Key challenges

Access to finance for SMEs improved over the last five years, even if the current economic outlook has introduced some uncertainty regarding future access. At the time of the last BEEPS, Turkish firms were suffering the lowest level of credit constraints in the EBRD regions. Since then, access to bank credit has further improved, mainly on the back of significant government guarantees provided through the Credit Guarantee Fund (CGF) which led to a major increase in SME loans in absolute terms. Non-bank financing options are also very developed with leasing, factoring, equity and even crowdfunding becoming increasingly viable alternatives to bank finance.

However, sluggish innovation and financial management suggest areas with room for improvement. According to the BEEPS V, only 5 per cent of SMEs were engaged in product innovation in Turkey, less than half the average in South-eastern Europe. Yet, among those Turkish SMEs innovating, a higher share introduced products or processes that are new to the country or international market. Improved skills in financial and business management could also help SME development. Currently, just under a quarter of the adult population is financially literate, with levels well below its Western neighbours and even below the average for the EBRD regions.

Providing tailor-made finance

In 2018, we provided €15 million in direct financing to SMEs in Turkey and over €78,6 million through partner financial institutions. We offer customised finance directly to dynamic, fast-growing SMEs that are underserved by the financial sector – businesses that we believe have great potential to drive employment, innovation and growth. 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.

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We also enable SMEs to access business advice, with a focus on underdeveloped areas in southern and eastern Turkey, where transition challenges and refugee impact are highest. Firms work with local consultants and international advisers in areas such as strategy, financial management, quality management and international certification to help improve their operations, become more competitive and grow. During 2018, we undertook a total of 112 such advisory projects in Turkey, including those under our Women in Business programme.

Our business advice helps each enterprise build significant value, before and after investment.

 

Promoting women in business

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

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Launched in 2014, our Women in Business programme in Turkey has provided €300 million in finance to date through our partner banks in the country, which have delivered loans to almost 18,000 women-led SMEs. We have also helped 340 such firms obtain business advice, alongside providing more than 6.750 female entrepreneurs with training, mentoring, networking opportunities and access to our online diagnostic tool Business Lens.

 

 

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.

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We also help SMEs in these communities access advice to strengthen their resilience in a challenging business environment. Moreover, we have completed a capacity-building project with the Gaziantep Chamber of Commerce, boosting its ability to support its members and those enterprises within the Gaziantep community that are led by refugees.