The world salutes micro, small and medium-sized enterprises.
Promoting small businesses is at the heart of the EBRD’s mandate; these private companies create jobs and wealth, building the foundations of a prosperous and democratic society.
More than 95 per cent of enterprises across the EBRD’s regions are SMEs so promoting their resilience, competitiveness and financial discipline is central to fostering a sustainable market economy.
Today the EBRD joins the international community in observing MSME Day. Last year the United Nations decided to declare 27 June MSME Day to raise public awareness of the sector’s contribution to sustainable development. This year the Day’s activities and focus are dedicated to youth.
Holistic approach
The EBRD helps to accelerate the development of small businesses by strengthening their access to finance. The Bank provides finance directly to companies but also leverages its strong network of more than 200 local financial intermediaries, reaching hundreds of thousands of SMEs every year through specially-designed credit lines, with a strong component of lending in local currency.
The Bank applies a two-pronged approach by building the capacity of both lenders and borrowers. To lessen the risk of financing small businesses and help partner financing institutions make their money go further, the EBRD co-finances and provides various risk-sharing facilities.
While the strength of the small business sector is improving in many of the most advanced economies in the EBRD’s regions, the EBRD remains one of the key players filling some of the gaps. This is particularly relevant when finance alone is not sufficient for companies to grow, in which case the Bank often helps them access know-how to improve their internal operations.
“This unique well-rounded approach of combining business advice and finance, under the Bank’s Small Business Initiative, is positioning small businesses for long-term success by improving their competitiveness and helping them to thrive,” said Claudio Viezzoli, the EBRD Managing Director for SME Finance and Development Group.
“In parallel, the EBRD also supports targeted policy actions that improve business environment for SMEs.”
Big impact for small businesses
In 2017 alone, the EBRD provided around €1.1 billion in direct and indirect finance to SMEs and advised more than 2,200 small businesses across three continents. Over €144 million has been raised in donor funding, including from the European Union (EU), the EBRD Small Business Impact Fund* and many other donors.
One of the EBRD’s flagship initiatives is the Women in Business programme through which the Bank and its donors (including the EU, Sweden and Luxembourg) offer finance and business advice as well as dedicated mentoring and networking opportunities specifically for women-led businesses. To date, the Women in Business programme has helped over 35,000 women entrepreneurs.
Another successful project is a joint initiative of the EBRD and the EU to help businesses in Georgia, Moldova and Ukraine take full advantage of unrestricted access to the EU, the world’s largest market.
They help enterprises improve their production and processes, adapt to EU standards and become more competitive in new export markets. So far 150 companies have benefited from this initiative.
Youth dimension
With global youth unemployment on the rise and over 40 per cent of the world’s active youth population either unemployed or living in poverty despite being employed, youth inclusion has become a critical social, economic and political issue.
Addressing this challenge is at the heart of the EBRD’s work in many countries, particularly those in the southern and eastern Mediterranean (SEMED) region and in the Western Balkans.
The Bank is currently developing a SEMED Youth Employment Programme which will be piloted in Egypt this year and then rolled out to the rest of the region. It will promote quality, work-based learning opportunities as a route towards employment for young people.
It will also involve specific projects to build the capacity of local SMEs to recruit more effectively and retain skilled young people. This work, supported by Italy, will provide EBRD direct investment and risk-sharing support for SMEs that have the potential to offer employment to young jobseekers.
The EBRD also worked with the Bosnian IT Alliance – a group of six leading ICT companies from Bosnia and Herzegovina – to encourage a new generation of IT professionals. Among many initiatives, they organised “ICT boot camp”, a six-month, intensive education programme for young people to learn crucial ICT skills, with practical training from experienced IT practitioners. Thanks to this project, many graduates have embarked on a new career in the country’s growing ICT sector.
Sustainable Development Goals
Overall, the EBRD believes that long-term sustainable economic growth cannot be achieved without the creation of a strong entrepreneurial class. This is why, through its Small Business Initiative, the Bank provides comprehensive support to the SME sector with a holistic approach.
By advocating for their rights and helping them prosper, the EBRD promotes job creation, entrepreneurship and innovation, some of the key targets on the global sustainable development agenda.
The EBRD’s focus on SME activities reflects their significant contribution towards achieving the Sustainable Development Goals.
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*Donors to the Small Business Impact Fund: Italy, Japan, Republic of Korea, Luxembourg, Sweden, Switzerland, Taipei China and the USA.
