SMEs play an important role in the economies of south-eastern Europe, contributing more to employment and GDP than the EU average. However, in some countries they face ongoing difficulties in accessing finance. Small businesses in Bulgaria, Croatia, Cyprus and Greece are hit particularly hard by credit constraints.
In terms of business skills and standards, the gap with EU averages is closing but there is still some distance to cover. For instance, although financial literacy (a proxy for investment readiness) in the region is approaching the EU average of 55 per cent of the population, SMEs would also benefit from greater ease of doing business. The results of the EBRD-World Bank Business Environment and Enterprise Performance Survey suggest that many small firms perceive competition from the informal sector to be a burden, along with corruption.
Difficulty in obtaining finance is also an important issue for SMEs in Russia. Small firms in the country have cited this as the top obstacle they face to doing business, and many suffer from credit constraints. Meanwhile, their ability to extend their market reach is often limited by a lack of international certification. Only around 10 per cent of SMEs have the necessary certification – one of the lowest levels in the wider EBRD region.
 EBRD-World Bank Business Environment and Enterprise Performance Survey.
Tailoring finance to promote leadership and growth
In 2016, we provided €215 million through partner financial institutions and signed 4 direct financing deals with SME clients, for a combined finance value of €17.4 million to these countries.Expand to read more
The EBRD provides customised finance directly to fast-growing SMEs. We believe these businesses have great potential to drive employment, innovation and growth. In addition to tailoring this finance to their needs, we help strengthen the firms as they implement the investments, by promoting good corporate governance, financial management and other standards that help these enterprises to stand out.
During 2016 we also invested €56 million in two private equity funds covering central and eastern Europe to bolster the regional private-equity industry, which was strongly affected by the financial crisis. And in our first investment of its kind in Greece we committed €10 million to a mezzanine fund.
We are also enabling SMEs to access business advice in Croatia, Cyprus, Romania and Russia. The Bank works together with local consultants and international advisers on projects in strategy, financial management, quality management, international certification and other areas that help small firms improve their performance, become more competitive and grow.Expand to read more
In 2016, we undertook a total of 279 advisory projects across these four countries, with 152 of the assignments in Russia. In these relatively advanced consultancy markets, we work to promote more sophisticated advisory services, for example in energy and resource efficiency, export promotion and financial enhancement, while also training local consultants to build their skills in these fields.
2016 was a particularly important year for Cyprus, where we began SME activities in the Turkish Cypriot community and have undertaken 39 projects with local consultants across the country. We operate in both parts of the island, ensuring an inclusive approach to our services.
Promoting women’s entrepreneurship in Croatia
In Croatia, our Women in Business programme is helping businesswomen access finance and know-how to expand their enterprises.Expand to read more
Since launching the programme in 2015 we have provided business advisory support to 54 women-led SMEs in many sectors, giving these enterprises a competitive edge and a chance to thrive. We have also made available €13.2 million in credit lines to three local partner banks under the programme, alongside providing women entrepreneurs with mentoring, our online diagnostic tool Business Lens, training and networking opportunities. In total, we have reached more than 1,400 women since the programme began.
A partnership for growth: Blue Ribbon in Croatia
Targeting a group of high-growth SMEs, we have launched a pilot of our Blue Ribbon programme in Croatia.Expand to read more
This programme engages SMEs for a five-year partnership, tailoring specific advisory and financing products to help them reach their full growth potential and create a lasting demonstration effect on the ground. Started in late 2016, the programme already has its first members.
Training local consultants to better serve SMEs
Our Grow Your Consulting Business suite of training courses strengthens the skills of local consultants in essential skills – including how to market and raise awareness of the importance of external advice for SMEs.
One such course was in Rostov-on-Don in southern Russia, providing the participants over four days with a range of tools for marketing their services to potential clients, particularly SMEs.
The participants also had a unique opportunity: as part of the course, the participating consultants had to advertise their services to real SMEs, stretching their skills to put the course materials to work. They had to determine the businesses’ priority areas for advice, convince them to undertake a project and negotiate effective terms.
A management consultant who runs a small firm based in Rostov, Alexander Perminov was one of the participants. He so impressed the business owner playing the part of potential client that the business owner has since conducted a consulting project, developing a long-term business strategy for their business! He then recommended Mr Perminov to his business partners, resulting in three projects in total.
of respondents have used the tools, techniques and skills
Establishing a dedicated SME growth market in Croatia
Businesses in our region continue to rely heavily on traditional debt financing, at the cost of alternatives that are more widely available elsewhere. We promote the development of complementary financing sources for SMEs, including financing via listing or the issuance of corporate bonds. However, equity markets in many of the EBRD’s countries of operations remain underdeveloped and very few offer dedicated listing opportunities for SMEs to access capital markets.
With support of the TaiwanBusiness-EBRD Technical Cooperation Fund, we are supporting the Zagreb Stock Exchange (ZSE) to establish a multi-level structure within the exchange, which will enable companies of all sizes and at various stages of development to access equity and debt markets. With our help, ZSE is exploring creating a regional SME growth market at the ZSE, which would offer dedicated listing support to mature SMEs.
In 2017, the Bank will further seek to extend its advisory services to mature SMEs that are preparing for an initial public offering at the ZSE standard market, providing them with the right know how to maximise performance and value.
listing for SMEs
to equity and debt markets
Building brand in Romania
With funding from Austria, we helped Depaco, a roofing systems producer from Romania, to strengthen the brand of their products and a new brand for their latest roof innovation – the best-in-class Wetterbest Gladiator, increasing their client base by 43%.
In order to ensure a successful launch for the new Wetterbest Gladiator, Depaco needed expert marketing advice. They were also having difficulties handling their existing brand portfolio and needed to properly define and differentiate their main brands.
We connected Depaco to a local marketing consultant specialising in branding. The consultant analysed the company’s overall and individual product brand positioning, developed an identity for three main product groups and created a brand for the new product in line with the company’s brand identity.
One year after completing the project and with a strong brand direction, Wetterbest has national recognition and customer loyalty has increased. The new identity books optimised promotion and communications, helping the company stand out among its competitors.
We subsequently undertook a second project with the company, using the expertise of an international adviser to optimise operations and help the company launch exporting activities. This value was recognised when in 2016 Depaco successfully sold a 50% stake to a strategic investor.