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.
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.Expand to read more
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.Expand to read more
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.Expand to read more
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.Expand to read more
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.Expand to read more
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.Expand to read more
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.
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
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.
Improving quality to drive growth in Turkmenistan
With support from the EBRD Early Transition Countries Fund, we provided Taze Ay with the finance and advice to spur their growth.
Established by the Orazov brothers in 2005, Taze Ay has expanded rapidly, becoming one of the leading producers of sausages and pastry products in Turkmenistan. With this rapid growth, the company knew they needed to put the proper controls in place to ensure their strategic future. This was a daunting task, particularly when the company had monthly growth of as much as 10%, amidst an unpredictable business environment.
We connected Taze Ay with an expert in meat processing with experience in the Netherlands, Georgia and Saudi Arabia. Together with a specialist on product optimisation, this advisory support helped the company to develop a long-term business plan, budget and new recipes, as well as to design an organisational structure, and set the basis for quality standards.
The advisory project complemented the EBRD’s financing relationship with the company. With the support from the International Cooperation and Development Fund (TaiwanICDF), the EBRD signed a loan of US$ 800,000 to finance increased production capacity.
Overall, this advisory and financing support has helped the company increase its sales volume by 400% and increase market share.
Magnifying management efficiency in Mongolia
Erdembileg Khurelbaatar started as an assistant at a local furniture manufacturer in 1995. Here, he came up with the idea of painting the old, unsold tables in the warehouse – an idea that catapulted him into the role of designer. In 1998, he started his own workshop which in 2005 became his current company, Render LLC.
Render is well-known in the market and now also covers interior and exterior design and construction. The company employs over 70 people, of which 25 are engineers and designers. But to be able to ensure consistent high quality, Render’s management realised that they needed a clearer and more strategic picture of the company’s development.
With support from the EU and the EBRD Shareholder Special Fund, we helped Render to work with local consultants in two different areas: defining strategic objectives and business process re-engineering. The consultants defined the company’s short- and long-term strategic objectives and financial projections and mapped management and business processes, enabling better decision-making and improved business performance.
Within a year, annual turnover rose by 313%. With well-defined objectives, a clear company structure, organised information flow and new technology, Render is ready for their next big idea.