The Albanian Rula brothers contributed, quite literally, to building their country. Their metal infrastructure products are used in tunnels, dams, sports arenas and cinemas all over Albania.
Thanks to their drive, the brothers turned their small company, Europa Construction, into an industry leader that currently employs 48 people. Business advice funded by the Netherlands and Luxembourg through the EBRD contributed in part to this success. It helped them implement an appropriate ISO certification and develop a proper business plan. The Rulas now serve as a great example of successful entrepreneurs helping to build a stronger, more competitive economy.
Our ability to support small and medium-sized enterprises (SMEs) such as Europa Construction depends largely on our partnerships with donors. This is particularly important in terms of developing innovative instruments for financing and technical assistance.
Supporting SMEs has been a significant focus of EBRD work over the past 25 years. To date, we have helped more than 18,000 small businesses to access advice, and each year we invest approximately €1.5 billion to support over 200,000 small firms. In 2015, the total donor contribution to SME-related activities reached over €100 million.
Small Business Initiative
Given the importance of the SME sector, in 2014 the EBRD launched the Small Business Initiative (SBI) to maximise our impact and generate more funds for investments, technical assistance and policy dialogue in this vital area.
As part of our efforts in 2015 to increase coordination and deployment of donor-funded activities we introduced the multi-donor Small Business Impact Fund and the Small Business Impact Network. The Network is a new consultative platform that includes donors contributing to SBI work.
The largest donor to SBI activities in 2015 was the European Union. Other important contributions came from Kazakhstan, Luxembourg, the EBRD Shareholder Special Fund, the Early Transition Countries (ETC) Fund, BG International (Kazakhstan) and Tengizchevroil.
Business development: advisory services and access to finance
Connecting SMEs to local consultants and international experts for business advice has been an important area of our work. The EBRD carried out over 1,900 such projects in 2015 alone. Between 2013 and 2015, 76 per cent of enterprises surveyed increased turnover in the year following the projects, and 58 per cent increased their staff numbers, creating over 22,000 jobs.
Through the SBI and donor support, we also tackle what SMEs around our region identify as a major hindrance to their growth: access to finance. The SME sector is riskier than others and therefore local financial institutions are often unable to cater for such clients. From 2013 to 2015, 79 SMEs secured direct finance from the EBRD for a total value of €430 million, as a result of cooperation with partner financial institutions, and we mobilised 27 credit lines for SMEs.
With the donor-supported Early Transition Countries (ETCs) Local Currency Programme we make loans available to SMEs in local currency, thus decreasing their exposure to the risk of exchange rate fluctuations.
For example, Mongolian automotive venture Tavan Bogd received a loan of 23.4 billion tugrik (€10 million equivalent) to finance the construction of a state-of-the-art Toyota repair, maintenance and sale centre, as well as improve its energy efficiency. Working with the EBRD and donors brought manifold benefits. The local currency loan minimised the company’s risk exposure and the advice on energy-saving technologies, funded by Japan, helped the firm lower electricity consumption by 17 per cent.
Women’s entrepreneurship driving economic growth
In the SME sector, the EBRD also promotes female entrepreneurship with its Women in Business programme, currently active in 16 countries. The programme helps businesswomen access finance via local partner banks and receive the advice they need to grow their enterprises. They also benefit from training in key entrepreneurial skills, mentoring and networking opportunities.
For example, in 2015 the EBRD signed its first credit line in Kazakhstan for 3.71 billion tenge (approximately US$ 20 million) with Bank CenterCredit for on-lending to women-led SMEs. The government of Kazakhstan is the project donor, having provided US$ 8.2 million to support the risk-sharing and advisory aspects of the programme.
Strengthening SME performance through tailored finance and business advice is an important part of our work. Businesses like Europa Construction create great value for their economies. They enhance the competitiveness of the sector, create jobs and provide a strong demonstration effect that promotes the growth of the wider economy, a goal that the EBRD, donors and entrepreneurs all share.