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European Bank for Reconstruction and Development – Instruments for SME Support

European Bank for Reconstruction and Development – Instruments for SME Support. Natalia Makova Regional Coordinator Eastern Europe, Caucasus & Turkey EBRD Small Business Support (SBS) Team. EBRD at a glance. International financial institution, founded in 1991

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European Bank for Reconstruction and Development – Instruments for SME Support

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  1. European Bank for Reconstruction and Development – Instruments for SME Support Natalia Makova Regional Coordinator Eastern Europe, Caucasus & Turkey EBRD Small Business Support (SBS) Team

  2. EBRD at a glance • International financial institution, founded in 1991 • Owned by 63 countries and two institutions • AAA/Aaa rated • Capital base of €30 billion • Invested over €71.1 billion in more than 3,389 projects since 1991 • As at end Dec 2011: • €9.1 billion invested in 380 projects • Private sector accounted for 77% share • Debt 85% & Equity 15% € billion Note: Provisional data as at 30 Dec 2011

  3. A network of 33 offices in 29 + 4 countries In 2011, the Bank expanded its operations to include Egypt, Morocco, Tunisia, and Jordan (Southern and Eastern Mediterranean – SEMED region)

  4. Mission and Vision EBRD’s operations are based on three principles Promotes transition to market economies, private ownership and good governance with respect for people and environment Supports, but does not replace, private investment. Provides financing at reasonable terms, otherwise not available Invests in financially viable projects, together with the private sector

  5. Benefits of Working with Us EBRD’s Value-Added: a unique offering • Strong, internationally recognized partner with long term perspective • Higher risk appetite than other lenders • Long established policy dialogue with Government and Regulators • Unparalleled presence in the region provides mitigation of political and regulatory risks • Preferred creditor status in all countries of operations • Catalysts to access additional finance (every € 1 financed by EBRD leads to mobilize € 3 from other sources2) • Flexible deal structure and product matching services • Dedicated teams with expertise in a variety of sectors and countries • Donor funded Technical assistance available 2. EBRD Annual Report 2010

  6. Examples of projects Moldova • MoSEFF - EUR 20 million Framework for financing energy efficiency investments of Moldovan enterprises (via 3 partner banks) • 7 partner banks, microfinance and leasing companies - credit lines for financing Micro-, SMEs, trade finance operations, co-financing Belarus • 7 partner banks - credit lines for financing Micro-, SMEs, trade finance operations, co-financing Ukraine • EUR 100 million SME Framework (to be implemented via partner banks) • USELF – EUR 50 million credit line for projects in the area of renewable energy

  7. Small Business Support (SBS) Overview • EBRD fosters entrepreneurship not only through capital funding but also by providing business expertise • Small Business Support (SBS) has been helping MSMEs to adapt to the demands of a market economy since 1993 • 2 instruments of the SBS, the Enterprise Growth Programme (EGP) and Business Advisory Services (BAS) are essential components of the EBRD transition toolkit • Run on a not-for-profit basis • Over €200mln. in funding utilised to date from bilateral and multilateral donors with the EU being the largest donor

  8. Small Business Support (SBS) Objectives The overall objective of Small Business Support (SBS) is to support economic transition and to achieve enterprise change in viable MSMEs across a broad range of sectors. Specific objectives and expected impact on MSMEs include: • Enhanced competitiveness of assisted MSMEs (as seen by increased exports, productivity and sales, new foreign contacts, new production line/technology, changes in product ranges and production processes) • Stimulated sectors with high growth potential (through disseminated best practices, shared successful models) • Strengthened and sustainable infrastructures of local business advisory services (as seen by increased supply of services, broadened range of services, improved quality, increased consolidation of the industry)

  9. Enterprise Growth Programme (EGP) • Targets mid-sized companies in need of management strengthening and / or enterprise restructuring • Offers access to international expertise by bringing experienced practitioners to assist local private companies • Advisory assignments for circa 18 months, with visits every 4 – 6 weeks • Team consists of Local Manager, Senior Advisor, various technical Specialists

  10. EGP focus areas • Organizational Structure and Strategy • Production and Efficiencies • Sales and Marketing • Financial Planning and Investment Attraction • Energy Efficiency and Environment • Overseas Business Promotion

  11. EGP Project cycle 1. Preliminary screeningof the company 2. Project approval by Programme donors 3. Selecting the Senior Adviser and signing the contract 4. First visit by the EGP team : Project Workplan 5. Work on the project (8-12 visits) 6. Project completion Post Programme review – one year after project completion 12-18 months 11

  12. EGP Ukraine case studies • Strategic Development Assistance • Client:Modern-Expo (Lutsk) • Shopfitting, shop furnishings, architecture and store design. Tailor made POSM equipment for major international clients • Task:to assist with the review of business model, enable management and owners to strategically plan company development • Project results: • Programme focused on: • Budgeting • Sales management • Organizational development • 2 years after programme completion Modern-Expo tripled its Turnover. The company is considering IPO at Warsaw Stock Exchange.

  13. EGP Ukraine case studies • Business Structure. Marketing and Sales • Client:New Ton (Kharkiv) • Aerosol paints manufacturer • Task:To review the structure of the organization (very fragmented before the project). Assist with developing new niches and customers • Project deliverables: • Programme focused on: • Restructuring and Corporate Governance • Strategic marketing initiatives • Product development • The company is now building the capacity to work with major retail chains in Ukraine. Penetrating the market of Russia. • Business operations are being consolidated for planning and budgeting purposes.

  14. Business Advisory Services (BAS) • Provide SMEs with access to local consultants through cost-sharing projects • Clients have less than 50 employees on average • A typical project costs €4k (matched by client) and lasts 4 months • 50 – 100 projects per country per year • Establish a sustainable infrastructure of support for small businesses in each country • Visibility, training and institutional development activities

  15. BAS supports extensive range of consulting services • Market performance: • Market analysis • Business planning • Feasibility studies • Management effectiveness: • Financial management / MIS • Reorganisation / restructuring • Cost reduction: • Computerised manufacturing systems • Engineering studies • Product management • Quality management: • ISO certification • Product management • Environmental management: • Energy efficiency • Environmental impact assessments

  16. BAS Market Development Activities (MDAs) • Training, visibility measures, institutional support with objectives: • Strengthen demand for consultancy services • Broaden supply of consultancy services • Imrove quality of consultancy services • Consolidate consultancy industry • Strengthen SME support institutions

  17. Over 1,900 projects implemented utilising 1,100 advisers from 50 nationalities Turnover of EGP clients increased by 18% Productivity increased by 29% 36% of companies reported increase in employment Investment linkages - In 2011, EGP clients secured €58.2 mln. of investments, out of which EBRD direct investment totalled €43.2mln. Over 11,500 projects undertaken engaging 1,600 local consultants Turnover of BAS client companies increased 37% Number of employees increased by 20% Productivity increased by 43% Investment linkages - 21% of BAS assisted enterprises received an external investment of over €600,000 on average Small Business Support (SBS) Impact Enterprise Growth Programme (EGP) Business Advisory Services (BAS)

  18. BAS project cycle project selection preparations and launch realization evaluation Completion, subsidy payment monitoring

  19. BAS Ukraine case studies • Support for QMS implementation • Client:KIMAK private enterprise (Truskavets) • Production of food additives and flavoring compositions for meat processing and sausage making industry • Task:to increase export and become more competitive the company needed introduction of Food Safety Management System which included QMS. • Project results: • Awarded certification • Registration of 11 types of products at the Department of Russian Consumer Supervision • New markets in Central Asia

  20. BAS Ukraine case studies • Support for introduction of management information system • Client:Network of kiosks (SV private enterprise) • Problems: • Ineffective accounting system • Manual data processing • Need for optimisation of operational activities • Project results: • Time saving • Increase in turnover • Improved effectiveness • Savings of working capital

  21. Small Business Support (SBS) Initiatives • Accounting Improvement Programme (AIP) • to facilitate access to financing the AIP help MSMEs produce good quality financial information • Women in Business • to help realise the potential of women in the MSME sector to contribute to economic development • over 15% of projects implemented to date have specifically targeted women-owned and women-managed enterprises • specific Women in Business (WiB) initiatives: WiB Programmes in Moldova (started 2012), Ukraine (started 2012) • Local Business Development programme • Multiplies spillover effects of banking investments in line with the needs of the business community • Improves the performance of local suppliers • Serves as corporate social responsibility initiatives

  22. Contacts • Natalia Makova • Regional Coordinator • Eastern Europe, Caucasus & Turkey • makovan@ebrd.com

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