The European Bank for Reconstruction and Development (EBRD) and the European Union (EU) are stepping up their support for businesses in Moldova.
A joint programme to help domestic small and medium-sized enterprises (SMEs) converge with EU standards has been launched today so that companies can take full advantage of the opportunities offered by the Deep and Comprehensive Free Trade Area (DCFTA) between Moldova and the EU.
Under the agreement the EBRD is extending a loan of €10 million to Mobiasbanca - Groupe Société Générale to support the development of local SMEs. The financing will be on-lent to the private sector to help local SMEs invest in improvements to product quality and modernise their services to meet EU standards. This in turn will create an environment that is beneficial to cross-border trade and economic growth in Moldova.
The EU will provide interested SMEs with grant incentives of up to 15 per cent from the loan amount as well as technical assistance in the form of advisory services from international consultants and the EBRD’s Advice for Small Businesses programme.
The establishment of a free-trade area is part of the EU’s Association Agreements with Moldova, signed in 2014. It will offer local firms access to the EU Single Market, the world’s largest free-trade area, and help boost economic development and growth in Moldova.
The signing marks the first transaction in Moldova under the EBRD-EU programme under which the EBRD is working with local banks to help businesses further invest in improving product quality and service standards.
This is part of a larger programme of the EBRD and the EU4Business initiative. In May 2016 the Bank started providing €380 million in loans and trade guarantees to local partner banks and other financial institutions for on-lending to businesses in Georgia, Moldova and Ukraine, while the EU is making available €19 million for technical assistance, investment incentives and risk-sharing.
Henry Russell, EBRD Director for Financial Institutions in Moldova, Ukraine, Belarus and the Western Balkans, said: “Mobiasbanca is our longstanding partner and has an excellent track record for on-lending EBRD finance to local companies to support their growth. As the Deep and Comprehensive Free Trade Area with the EU is opening a major new market to Moldovan companies, we are partnering again to help local SMEs become more competitive on regional markets. The EU financing for this programme represents very important support enabling companies to make the most of the new opportunities.”
Pirkka Tapiola, EU Ambassador to the Republic of Moldova, commented: “The DCFTA facility is here to help SMEs seize new trade opportunities with the EU. It will also allow companies to take advantage of the increased inflow of foreign direct investment triggered by the DCFTA and the Association Agreement. The signing of the loan between the EBRD and Mobiasbanca represents a practical step in this regard, which will lead to tangible results for the business community in Moldova.”
Ridha Tekaia, President of the Management Board and CEO of Mobiasbanca, appreciated the sustainable cooperation established between Mobiasbanca and the EBRD, as well as the new opportunities offered to Mobiasbanca’s clients thanks to the EU support. He said: “It is always an honour and a professional satisfaction to cooperate with the EBRD. Today’s signing of the agreement completes the range of opportunities for our customers who aim to improve their product quality and access new markets. We are glad to contribute, together with the EBRD, to local business development and the economic growth of the country.”
A subsidiary of Groupe Société Générale SA, Mobiasbanca is Moldova’s fourth-largest commercial bank, serving over 130,000 active clients in the SME and retail sectors through a network of 58 branches.
The EBRD is the largest institutional investor in Moldova, with over €1.1 billion of cumulative investment in more than 110 projects in agribusiness, energy, the financial sector, infrastructure and manufacturing. The EBRD’s operations and policy dialogue in Moldova’s banking sector aim to improve transparency and governance in banks in order to enhance access to credit for SMEs in Moldova, including by increasing the number of banks that can benefit from the EBRD’s lending products and frameworks.