Economic context

Access to credit in the Western Balkans has become more challenging since the global financial crisis. Banks are struggling with high ratios of non-performing loans – between 10 and 20 per cent in most of these countries. As a result, SMEs are being affected far more than other firms and access to finance remains a leading obstacle to their growth.

These firms could also benefit from improvements in financial management to enhance their creditworthiness. For instance, financial literacy (a proxy for investment readiness) remains relatively low in most Western Balkans countries. In a recent EBRD-World Bank survey, the percentage of financially literate adults ranged from an average of 20 per cent or less in Albania and Kosovo to 48 per cent in Montenegro, compared with 50 per cent in the EU. While the majority of these countries have now adopted the simplified International Financial Reporting Standards for accounting, small firms in Albania, FYR Macedonia and Kosovo still struggle to present audited financial statements and less than 25 per cent of SMEs have done so.

Helping SMEs access finance and know-how

In 2016, we provided €85 million through partner financial institutions and have signed 10 direct financing deals with SME clients, for a combined value of €23.7 million.

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For our direct and co-financing business in the region we use our local presence and detailed understanding of these markets to seek out leading SMEs that would otherwise not have access to finance or the know-how to grow. In addition to tailoring this finance to their needs, we help strengthen the companies by promoting good corporate governance, financial management and other standards that help them to stand out.

The EBRD also enables SMEs to obtain business advice. By working with local consultants and international advisers in areas such as strategy, financial management, quality management and international certification, our clients improve their performance, become more competitive and grow. In total, we undertook 453 advisory projects in the region during 2016.

Western Balkans Enterprise Development Investment Facility

We are active in the Western Balkans Enterprise Development and Innovation Facility (WB EDIF), a platform that provides a comprehensive set of measures to improve access to finance for SMEs and fosters economic development.

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The platform consists of five different pillars designed to offer complementary financial instruments addressing the entire range of SME financing needs in the region. The EBRD manages and the Enterprise Expansion Fund (ENEF), which is one of the investment pillars of EDIF and supports established SMEs with a high potential to grow and further expand. The EBRD also has invested into the Enterprise Innovation Fund for start-ups, and provides advisory services and policy dialogue support. In 2016, we spearheaded the creation of new EDIF programmes that provide finance and advisory support to SMEs.

Through ENEF we provide direct financing, primarily through equity and quasi-equity investments, to SMEs with high growth potential. As an investment adviser to the Fund, the EBRD works to develop the portfolio and project pipeline. In 2016, five transactions were signed including the first project in FYR Macedonia. This brought the total ENEF portfolio to €25 million, making it one of the largest such funds in the region.

A partnership for growth: Blue Ribbon

For a targeted group of high-growth SMEs, we have launched the first pilot of our Blue Ribbon programme in the Western Balkans.

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This programme engages SMEs in a five-year partnership, tailoring specific advisory and financing products to help them reach their full growth potential and create lasting impact.  Started in 2016, we already have our first members of the programme in the region.

Promoting women’s entrepreneurship

The EBRD’s Women in Business programmes promote women’s participation in business by enabling SMEs led by women to access the finance and know-how they need to grow.

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Our programme in the Western Balkans was launched in 2015 and has since provided €24.5 million in finance to partner financial institutions for on-lending to women-led SMEs. We have also helped over 1,500 such firms to access business advice, and provided mentoring, our online diagnostic Business Lens, training and networking opportunities.

Supporting agribusiness in Albania

In Albania, we launched an ambitious programme in 2016 to support the agribusiness sector, which has significant potential but suffers from low productivity. In order to help agribusinesses secure the range of financial services they need, we are providing up to €100 million in finance under the programme, backed by risk-sharing funds from the government of Albania, as well as providing advisory services and training for small agribusiness firms. In 2016, we made a total of €12.5 million available to four financial institutions for on-lending to SMEs.

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