INTERVIEW: Infrastructure investment to unlock Moldova’s future export potential

INTERVIEW: Infrastructure investment to unlock Moldova’s future export potential
Rehabilitation of the Ciumai-Vulcanesti road section in Moldova was financed by the EBRD. / EBRD
By Clare Nuttall in Yerevan May 28, 2024

Moldova has already oriented its trade towards Western markets, but to further boost its exports investment into infrastructure – from roads and railways to logistics centres – is needed, the European Bank for Reconstruction and Development (EBRD) head of Moldova, Catarina Bjorlin Hansen, said in an interview with bne IntelliNews.

Investments into road and rail infrastructure are already ongoing, with support from the EBRD, the EU and Moldova’s other international partners. This type of investment is essential to open up new markets for Moldova’s large agriculture sector in particular, as well as encouraging export-oriented investment in sectors from IT to automotive. 

After Russia’s invasion of Ukraine and weaponising of its energy supplies to Moldova, the EBRD and other international partners stepped in to support the energy sector in particular as the country pivoted towards European suppliers. 

However, international financial institutions (IFIs) are also financing investments into infrastructure and other areas to support Moldova’s longer-term development. The EBRD, for example, announced earlier this year it is lending €150mn for road upgrades in Moldova and is also working with Moldovan Railways to develop the rail network. 

“Since Russia’s war in Ukraine started, the needs of Moldova in terms of support from international organisations were really magnified. We, as well as all the other IFIs, stepped up and tried to meet these needs as quickly as possible,” Hansen told bne IntelliNews during the EBRD annual meeting in Yerevan earlier this month. 

“We would love to continue this level of investment. Rather than continuing emergency support, now is the time to plan projects. Moldova is large for us in terms of operations; we have been investing several hundred million euros per year and will continue to do so.” 

Shift to the West

Since Moldova signed its Association Agreement and Deep and Comprehensive Free Trade Area (DCFTA) agreement with the EU, the country's trade has shifted westwards. 

"A few years back 70% of Moldova’s trade was with Russia and Ukraine. When that was no longer possible, connections to Europe became acutely needed — both rail and road," says Hansen.

Beyond the broader infrastructure investments, there is a need for investment specific to the agriculture sector. “55% of Moldova’s population work in agriculture. Produce needs to be shipped to the EU now and roads need to function because if there are delays this produce will go bad. It’s very important that the logistics work,” she adds. 

"Cold storage, warehouses and logistics centres would be great investments to enhance the competitiveness of the Moldovan agriculture sector.” 

Moldovan producers already have some advantages. “Moldova has very clean production. Its juices and jams have less sugar than in many other countries. They are good products and I would like to see them in the EU,” said Hansen.  

However, the small size of many agricultural producers and processors can be an issue. “There is possibly one impediment as many of these companies are SMEs. It may be difficult for an SME to place their product in a large European supermarket,” according to Hansen. “We try to encourage SMEs to look at smaller European markets, where there is a better match between production capacity and demand.”

Food and agriculture is part of the story, but Moldova is also developing other sectors such as ICT and automotive components. 

“Moldova is already taking advantage of the nearshoring and friendshoring trends. Just the fact you can drive from Moldova to anywhere in the EU is a huge incentive,” says Hansen. “There are lots of foreign investors in business process outsourcing that produce automobile parts in Moldova. We would love to see this grow.”