Finance and Advice for Small Businesses

SME Financing in the EU enlargement countries

Charlotte Ruhe, Head, SME Finance and Development, EBRDLaunch of the SME Policy Index for the Western Balkans and Turkey 2016

Paris, April 2016

Finance and Advice for Small Businesses

Setting the scene… SME access to finance

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Western Balkans (unweighted average)Turkey

• Access to Finance 2nd most severely perceived obstacle to business in the WB, 5th most severe obstacle in Turkey

• Banks are very liquid, but in light of high NPL levels (esp. in the WBs), banks are very risk averse

• Lack of creditworthy borrowers• Bank lending remains expensive,

and especially long-term financing is difficult to access

• Non-bank finance virtually non-existent

• Financial inclusion remains a key challenge

BEEPS 2012, perceived business obstacles (0-5)

Finance and Advice for Small Businesses

• Limited awareness of SMEs about the variety of financing opportunities available in addition to standard bank-lending.

• Incomplete legal and regulatory framework that ensures investors’ confidence and reduces legal uncertainties.

• Need for local buy-in and support to market-friendly incentives to increase lending appetite of banks.

• Lack of investment readiness of SMEs, including sound financial management and transparency.

Additional challenges

Finance and Advice for Small Businesses

The EBRD Small Business Initiative

Financing through financial

institutions

Direct financing for small business

Policy dialogueCo-financing with financial

institutionsBusiness advice

• 200+ partner financial institutions

• €1+ billion of finance each year

• Benefitting hundreds of thousands of small businesses

• Providing direct financing for small businesses, coupled with business advice

• Instilling higher standards of corporate governance and financial transparency

• Taking targeted policy actions alongside our investments

• Engaging effectively with policy-makers across our region

• Lessening the risk of financing small businesses

• Helping partner financing institutions to make their money go further

• Providing business advice

• Ranging from strategy to operations, financial reporting, energy efficiency and much more.

Finance and Advice for Small Businesses

Almost 55,000 SMEs reached annually in Turkey and the Western Balkans

SME credit lines channelled through partner financial institutions to provide long-term financing (EUR 1.8 bn in Turkey and EUR 1.1 bn in the Western Balkans)

Facilities and integrated programmes targeted sub-segments in agribusiness, energy efficiency, trade finance and competitiveness (planned)

Dedicated SME instruments for debt, equity and quasi-equity investments

Advice for Small Businesses activities to improve competitiveness in enterprises at pre- and post-investment stage (over 340 SMEs and 4330 SMEs assisted in Turkey and the Western Balkans)

Targeted policy dialogue to strengthen financial sector legislation Close coordination with partner organisations under the multi-donor

Western Balkans Enterprise Development and Innovation Facility, EDIF

EBRD response in facts and figures

Finance and Advice for Small Businesses

• Strong focus of the EBRD on financial inclusion, with a view to decrease regional disparities and increase access to finance for underserved groups such as women entrepreneurs and refugee-impacted communities Dedicated integrated product to close the gender inclusion gap

through the EBRD’s flagship Women in Business Programme EUR 175 mn in credit lines for women-led enterprises in Turkey

and EUR 20 mn in the Western Balkans to date Incentives to partner financial institutions to promote lending

to new segment Business advice for women-led SMEs, training, mentoring and

coaching Technical assistance to partner financial institutions

Strong focus on underserved regions, especially in Turkey, where activities largely focus on the south and east regions

A comprehensive refugee response package for Turkey and surrounding countries currently under preparation

Financial inclusion

Finance and Advice for Small Businesses

Thank you