SME Financing in the Middle East
Sibel Beadle
11 May 2016
What is the EBRD?
International financial institution with the
mandate to promote transition to modern and
well-functioning markets in 36 countries
In 2015:
• €9.4 billion invested in 381 projects
• Private sector accounted for 78% share
• Debt 82%, Equity 14%, Guarantee 4%
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10
Annual business investment (ABI)
Since 1991, EBRD has invested more than
€107 billion in over 4,400 projects across
private and public sectors in its countries of
operations.
110
105
100
95
90
85
80
75
70
65
60
55
50
45
40
35
30
25
20
15
10
5
0
12
9
8
7
6
5
4
3
2
1
0
Net cumulative business investment
• Owned by 65 countries, the EU and EIB
• Capital base of €30 billion
• Highest credit rating from all three main
rating agencies
Net cumulative business
investment €107 billion
Equity ABI
Debt ABI
Net Cumulative Business Investment
2
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EBRD in the SEMED region
Since 2011, nearly 100 projects (€3.5 billion) signed in Egypt, Jordan, Morocco
and Tunisia
Operational priorities in the region
•
Support for the private sector, with particular emphasis on small and
medium-sized enterprises (SMEs)
•
Developing non-sovereign financing solutions for infrastructure, including
PPP structures
•
Promoting sustainable energy and energy efficiency initiatives
•
Supporting and developing local capital markets
What’s next in 2016:
• Lebanon expected to become a shareholder and country of operation
• West Bank & Gaza will receive investment via trust funds
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EBRD’s financial sector portfolio by region
€ Millions
10,000
Greece
Turkey
9,000
SEMED
8,000
Eastern Europe
& Caucasus
7,000
6,000
South-Eastern Europe
5,000
Central Asia
4,000
3,000
Russia
2,000
Cyprus
1,000
Central Europe & Baltics
0
1995
1998
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2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
5
Strategic challenges for MSMEs in the region
Fair access
to product/
services
markets 60
Access to
financial
markets
Access to finance as
50
Access to debt finance
– For micro-entrepreneurs
a barrier
– For women
– For SMEs
– For “gazelles”
40
Management
expertise
30
20
Formalisation10
challenges
0
Access to
advice
Egypt
Access to
growth
equity
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Jordan Morocco Tunisia Malaysia Turkey
Small firms using banks to finance investment (%)
Firms identifying access to finance as a major constraint (%)
Source: World Bank Enterprise Surveys (2013). Malaysia data for 2007.
Small firms are those employing fewer than 20 people.
Lack of
regional
integration
6
EBRD’s MSME product
Promoting local banks’ and
microfinance institutions’ capacity for
lending to private micro-, small- and
medium-sized firms (MSMEs).
EBRD provides finance for on-lending
through financial intermediaries.
EBRD MSME Portfolio by
type of partner FI
SME-Focused
Banks
Non-Bank Micro FIs
4%
Leasing
4%
9%
Debt Fund
2%
FI portfolio: €9.6 billion
FI MSME portfolio: €3.8 billion
Over 200 partner financial institutions
in 28 countries of operation
81%
Targeted lending:
Rural, Women in Business, Agricultural,
Energy Efficiency
Universal
banks
Note: as at 31 December 2015
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Egypt
•
EBRD’s primary objective in the sector is
to provide financing to MSMEs through
banks and non-banks
•
To date, EBRD has invested $310m in
senior funding and $290m of trade
finance limits through 11 projects in Egypt
•
Some loans have been accompanied by
technical assistance which have helped
improve clients’ practices
•
Pilot projects launched with NBE for
targeted lending
- Women in Business: $20m loan +
training for women entrepreneurs
- EgyptSEFF: $30m loan for energy
efficiency projects
•
Nationwide rollout of EgyptSEFF
forthcoming with EIB and AfD
EBRD FI’s Current Partners in Egypt
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Jordan
•
EBRD’s primary objective in Jordan is to
provide financing to MSMEs through
banks, leasing companies and
microfinance institutions
•
To date, EBRD has invested about $56m
in loans and $150m in trade finance limits
through 10 projects
•
Examples of technical assistance tailored
to clients’ needs:
-
Introducing a new risk analysis methodology
Developing an MSME-focused product range
Improving internal procedures
Contributing to staff training
Strengthening credit risk and asset/liability
management skills
• Initiatives in Jordan to improve the
business climate for MSMEs:
- Cooperation with the Jordan Loan
Guarantee Corporation
- Participation on SME Financing Advisory
Committee
- Policy dialogue work on insolvency law &
secured transactions reform
Clients of EBRD’s partner, Microfund for Women.
EBRD FI’s Current Partners in Jordan
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Morocco
•
EBRD’s primary objective in the sector is to
provide financing to MSMEs through banks and
microfinance institutions
•
To date, EBRD has invested €290m in senior
funding and $220m of trade finance limits
through 11 projects
•
EBRD has invested $60m in a $300m
Eurobond issued by BMCE, a landmark
transaction aimed at providing support to the
first non-sovereign Moroccan Eurobond
•
MorSEFF: financing facility for energy efficiency
and small-scale renewable energy investments
-
•
EBRD is also currently developing a
Women in Business program, aimed
at improving women entrepreneurs’
access to bank finance
EBRD FI’s Current Partners in Morocco
BCP
BMCE
SGMB
Crédit du Maroc
Fondep
BCP: €10m, co-financed by AFD and KfW
BMCE & leasing subsidiary: €20m, with further
€15m co-financed by EIB, AFD and KfW
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Tunisia
•
SME finance is a key focus of IFIs in Tunisia in a
context where they have difficulty accessing bank
finance (need for collateral, caps on bank lending
rates, ‘informal’ sector), while representing the
largest potential for employment growth
•
Since January 2014, EBRD has provided €140m
of loans to Tunisian financial institutions for onlending to MSMEs, and $40m in trade finance
limits to banks, through 8 projects
•
These loans are typically accompanied by
technical assistance which have helped improve
clients’ practices
•
EBRD’s policy dialogue efforts in Tunisia include:
-
EBRD FI’s Current Partners in
Tunisia
Amen Bank (bank)
Banque de Tunisie (bank)
BTK (bank)
UBCI (bank)
CIL (leasing)
Tunisie Leasing (leasing)
Enda (microfinance)
Insolvency law reform
Factoring law reform
Reform of the clearing & settlement system
Deposit insurance scheme
Interest rate caps regulation
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Thank you!
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Annexes
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3 key principles of EBRD’s operations
Promotes transition to
market economies, private
ownership and good
governance with respect for
people and environment
Supports, but does not
replace, private
investment.
Transition
Impact
Provides financing at
reasonable terms,
otherwise not available
Invests in financially viable
projects, together with the
private sector
EBRD
Sound
Banking
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Additionality
14
EBRD’s mandate in the financial sector
• Development of a sound banking sector through improvement of
business standards, restructuring and consolidation, and increased
competition
 Supporting resilient and efficient banks
• Strengthening the financial sector by achieving better diversification
(including the development of the non-banking sector) and integration
into global financial markets
 Improving financial sector effectiveness and integration
• Fostering deeper and broader financial intermediation in countries of
operation through innovative financial products to reach under-served
market segments and strengthen competition and market effectiveness
in the financial sector
 Enhancing financial intermediation
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