fyr macedonia case studies

Signed projects

Board approval is the final stage in the project approval process. After Board approval, the EBRD and the client sign the deal and it becomes legally binding. Signed project lists reflect year-end data.

Signed projects  (0.1Mb)

Case studies

The Western Balkans Fund
Micro and small enterprises
Power and energy

Manufacturing

Creating jobs from cookies in FYR Macedonia

Simon Naumoski has been with Vitaminka, the largest food manufacturer in FYR Macedonia, since 1974. A former MP, Mr Naumoski, now the general manager of Vitaminka, says he prefers business to politics.

Sitting comfortably in his office in the city of Prilep, in the west of FYR Macedonia, he is convinced that Vitaminka performs better today than back in 1956 when it was established.

Just like the country, Vitaminka has seen tumultuous days and survived. “The company was created to meet the needs of the unified former Yugoslav market. Until the dissolution of former Yugoslavia in 1991, Vitaminka was catering for 24 million people and its sales reached €34 million per year,” explains Mr Naumoski. With FYR Macedonia gaining independence in 1991, Vitaminka struggled as neighbouring countries abruptly closed their borders, leaving just a domestic market of two million people.

The collapse of the export market for Vitaminka was followed by four years of zero sales growth. A drive around the city of Prilep and any visitor can witness dilapidated factories from the old communist days. Once established companies, they closed their doors and the city’s workers left to find jobs elsewhere.

But Vitaminka persevered and survived. In 2007, it received its first loan from the EBRD. A €4 million loan from the Bank was needed to develop new products and expand the company’s activity in the Western Balkans and other countries in the EBRD’s region.

“The loan is an example of how the EBRD is helping good private domestic companies to grow in FYR Macedonia,” says Elena Urumovska, Acting Head of EBRD’s Skopje Resident Office.

Mr Naumoski explains: “The EBRD finance will help Vitaminka to grow and more importantly re-enter into regional markets where it once operated and to explore new opportunities in these markets.”

With sales growing steadily and with clients from Bosnia and Herzegovina to Slovenia, Vitaminka has become the second biggest private business in the city of Prilep. This means a lot to Vitaminka’s 420 employees and to the local farmers who provide the raw materials for Vitaminka’s 300 products. They, at least, haven’t had to move to bigger cities or abroad to find a job.

“Over 50 people have been hired to work on a new product, soft chocolate cookies, that Vitaminka is introducing with the help of the EBRD loan,” explains Mr Naumovski.

The loan to Vitaminka comes under the Western Balkans Local Enterprise Facility, an investment instrument established in 2006 by the EBRD with financial contributions and support from the Italian government.

In 2007, the Italian government replenished the facility, which now amounts to €65 million, to benefit businesses in need of finance in the Western Balkans.
“The replenishment demonstrates the Italian government’s commitment to the Western Balkans,” emphasized Enzo Quattrociocche, the EBRD’s Director for Italy. “This Facility is instrumental in engineering new solutions for financing small and micro businesses in the Western Balkans,” he added.

The Western Balkans Local Enterprise Facility provides individual investments up to €8 million and has been instrumental in providing much-needed finance for the Western Balkans through mainly equity and quasi-equity financing to small and medium local enterprises.

The Western Balkans Fund - Donor Report 2007

The EBRD’s Annual Donor Meeting in 2005 reviewed the Bank’s strategy for mobilising assistance and coordinating action with donors in the Western Balkans. Citing the success of the Early Transition Countries Fund, donors asked the Bank to consider a similar initiative for the Western Balkans.

Follow-up discussions with donor representatives were held in 2006 to identify the priority needs in the region and to clarify the benefits that a new multi-donor fund could provide. It was agreed that the fund should promote coordinated and efficient assistance for infrastructure development, small and medium enterprise (SME) access to finance, institutional reform and cross-border cooperation.

Inaugurated in November 2006, the new multi-donor Western Balkans Fund aims to mobilise and coordinate additional grant resources for Albania, Bosnia and Herzegovina, FYR Macedonia, Montenegro and Serbia (including Kosovo).

The Fund’s contributors are Austria, Canada, the Czech Republic, Finland, Ireland, Luxembourg, the Netherlands, Norway, Poland, the Slovak Republic, Slovenia, Spain, Sweden and the United Kingdom. The participation of the Czech Republic, Poland, the Slovak Republic and Slovenia is particularly significant, as they are the first EBRD countries of operations to join the Bank’s donor community as contributors.

The Fund operates as an untied, multi -donor cooperation fund (untied meaning that the money can be used without any restriction as to the nationality of the firm or experts contracted in a particular project). It is managed by an Assembly of Contributors (the donors), supported by the Official Co-financing Unit of the EBRD, which acts as its Secretariat. Through its multilateral structure, the Fund will have greater flexibility for each project and will be able to respond more quickly and effectively to the demands of larger projects involving more than one country (traditionally problematic for a single donor). The Assembly will also provide a channel for identifying co-financing opportunities and a forum for policy discussions at project and strategic levels.

Integrating the Western Balkans into the European economy - Donor Report 2007

The Central European Initiative (CEI) fosters regional integration. Through its grant-aided technical cooperation projects, it has aimed to strengthen the legal, economic and financial environment of recipient countries and to promote harmonisation with the wider European economy. The CEI operates within the Official Co-financing Unit of the EBRD, where it manages the CEI Trust Fund, a tied fund supported by the Italian government with a total allocation amounting to €28 million.

Through its technical cooperation activities and “Know-How Exchange” programmes, the CEI promotes the dissemination of expertise and technical knowledge to bridge the skills gap between the most advanced and least advanced transition countries. It has assumed an ever-expanding role in regional development through the leverage achieved by its projects – in 2005-06, for instance, each euro invested by the CEI generated €177 of additional investment.

At the CEI’s Summit Economic Forum in Tirana (Albania) in November 2006, discussions centred on the theme of “Fostering reforms and innovation for sustainable growth”. The Forum hosted official business seminars alongside CEI heads of government and ministerial meetings. Just over 1,000 participants from 36 countries attended over 70 formal and informal meetings.

The formal sessions considered three main themes – fostering the business climate; exploiting local potential; and investing in innovation. Overall, the Forum concluded that, despite better macroeconomic conditions and stronger political backing for reforms in the Western Balkans, the enforceability of legislation and self-regulating codes remains an obstacle. Supporting reforms in innovation, enhancing intra-regional trade and assisting in the development of infrastructure will be priorities for the CEI in the coming year.

Micro and small enterprises

Making a big impact with small loans - Donor Report 2007

Micro and small enterprises (MSEs) have always been integral to economic development. With donor funding from the US/EBRD Small And Medium-Sized Enterprise Facility, ProCredit Bank Macedonia is providing invaluable support to a growing number of small entrepreneurs. This development-oriented bank, in which the EBRD holds an equity stake of 12.4 per cent, is part of the ProCredit global network of financial institutions operating in 18 countries and focusing on lending to MSEs. The majority of ProCredit Bank Macedonia loans are for sums under €10,000.

Entrepreneur Sasho Kuzmanovski is one of the many beneficiaries of this credit facility. In 1999 he opened the Ikona bookstore which, despite the country’s serious political and social turmoil in 2001, proved a success. Subsequently, with a view to expansion, he approached ProCredit Bank Macedonia with the request for a €6,000 loan. He used the money to purchase specialised books, technical manuals, foreign language publications and dictionaries, which were still rare on the domestic market. Strong demand generated further expansion. With three Ikona bookstores in the capital, Skopje, he is planning to open further branches with the help of another loan, this time for €14,000.

Another entrepreneur, Goran Gorkievski, owns the Specijal bakery in Skopje, which he started in 1991. To finance expansion, he turned to ProCredit Bank Macedonia for his first loan in September 2003. The €30,000 advance financed the construction of new business premises with an enlarged bakery. In October 2004 he took out another ProCredit loan for €50,000 to fund further expansion of his bakery business and a new restaurant in the centre of Skopje. Specijal has become a household name in FYR Macedonia.

Power and energy

Promoting the privatisation of a power utility - Donor Report 2006

To help modernise and restructure the energy sector in south-eastern Europe, the EBRD is investing up to €45 million in Elektrostopanstvo na Makedonija (ESM), the state-owned power utility in FYR Macedonia. This pre-privatisation equity investment will support restructuring plans and reforms ahead of a long-awaited tender for strategic investors.

With its headquarters in Skopje and 37 nationwide subsidiaries, ESM is responsible for the production, transmission and distribution of electricity in the country.
It operates coal and lignite mines to feed its three thermal power plants, runs 14 hydro-power stations and is also involved in regional electricity trading.

The Bank’s involvement, together with support from Canada, will speed up the introduction of EU-aligned environmental standards. Canadian assistance (€200,000) has enabled ESM to undertake an environmental audit and bring its operations in line with best practice.

Privatisation should attract much-needed investment to the power sector in FYR Macedonia, as well as efficiency gains for ESM.