Economic context

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.[1]

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.

[1] 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.

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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.

Improving competitiveness

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.

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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.

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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.

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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.