In Turkey, access to finance for SMEs has improved over the last five years, even where the current economic outlook has introduced some uncertainty. The most recent Business Environment and Enterprise Performance Survey, implemented by the EBRD in partnership with the World Bank, showed that Turkish firms had the lowest level of credit constraints in the EBRD region. However, access to finance in less-developed regions of Turkey – where 70 per cent of the population lives – may be more constrained, as only 50 per cent of bank branches are located outside the three main cities.
A high number of small firms – over 40 per cent – obtain international certification. But with regards to innovation and financial management there is room for improvement. Only 5 per cent of SMEs report being engaged in product innovation in Turkey less than half the average for south-eastern Europe. Yet, among those Turkish SMEs that do innovate, a higher percentage of firms introduce products or processes that are new to the country or to international markets.
Better skills in financial and business management could also help the development of SMEs. Currently just under a quarter of the adult population is financially literate – a level below those of Turkey’s western neighbours and below the average for the EBRD region.
Providing tailor-made finance
Between 2011 and 2016, we provided around €100 million in direct financing to SME clients in Turkey (via both debt and equity investments) and provided €173 million through partner financial institutions in 2016 alone. We offer customised finance directly to dynamic, fast-growing SMEs in regions that are underserved by the financial sector – businesses that we believe have great potential to drive employment, innovation and growth.Expand to read more
In addition to tailoring this finance to their needs, we help strengthen companies as they implement the investment through our advisory work. Our assistance helps promote good corporate governance, financial management and other standards that help these enterprises to stand out.
We also enable SMEs to access business advice, with a focus on underdeveloped areas in southern and eastern Turkey. Firms work with local consultants and international advisers in areas such as strategy, financial management, quality management and international certification to improve their operations, become more competitive and grow. During 2016, we undertook a total of 153 such advisory projects in Turkey, including those under our Women in Business programme.
Before and after investment, our business advice helps to build value within each enterprise.
Promoting women in business
The EBRD’s Women in Business programmes promote entrepreneurship and participation in business by enabling women-led SMEs to access the finance and know-how they need to grow.Expand to read more
Launched in 2014, our Women in Business programme in Turkey has provided €250 million in finance to date through our partner banks in the country for on-lending to 12,000 women-led SMEs. We have also helped over 255 such firms to obtain business advice, alongside providing women entrepreneurs with mentoring, our online diagnostic tool Business Lens, training and networking opportunities. In total, we have reached more than 18,000 women in Turkey since the programme began.
Supporting refugee-hosting communities
Support for the private sector and SMEs is a core part of the EBRD’s response to the refugee crisis in Turkey. This work began in 2016 and aims to improve the economic resilience of communities most affected by the crisis, providing financing to the private sector both directly and through our partner financial institutions.Expand to read more
We also help SMEs in these communities access advice to strengthen them in a challenging business environment. Moreover, we have started a capacity-building project with the Gaziantep Chamber of Commerce, boosting its ability to support its members and enterprises within the Gaziantep community that are led by refugees.
Supporting strategic investment decisions in Turkey
With funding from the Republic of Korea, we are helping Sapro, a leading Turkish producer of wet wipes, to identify locations to set up a new production facility. This is a vital complement to our €3 million loan to Sapro to enable the company to produce spunlace in house — the main raw material for wet wipes.
Sapro is an ambitious export-oriented company, currently exporting more than half of its production to large European retail chains such as Aldi, Carrefour and Rewe, while also maintaining a presence domestically through its own-brand, Hops. In order to enhance Sapro’s export capacity and long-term growth, it was essential for the company to have a new production facility outside of Turkey, providing closer proximity to the company’s EU-based clients.
We designed a special technical assistance assignment to fit Sapro’s investment strategy, bringing together a team with multi-national work experience to analyse the pros and cons of various locations for the new facility. The team is working now, comparing market conditions, government regulations, and health and safety standards across the region in order to provide Sapro’s management with a comprehensive analysis.
With our support, Sapro is well on its way to realising its ambitions, becoming more competitive and dynamic as it continues to grow its business.
million EBRD finance
Supporting a women-led specialised manufacturer in Turkey
With support from the EU, EBRD and Republic of Turkey, we helped Baroks, a women-led hyperbaric oxygen chambers production company, to improve management effectiveness by developing a three-year strategic plan. Nowadays, the company has solid business targets and the management is committed to success.
Baroks was established in 2012 in Istanbul and is currently managed by its chairwoman, Sema İnci. The company operates in a highly differentiated industry: they produce diving, medical and tunnel hyperbaric oxygen chambers.
As a result of rapid growth and the fact that there are different market conditions and customer profiles for each tender project, Baroks’ management identified a need to develop a structured business plan to better manage the company.
We helped Baroks to work with a local consultant who conducted a diagnostic study of the company and the international market, including the liquidity and profitability of the business, and helped Barok define its vision and mission. With this in place, the consultant helped the company also set short and long-term targets and delivered a three year plan that encapsulated all this.
Baroks also received external financing from one of the partner banks under the Women in Business Programme in Turkey.
million Export revenue
Technical cooperation support to SME direct finance
Our work with SMEs has grown and evolved over the years, culminating in more dynamic, more integrated and more innovative interventions under the Small Business Initiative. But getting to this stage would not have been possible without a strong foundation of support in the early days from our donors.
Since the very beginning of the EBRD’s work in the SME arena, Italy has stood out as one of the strongest advocates for SME development. Italian technical assistance of €7 million has underpinned the development of a series of direct financing facilities for SMEs set up by the EBRD in the late 1990s, laying the initial groundwork to help the growth of small and medium-sized businesses in the Western Balkans, the southern and eastern Mediterranean (SEMED) regions, and Turkey.
This technical assistance has been an essential catalyst for the successful implementation of hundreds direct investments where the EBRD provided equity, quasi-equity or debt financing to local SMEs — financing that would have otherwise not been available in the local market. By bridging the gaps between the local and EBRD business standards and by helping to add value to investee companies, this technical cooperation engendered lasting impact for each individual SME but also for the sector as a whole, achieving real and tangible strides in our transition work.