Most small and medium-sized enterprises (SMEs) produce mainly for domestic markets. And, while the SME sector can be well-suited to international trade, smaller businesses often face barriers to reaching international markets.
By making SMEs more competitive and export-ready, we strengthen their capacity to trade, open them up to new markets and contribute to economic diversification.
In order to do this, the EBRD provides access to trade finance tools and financing that enable SMEs to align with international standards. We also help small businesses obtain the right know-how to introduce international quality, phytosanitary, safety and ecological standards, and adapt their products and approach to international markets. And we help improve their management capacity, corporate governance, export marketing and financial transparency. A fifth of the advisory projects we evaluated in 2016 brought export growth, with these 354 enterprises increasing their exports by a combined total of €197 million.
Readying SMEs for stronger trade with the EU
The EBRD is preparing SMEs for the opportunities offered by the Deep and Comprehensive Free Trade Area (DCFTA) between the European Union and Georgia, Moldova and Ukraine. In a joint programme with the EU, we are supporting SMEs in these three countries. The programme provides financing through local partner financial institutions, supported by grants, for SMEs to invest in new technologies or processes and adapt to international standards. It is also helping businesses access the right know-how to improve their internal operations or seek new market opportunities.Expand to read more
In 2016, we provided the first loans to partner banks under the programme. A US$ 25 million (€23 million) facility was signed with Bank of Georgia and €5 million was signed with Mobiasbanca – Group Société Générale in Moldova. And across all three countries, almost 70 firms benefited from business advice to help them introduce new standards or explore EU markets.
In addition, we are lending to SMEs directly to support DCFTA-related investments. This financing is mainly in local currency and with longer-than-average tenors, neither of which are widely available to SMEs in these markets. In 2016, three direct investments were made under the programme, providing €13.2 million in finance.
Increasing export readiness in Central Asia
In 2016, we successfully concluded a five-year programme assisting SMEs in Kazakhstan, the Kyrgyz Republic and Tajikistan to improve their export-readiness and diversify their trade.Expand to read more
Whether they were already exporting and needed to strengthen their position, or were starting export activity, business advice from international industry advisers or local consultants helped them take the next step. As part of this programme, 355 advisory projects were undertaken. There were also numerous activities to strengthen export capacity, including training, seminars and sector events.
Trade Ready: promoting access to trade finance and advice for SMEs
In 2016, we launched Trade Ready, helping SMEs unleash their trade potential. It provides wide-ranging advice to make small businesses more competitive at home and abroad. Trade Ready also offers training in trade finance instruments and features networking opportunities that can support more effective export-import activities. With these tools, SMEs are better able to choose appropriate financing options for their international trade.Expand to read more
Trade Ready also works with local partner banks. It helps tailor their trade finance products to the needs of small businesses and market them more effectively to these clients, many of whom consider trade finance too complex and expensive. In 2017, Trade Ready is being rolled out to our first pilot countries, Georgia and Serbia.
Harnessing a partnership for growth in Ukraine
With funding from the European Union, we helped NewTon, a Ukrainian paint producer, to partner with a local supplier of caps for aerosol spray cans, obtaining a new contract that helped them reach the quality required to launch exports to seven new export markets in the European Union.
NewTon is a manufacturer and supplier of aerosol spray paints. The company had a problem with the quality of aerosol can caps from one of their suppliers, which were often a poor fit, causing paint leaks.
Spetztekhostnastka (STO) manufactured high quality plastic injection mouldings for the automotive industry. As both companies were working with the EBRD in Ukraine, we realised the potential for a match. Although STO was not a manufacturer of aerosol caps at the time, it was clear that they had the technical capability.
As a result of this partnership, both companies have achieved significant benefits. With the new quality guarantee behind them, a year of starting the project, NewTon has been able to engage in 7 new export markets in the European Union, as well as reducing operating expenses by 32 per cent and increasing turnover by 60%. STO has increased sales, while at the same time diversifying with a new product line.
New EU markets
Reduction in operating expenses
DCFTA: Supporting renewable energy in northern Georgia
We are teaming up with TBC Bank in Georgia to jointly provide a US$ 14.25 million loan to local Rustavi Group LLC to finance the construction of the Lukhuni 2 HPP, a medium-size hydroelectric power plant on the Lukhuni River in northern Georgia.
The EU is supporting this transaction through a risk-sharing facility, which aims to help businesses to fully benefit from the Deep and Comprehensive Free Trade Area (DCFTA) between the EU and Georgia.
This project also aims to step up the development of the Racha region in northern Georgia, both in terms of energy supply and job creation. During the summer months, Lukhuni 2 HPP will operate fully in the competitive market and will be eligible to export electricity to Turkey. In winter, it will play a key role in providing electricity to the region.
With our financing, the company will be able to implement EU standards in the construction of the plant and introduce more efficient and quality-oriented management practices, thus creating a successful benchmark for the industry.
GWh annual generation capacity
with TBC Bank
New export potential for plastics producer from Tajikistan
With funding from the United States, we helped Star Plast LLC, a leading producer of pipes and other plastic products from Tajikistan, to improve the quality of their products. They also introduced new products and expanded their export operations. As a result, the company could establish a representative office in neighbouring Kyrgyz Republic and increased its sales by 12%.
We put Star Plast in touch with an international advisory team of two experts on marketing and technology. The advisers focused on best practices in accessing external markets and in developing new products, helping the company to assess export potential of neighbouring markets in particular such as Kazakhstan, Kyrgyz Republic, Uzbekistan and Afghanistan.
For the most prominent markets, the advisers built an action plan, revising Star Plast’s sales and export strategy, training staff and devising new products based on the needs of these markets.
We also helped the company visit China Plast 2016, a famous biannual industry expo that enabled Star Plast’s management to network with suppliers of raw materials and modern machinery, share experiences and build business links in the region.