Economic context

SMEs in the southern and eastern Mediterranean (SEMED) region provide around 55 per cent of employment (two-thirds in Egypt and Jordan), contributing around 45 per cent to GDP. This is significantly less than comparable figures in EU economies, where the SME share of GDP averages 60 per cent.

Access to finance is an important issue in the SEMED region. Both Egypt and Jordan show high levels of credit constraints, with more than two-thirds of the smaller firms that need a loan stating that their loan application was rejected or that they were discouraged from applying. In Morocco and Tunisia, over a third of firms report the same problems. Meanwhile, informality and a lack of audited data can often prevent smaller businesses from being perceived as creditworthy by local banks.

Access to skills also matters greatly. Low levels of financial literacy in the region, and the small percentage of companies that have international certification, are constraints on enterprise growth. They are areas where much can be done to boost the SME sector.

Boosting financial inclusion

Small businesses in the SEMED region often face major constraints on growth, such as limited financial literacy, as well as barriers to obtaining finance. Through our large-scale SEMED MSME Financial Inclusion Programme, we provide funding, risk-sharing and technical assistance to partner financial institutions in Egypt, Jordan, Morocco and Tunisia, improving financial inclusion to support SME growth. The first investment under the Programme was signed in 2016, extending 2 million Tunisian dinars to Microcred Tunisie.

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The EBRD also offers access to advisory services and know-how across all four countries to help small businesses become more bankable, through projects in areas such as strategy, financial management, marketing and quality management. In 2016, we undertook 404 advisory projects in the SEMED region. In Tunisia, we have the Programme d’Appui à la Compétitivité des Services (PACS), which is dedicated to strengthening the service sector.

Lastly, we are working with policy-makers and stakeholders on legal and regulatory reform in areas such as leasing and factoring to expand the financing options available to SMEs.

Providing customised financing solutions

In 2016, we provided €174 million for on-lending by partner financial institutions and signed 7 direct financing deals with SME clients in SEMED, for a combined finance value of €66.6 million. For our direct lending and co-financing of SMEs, we identify local and regional market leaders with strong growth prospects and provide financing tailored to their needs.

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The EBRD also helps them prepare to make the most of the investment and put in place the corporate governance and financial management standards that can take their businesses to the next level. And we offer business advice so these clients can build value within their enterprises.

2016 saw the first EBRD investment in a private equity fund focused on Egypt, for €19 million, as well as ongoing support for early-stage businesses through a €9.5 million investment in a venture capital fund dedicated to Egypt.

Access to finance in local currency is also crucial as it protects SMEs from the risk of foreign exchange fluctuations. In January 2016, we launched the SME Local Currency Programme, which makes available local currency lending through local partner financial institutions and directly to businesses. The Programme also works with governments to improve local capital markets. In 2016, we signed a Memorandum of Understanding with the government of Tunisia to introduce the programme there, including a plan for capital market reforms.

Promoting women’s entrepreneurship

In Egypt, our Women in Business programme is assisting women-led SMEs to obtain the know-how and finance they need to grow. Since launching the programme in 2014 we have provided business advice to 96 women-led firms through 124 advisory projects.

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We have also made available a US$ 20 million credit line to the National Bank of Egypt for on-lending to women-led SMEs, as well as offering training, mentoring and networking opportunities that have reached over 500 female entrepreneurs.

The EBRD is working with the Social Fund for Development (SFD) on this programme in Egypt, while strengthening the capacity of the SFD to provide non-financial business development services in support of their national mandate to develop the micro and small enterprises in Egypt.We have also made available a US$ 20 million credit line to the National Bank of Egypt for on-lending to women-led SMEs, as well as offering training, mentoring and networking opportunities that have reached over 500 female entrepreneurs.

The EBRD is working with the Social Fund for Development (SFD) on this programme in Egypt, while strengthening the capacity of the SFD to provide non-financial business development services in support of their national mandate to develop the micro and small enterprises in Egypt.

Supporting enterprises led by refugees

As part of the EBRD’s response to the refugee crisis, we are helping enterprises led by refugees in Jordan to access finance, advice and vocational training.

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We are also supporting entrepreneurs who wish to establish businesses. And we are working with business organisations and non-governmental organisations, enabling them to provide more robust services in their local communities, and building the resilience of the private sector.