tanzania, and by extension African countries, all members of the Global South, turn to the European Investment Bank? I mean, what’s your competitive advantage, at least from the perspective of the borrowers?

Thomas Östros: We want to be equal partners in a joint agreement. We want to respect the environment and the social conditions. We want to support good projects that are good for the country. Then, I think we have a common purpose, be it the private sector or public sector in Tanzania, and from us, from the European Union. I think we are a very natural partner, and we should deepen that cooperation.

The Chanzo: There is a perception on the part of many people in this part of the world, I mean in Africa and in the Global South generally, that debt actually does not benefit the borrower but the creditor, so there’s been a conversation that lenders like European Investment Bank attach so many conditionalities to their loans that if you examine them, you find that the loans actually end up benefiting the creditors and not the recipient or the borrower. 

So, for example, some of the conditionality could be that we are supporting this particular project, but everything needed to implement the project must be outsourced from the country where the bank is based, so in this case, for example, everything has to be sourced from the European Union. 

If it’s material to construct a dam or, you know, the constructors themselves, it must be sourced from there. What kind of conditionalities does EIB attach to its loans to countries like Tanzania or African countries in general?

Thomas Östros: I can really understand that perception because actors in this field behave like that. We are not in that business. We are in the business of partnership, and we want to do it on equal footing, which may be our strongest argument. 

Together, with that, we also have very competitive agreements that we can do when it comes to interest rates and duration of the loan. We are also honest brokers. We want to have an honest partnership, and we are not here to take over things; we are here to be partners. Not every country and not every bank acts like this, but that is how we do from the European Union.

The Chanzo: So, the European Investment Bank gives loans without conditions. Is that what you would say?

Thomas Östros: We have strong conditions together with our partners. The environment is very important. Social condition is very important. The sustainability of the project, that the project is a viable long-term project that is good for the country, impactful for people’s lives, and makes it possible for them to get a good job. 

So these are many conditions that we do, but we welcome different suppliers of input. Many European firms are interested, but also other firms are interested in participating. So we are, I think, a good partner in that respect, and we want to be to our African partners.

The Chanzo: You are also coming to Tanzania at a very critical time when there is a growing resentment among the people, not just here in Tanzania but across the region, towards their governments’ borrowing behaviour. We have seen this resentment explode into anti-government protests in Kenya and other parts of the world. You must have seen this resentment. As a lender, how do you interpret those developments?

Thomas Östros: I think we have gone through very difficult times in the global economy, where Africa has been particularly hit. Before COVID, there was a period of access to lending in the private sector. 

You could issue bonds on favourable terms for many African countries. But after COVID and then the brutal Russian invasion of Ukraine and the energy prices and inflation that came from that, the financing condition has changed dramatically for many African countries.

Borrowing from private markets has been very difficult and expensive. All African leaders and officials I meet say the multilateral development banks must step in and support it because otherwise, projects will not be done. 

And I agree—we cannot do everything. We are a big bank, but we cannot do everything. But, we want to select good projects and sound partnerships to develop the economy.

The Chanzo: You are also visiting Tanzania at a very critical moment for your institution, the European Investment Bank. We have read reports of the investigation currently going on of two former bank officials for corruption allegations. Of course, the former president, Werner Hoyer, has denied that.

Also, given his history in the consulting world, there has been opposition to the bank’s choice for Mr Andrew McDowell as head of the bank’s external lending, EIB Global. I was wondering, how do you assess the impact of these developments in your efforts to shore up trust among countries like Tanzania? You are a bank, and you want to be trusted, and then we have these reports coming out of your institution.

Thomas Östros:  The starting point is very strong when it comes to the position of the European Investment Bank, one of the world’s most respected multilateral development banks with very strong management. And if we have incidents like the one you pointed out, too, and there is suspicion, we open our books every time. 

So the investigating agency can see everything. We have absolutely nothing to hide. So, in that respect, we are cooperating with the authorities. And let’s see how that develops. Nobody knows.

We established EIB Global three years ago. That is a branch within EIB dedicated to outside the EU. And it has been received very, very well and strongly. We have certain strengths: water, sanitation, and energy; we’re probably the world’s strongest in financing renewable energy and health. 

Health has become a very important and strong profile for us. We are now working with WHO to roll out investments in the health sector in Africa.

The Chanzo: And you are sure that these reports are not going to impact your reputation as an international financial institution?

Thomas Östros:  Yes, I’m sure because everybody sees that we are an open book when it comes to supporting authorities. So let them do their investigation. We will be as helpful as possible. But our strong standing in the world is not threatened.

The Chanzo: Okay, so you started this conversation by telling us that you are here to follow up on the project signed during the previous EU-Tanzania Business Forum. So, would you mind telling us, and for the benefit of the viewer of this interview, what are some projects that the European Investment Bank is currently funding or financing in Tanzania?

Thomas Östros: Just after this interview, I will visit a hospital here in Dar es Salaam, a hospital with a good reputation directing the activities to low-income people. They are now financed via one of the banks that we finance. They finance, in turn, this hospital. 

This is an example of exactly how we want to work to support primary health care, in this case, small and medium-sized businesses, women-led. Now, 3,000 women-led companies have received financing via our support to local banks. 10,000 SMEs, all in all, have benefited from our support. So, I think, we are doing important things together.

We will also discuss this when we are here and have a closer look. Can we be part of the bus rapid transport system being built in the next phase? We are ready to look at it. Can we also finance that? 

We are going to look at more water projects in different parts of the country to see if we can support them. So, I think we have a pipeline being built up in the private sector, in small and medium-sized businesses, and in the public sector where we can play a role together.

The Chanzo: And so you do that through the Tanzanian government or through private sector actors, like, for example, financing. You mentioned the rapid bus transit and the hospital construction. So, I just want to clearly understand how that is happening. Do you do that through local banks, for example, or through the government?

Thomas Östros:  What is important with the EIB is that we have access to the full portfolio. We can do everything from participating in equity funds that go in with equity to African companies. 

We can support an African corporation directly if it is a strong business. We can support small and medium-sized businesses. Then, we can go via local banks and support public sector investments. So, we have a very broad set of tools that we want to discuss with our Tanzanian counterparts to see how we can optimise them.

The Chanzo: I’m just wondering, how does a borrower, for example, from European Investment Bank, apart from having these projects, apart from having a hospital built, apart from having a working bus rapid transit, what unique benefits does a country get when they borrow from European Investment Bank?

Thomas Östros:  You get the European Union partner that will be engaged with our counterparts in this country to get the best possible project outcome. And we will do it on equal terms, seeing each other as partners in developing the country. So you get, I think, a lot besides the money itself. 

You can also get technical assistance [and] advice from our best experts on how to do a good water sanitation project, a good energy project, or how to see to it that the banks that receive the money actually reach the women who need it because they have a business that needs expansion.

The Chanzo: Mr Östros, thank you very much. I just want to ask you some personal questions. You were the Prime Minister of Sweden, no?

Thomas Östros: I was a minister in Sweden for ten years, in different positions.

The Chanzo: Yes, a minister. And I think your trajectory is slightly different from what we have experienced here in Tanzania, for example, in other African countries where you see someone serving in, you know, technocracy, like, for example, working as a banker, like governor. Then, they went to venture into politics. But to you, It’s the other way around. How is that possible?

Thomas Östros:  I’m an economist. I was very young when I was recruited to become a minister, and was a minister for a long time. And after that, I felt I wanted to use my experience as a minister and an economist. 

I was head of the Swedish Bankers Association, a board member of the International Monetary Fund (IMF) in Washington, and now I’m Vice President of the European Investment Bank. So I think I’ve been… I’m very grateful for that opportunity.

The Chanzo: Yeah. How are the pressures different from being a politician? Are the pressures the same?

Thomas Östros: I’m a policy taker nowadays. I’m not a policymaker, so that’s the difference.

The Chanzo: You are an economist, yes. Do you believe that giving poor people cash improves their chances of getting out of poverty?

Thomas Östros:  I think one of the key things behind every country’s development, also from Sweden, [is credit]. Sweden was Europe’s poorest country in the 1860s, with famine in Sweden. 

What made Sweden one of the richest countries [is a combination of] many things. Education, infrastructure, the labour movement, [and] equality. But also access to credit. A credit system that was not only for the rich but also reaches those weaker in the capital markets. So, this is an important component in development.

The Chanzo: But debt can also be used as a means of control, don’t you think?

Thomas Östros:  Yeah, and you must do it in a sensible way. You’re absolutely right. That is why I think banks like the European Investment Bank can really be good partners in this context.

The Chanzo: Mr Östros, thank you very much. Do you have any final thoughts you want to share with us before we close?

Thomas Östros: I just landed this morning. I look forward to my three days in Tanzania, and I’m especially honoured to meet the President of the Republic [Samia Suluhu Hassan]. I met her before, but this is the first time I meet her here in Tanzania.

The Chanzo: Thank you very much, and I wish you all the best on your visit to Tanzania.

Thomas Östros: Good to see you. Yes, good to see you.

Khalifa Said interviewed Mr Östros. Jackson Noah and Stephen Gimbi oversaw the production of the interview, and Matonyinga Makaro transcribed the conversation.