Economic context

Access to finance is one of the major obstacles to doing business in many EBRD countries of operations. Over half of SMEs in Kazakhstan, the Kyrgyz Republic and Tajikistan that reported needing a loan have been unable to obtain one. Moreover, non-bank financial instruments such as leasing or factoring tend to be underdeveloped in the region. This picture coincides with low levels of financial literacy averaging around 30 per cent of the population. Accounting standards are also low, which further constrains access to finance.

In addition to better financial management, improved business standards could help companies become more competitive and reach new markets. However, the level of international certification remains low among small firms, at around 15 per cent. The business environment can also be challenging, including the administrative burdens around paying taxes and trading goods.

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Promoting financial inclusion and tailor-made finance

In 2017, we provided €130 million through partner financial institutions and signed 16 direct financing deals with SME clients, for a combined finance value of €46.5 million. We support national and regional leaders from the SME sector that have potential for robust growth and innovation, especially where these companies cannot find financing tailored to their needs in their local capital markets.

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Through our indirect, direct and co-financing, small businesses can access the finance they need. Our work includes a strong element of financial inclusion: by working with microfinance institutions, particularly in Tajikistan and the Kyrgyz Republic, we improve the ability of micro enterprises to obtain finance.

In particular, under the EU’s Investment Facility for Central Asia (IFCA), we provide indirect and direct financing supported by credit enhancement mechanisms and technical assistance to SMEs. This helps them prepare for investment and enables us to provide the longer-term financing they require. Under this Facility, the EBRD has provided more than €72 million in financing directly to 48 SMEs in the Kyrgyz Republic, Tajikistan and Turkmenistan, as well as delivering 37 business advice projects in Turkmenistan. In 2017, based on the successful implementation of the programme, a second phase of funding was approved to extend financing and advisory support to the region.

Our extensive network of regional offices helps us reach SMEs beyond major cities. Moreover, under the auspices of the Investment Councils in the Kyrgyz Republic and Tajikistan, for which we provides assistance to the secretariats, we can engage clients and local stakeholders to help address the issues they face.

Improving access to local currency financing

Access to finance in local currency protects SMEs from the risk of foreign exchange fluctuations.

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In January 2016, we launched the SME Local Currency Programme, building on our longstanding experience in Central Asia, Eastern Europe and the Caucasus. In 2017, the Programme signed 35 local currency operations equivalent to US$ 114.2 million (€92.9 million). Of these, 51 per cent were in Central Asia. As part of the programme we also work with governments to improve local capital markets.

Helping SMEs get the know-how to grow their businesses

We enable SMEs to obtain business advice across all countries in the region. Working with local consultants and international advisers in areas such as strategy, financial management, marketing and quality management, we help SMEs improve their performance, become more competitive and grow.

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In 2017, we undertook a total of 527 advisory projects in Central Asia. An important example was the completion of a five-year programme dedicated to export promotion in Kazakhstan, the Kyrgyz Republic and Tajikistan.

Supporting women and young entrepreneurs in Kazakhstan

The EBRD’s Women in Business programmes promote women’s entrepreneurship, enabling women-led SMEs to access the finance and know-how they need to grow.

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Launched in 2015, our Women in Business programme in Kazakhstan was the first programme of its kind in Central Asia. Through funding from the Small Business Impact Fund (SBIF), we also launched the Women in Business Programme in Tajikistan last year, extending the reach of this innovative and integrated product to a new market in Central Asia.

To date, we have provided €40 million in finance to partner financial institutions for on-lending to women-led SMEs. The programme has also helped over 600 women-led SMEs to access business advice, mentoring, our online diagnostic Business Lens, training and networking opportunities.

Re-engaging with SMEs in Uzbekistan

Following a decade-long hold of EBRD operations in the country, we relaunched our activities in Uzbekistan starting with our advice for small businesses programme with funding from the EBRD Shareholder Special Fund and the Small Business Impact Fund.

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SMEs are playing an increasingly important role in Uzbekistan’s economy. SMEs generate nearly 60 per cent of the country’s GDP (up from less than 30 per cent a few years ago) and provide more than 75 per cent of total jobs. The Bank will also seek to open up potential investments by offering a combination of finance and advice to promising small and medium businesses with an ambition to expand and grow further and become market leaders.

A comprehensive approach to obtaining finance in Mongolia

In Mongolia we continued to implement a programme funded by the EU Asia Investment Facility, dedicated to helping SMEs access finance, improve their competitiveness and contribute to the diversification of the Mongolian economy, which relies heavily on commodities.

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Financing through local partner financial institutions is available under the programme, as well as advisory services to boost financial management and competiveness. In addition, the programme’s policy dialogue activities will help strengthen business membership organisations, as well as working with the government of Mongolia on introducing legislation to support financing options.