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. 22 per cent of the advisory projects we evaluated in 2017 brought export growth, with these 420+ enterprises increasing their exports by a combined total of €219 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
The programme provides a total of almost €1.1 billion of financing through local partner financial institutions, supported by over €58 million in grants, for SMEs to invest in new technologies or processes and adapt to international standards. Through EU4Business-EBRD Credit line under the programme, over 100 Georgian companies have received €60 million in financing so far, with on-lending also available in Moldova and due to launch in Ukraine. Georgian SMEs have used this financing for a wide range of investments, from acquiring machinery to complex programmes where companies had the opportunity to draw on free technical assistance provided by an international team of experts. Half of the projects financed in Georgia are with companies located in regions outside the capital, Tbilisi. Further, across all three countries, more than 190 firms benefited from business advice to help them improve their internal operations or seek new market opportunities.
We are also lending to SMEs directly or through co-financing to support DCFTA-related investments. This financing allows for better terms than available to SMEs in these markets, including longer-than-average tenors. Since the start of the EU-backed programme in 2015, the EBRD has extended €19.8 million of finance to seven companies in Georgia, Moldova and Ukraine.
Trade Ready: a programme promoting access to trade finance and advice for SMEs
In 2017, we rolled out Trade Ready to our first pilot countries, Georgia and Serbia. Trade Ready is a programme to help SMEs unleash their trade potential. It provides wide-ranging advice to make small businesses more competitive at home and abroad. The programme 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 2018, Trade Ready is being rolled out to Kyrgyz Republic.
Improving security standards to export in Armenia
With support from the European Union under the EU4Business Initiative, we helped VOLO LLC, an IT consulting company in Armenia specialised in outsourced software services and IT business solutions, to introduce Security Management Systems, resulting in improved security policies and control, as well as compliance with international standards.
VOLO LLC was established in Armenia in 2006 as an IT consulting company. Its speciality is outsourced software services and IT business solutions to companies from around the world, designed for secure, scalable and reliable business systems. Innovative approaches, wide range of services, and customised solutions enabled VOLO LLC to rapidly expand its market further – primarily into the USA and Canada. As much as 87% of their output is exported.
In order to expand to the EU market, VOLO LLC needed to comply with international information security standards set by ISO. We connected the company with a local consultant specialised in Quality Management and ISO certification who helped VOLO LLC in a number of areas including introducing a security management system and defining an internal audit process.
As a result, the company multiplied its export volume and turnover, all the while increasing its productivity by 44%. Based on the positive experience with the local consultant, VOLO LLC expressed interest in International Advisory with the EBRD. The project has already started with specific focus on HR management, exports, marketing strategy, and operations.
increase in turnover
increase in exports
increase in productivity
Helping a dried fruit producer in Northern Tajikistan improve production and shipment along international standards and export to new markets
In December 2017 the EBRD signed a US$ 225,000 loan under the Risk Sharing Framework (RSF) to Golden Fruit, a dried fruit producer based in Isfara, located in northern Tajikistan. The four-year loan provided on a 50/50 basis with Bank Eskhata is to finance the acquisition of new equipment to test raw fruit at delivery during production, before storage and before shipping to comply with international requirements (Hazard Analysis and Critical Control Points, HACCP).
The SME was initially identified as a potential EBRD client back in 2016. With funding from the Small Business Impact Fund’s (SBIF) Finance and Advice Programme in Kyrgyz Republic and Tajikistan, the EBRD then linked Golden Fruit through its advisory services to an international adviser on business development and marketing. The consultant helped the company to start exporting dried fruits not only to traditional markets, e.g. Kazakhstan, but also as far as Japan.
Golden Fruit could obtain the loan after the RSF consultant, hired through the SBIF funding to work with Eskhata Bank, helped the bank’s credit specialists to adequately assess credit risks and build realistic financial forecasts for the company’s future cash flow. In preparing for financing, Golden Fruit could also get support to objectively realise its financial position including on key financial concepts such as business planning and cash flow assessment.
Helping a Syrian chocolate producer expand its market reach
With funding from the European Union, we helped Parfai, a Syrian chocolate and Arabic sweets manufacturer increase turnover by more than 75% by improving food safety and hygiene procedures, bringing accounting and financial reporting to international standards, and expanding the businesses.
Parfai is a chocolate and Arabic sweets manufacturer established in 2009. The company’s main production facility is a 350m2 factory located in Amman, with one branch directly selling to customers.
The factory itself operates several machines managed by 15 workers to produce 45 different products in the following categories: chocolate, baklava, nougat, mamoul, and dried fruits.
The management at Parfai wanted to improve the current safety and quality standards of its products in order to become a more trusted and attractive supplier to its current markets and to enter new markets for the future expansion. We connected Parfai with a local consultant specialised in food safety and marketing to help with the preparation and implementation of ISO 22000 certification, including staff trainings in hygiene and internal auditing.
The certification helped Parfai’s management expand as planned: there are now new branches in Jordan, Saudi Arabia, and Iraq, with more due to open in the near future. Since the project, turnover increased by 75%, export volumes doubled and the number of employees grew by 32%. Parfai is right on track to scale up production of its delightful confectionary even more.
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.