The European Bank for Reconstruction and Development (EBRD) has created a €1bn special fund to support economic development in emerging Arab democracies.

The bank is planning to extend its geographical remit to the Middle East and North Africa following recent political changes in the region, and expects to set aside up to €2.5bn for investments in the area once the expansion is ratified.

The EBRD aims to help the growth of the private sector and small and medium enterprises, as well as stabilise financial sectors and improve energy supplies in Egypt, Morocco, Tunisia and Jordan. It has appointed a managing director for the region and opened offices in all four countries ahead of the first projects, which are likely to be concluded around September 2012.

“The EBRD was asked to apply its 20 years of experience in supporting economic development in central and eastern Europe and the former Soviet Union to another region where people are again demanding a more stable economic future,” the bank says, pointing out that the expansion does not mean it will detract from investments in its current markets.

The London-based bank invested a total of €9.1bn in various projects across Europe in 2011. Earlier this year, it helped Turkish and Kazakh agribusinesses with loans of US$65mn and US$45mn respectively, and invested €135mn in a Turkish wind power plant.