Supporting the development of small and medium-sized enterprises (SMEs) is at the heart of the EBRD’s transition mandate and business model. Donor funding and engagement is vital to delivering sustainable impact on the SME sector in the countries where we work. It enables us to provide the right-know how alongside financing, and to operate in markets and with segments where otherwise we would not be able to provide support.
The Small Business Impact Fund (SBIF) was launched in May 2015 as a primary way to mobilise donor funding and cooperation for our SME work under the Small Business Initiative, whether for financing, advisory or policy dialogue activities. By pooling donor resources under one umbrella, the SBIF is an effective, efficient and flexible instrument that allows for a more targeted allocation of resources and maximises the impact of individual contributions.
Last year, the SBIF has doubled its size, reaching over €21 million of donor support for SME development programmes across our countries of operations. The donors now include Italy, Japan, Korea, Luxembourg, Sweden, Switzerland, the TaiwanBusiness-EBRD Technical Cooperation Fund and the USA.
With these generous contributions, we have been able to design a number of innovative and fully operational programmes that bring to the market a range of instruments and activities. The contributions cover a wide range of regions and programmes, including:
- Finance and Advice for Small Businesses in Tajikistan and Kyrgyz Republic (2017), which combines targeted investment support, advisory services and training in key skills with policy dialogue efforts in the two countries.
- Finance for Small and Medium Businesses in Ukraine (2016), which extends a unique guarantee facility to SMEs in Ukraine by encouraging commercial banks to restart lending to SMEs and to also support EBRD financing in the country by sharing in the risk of these transactions.
- Support for the expansion of the Risk Sharing Framework (RSF) and other risk sharing products for SMEs (2016), which provides the technical cooperation underpinning skills transfer to partner banks under the Risk Sharing Framework. This includes the areas of risk assessment and financial modelling, the setting of standards for corporate governance and business conduct for local companies.
- Support to SME development under the SBI in Turkey (2016), which seeks to expand the potential for lending to SMEs in Turkey through support for pre-investment legal and financial preparation and post-investment advisory support.
- Blue Ribbon in Croatia (2016), which extends the Blue Ribbon programme to Croatia, supporting a longer-term partnership with leading SMEs in the country through advisory and financing assistance.
- Eastern Partnership Women in Business Programme (2017), which helps improve SMEs access to finance in Armenia, Azerbaijan and Belarus through dedicated credit lines to local financial institutions for on-lending to women-led businesses and a first loss risk cover on a portfolio of such loans.
- Advice for Small Businesses (ASB) in Kosovo (2017), which aims at strengthening the role of micro, small and medium enterprises (MSMEs) in the economy by enhancing their competitiveness and productivity in Kosovo across a broad range of sectors through a combination of advisory services and skill training.
- Advice for Small Businesses (ASB) in Azerbaijan (2017), which enables the continued, successful provision of advisory services to SMEs via local consultants and international advisors as well as a range of activities intended to embed knowledge and skills more widely within the consultancy market and the SME sector in Azerbaijan.
- Advice for Small Businesses (ASB) in Uzbekistan (2017), the first activity launched in Uzbekistan by the EBRD in the context of its re-engagement following a decade-long hold of operations in the country. The programme deploys SME advisory activities in a broad range of sectors to strengthen the SME role in the economy through enhancing their competitiveness and innovation.
- Finance for Small and Medium Businesses in the Caucasus (2018), which aims to extend much needed access to finance to SMEs in Georgia, Armenia and Azerbaijan through the Risk Sharing Framework (RSF). This support will provide First Loss Risk Cover to enable partner financial institutions to expand their SME portfolios by both reaching more underserved SMEs as well as providing longer and better financing terms, helping SMEs grow.
- Capacity development along horticultural value chains (2018), which aims to identify opportunities and potential for future investments in the horticultural sector across Georgia, Moldova, Tajikistan and Uzbekistan, while supporting the capacities of SME producers across the identified value chains, including growing nuts, fruits and vegetables.
Helping a Kyrgyz milk products producer gain international certification
With funding from Switzerland, we helped Ak-Jalga, a women-led milk processing company, to introduce a food safety management system. By meeting the requirements of the international standard ISO 22000:2005, the company was able to increase exports and boost domestic and international sales.
Established in 1994 in Issyk-Kul in eastern Kyrgyz Republic, Ak-Jalga became one of the leading milk products manufacturers in the area. Ak-Jalga had a small part of its products exported to Kazakhstan but these sales were irregular. However, Ak-Jalga’s management realised that to grow further they needed to expand internationally; to do that, they needed to show compliance with internationally recognised food safety and hygiene standards.
With our assistance, Ak-Jalga worked with a local quality management consultant who developed a food safety and monitoring system, trained Ak-Jalga staff and facilitated communication with the certification company from the Czech Republic. The new system cut production flaws by 20%, including a new strategy towards the milk producers that increased quality.
With this in place, the company grew its client base and increased exports to neighbouring markets of Kazakhstan and Russia – seeing turnover growth of 34% within a year of the project.
In the words of Ak-Jalga’s CEO, Zhuzumalieva Kuluipa: “Thanks to EBRD’s support we are now capable of making world-class cheese!”
Extending the Blue Ribbon programme to Croatia
With support from the Small Business Impact Fund (SBIF), we launched a pilot of the Blue Ribbon programme in Croatia, expanding the reach of this new integrated programme.
The Blue Ribbon programme seeks to provide longer term growth support for dynamic SMEs that are leaders in their country and in their region, with strong demonstration effects in the private sector. Blue Ribbon offers a combination of the Bank’s advisory and financing to this carefully identified and selected group of SMEs over a five year relationship, helping its clients to reach their fullest potential.
Two promising local SMEs have already been identified under the pilot: Rasco, a road maintenance equipment producer and Gumiimpex, a producer of rubber products. Having met the rigorous programme criteria, both companies are now deep in discussions to develop a tailored suite of EBRD advisory and financing solutions relevant to their respective competitiveness and growth challenges. For Rasco, a focus on introducing lean manufacturing across its production lines will be front and centre, while for Gumiipex, improvements in its corporate governance will be a key priority.
companies in Croatia
Cutting emissions in Ukraine
The Khask Group is a Ukrainian manufacturer of flexible plastic packaging materials. As part of our portfolio risk sharing approach with a local bank, possible thanks to donor funding from the United States, we provided a €1.4 million loan to the company that enabled them to reduce their greenhouse gas emissions.
With the loan, Khask purchased a solvent recuperation system which, along with their other energy efficiency measures, will help the company save up to 350,000 m3 of natural gas per year and avoid annual emissions equivalent to up to 2,900 tonnes of CO2.
To help maximise the impact of the project, we also helped the company to work with an international adviser, who looked in particular at their potential to move into new markets and increase exports. And we assisted the company to receive an energy audit that formed the basis of their investment, itself supported by a grant. All of this was supported by funding from a wide range of donors.
Khask is now more energy efficient and greener!