|  16.08.2016

Know how to support SMEs: EBRD Advice for Small Businesses in Romania

The SME sector has not fully recovered after the economic crisis, and SMEs in Romania continue to operate in a difficult business climate, including transition challenges in access to finance.

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While Romania has historically been behind EU 28 averages in terms of economic development, in recent years the country has experienced steady growth, driven mainly by private consumption and partly by investment. However, research and development expenditure in Romania remains lower than in the EU 28 and productivity is also slightly behind that in the region. Romanian small and medium enterprises (SME) rank 75th out of 140 in terms of innovation according to the 2015-2016 World Economic Forum Competitiveness Index and, while they represent 99% of the total number of firms in Romania and employ 65% of the country’s labour force, they only account for 50% of value added/GDP. Overall, while there has been significant progress in its development, the Romanian SME sector has not fully recovered after the economic crisis, and companies continue to operate in a difficult business climate (37th in the 2016 World Bank Doing Business ranking), including transition challenges in access to finance. Specialized skills and knowledge are in high demand and rather scarce supply among Romanian entrepreneurs, indicating a need for professional advisory support.


A vibrant SME sector is a vital ingredient for a healthy market economy, and supporting small enterprises lies at the heart of what the EBRD does. Under its Small Business Initiative (SBI), the EBRD provides finance both directly and through intermediary banks in order to reach more businesses. The Bank has provided over EUR 950 million of dedicated financing to 26 partner financial institutions to support on-lending to SMEs with a particular focus on underserved segments such as energy efficiency and rural areas. In fact, the majority of financing provided by the EBRD to partner financial institutions (banks and leasing companies) was primarily dedicated to SME on-lending. In terms of direct financing, the EBRD has invested over EUR 13 million.

However, finance alone often cannot meet the challenges facing small and medium-sized businesses and SMEs also need access to know-how to improve their performance and grow. The EBRD also recognises the important link between access to finance and access to advice, and places a specific focus on assisting SMEs in improving corporate governance and financial management, which will help them become more attractive for investors.

The EBRD therefore provides advice to SMEs by connecting them to local consultants and international industry advisers on a cost-sharing basis through the Advice for Small Businesses programme. This consultancy has had substantial impact on beneficiary companies. Within a year of a project, 62% of enterprises have increased their turnover, with a median increase of 31%; 55% have increased their productivity as they expanded their business; 52% saw significant job creation and 16% secured external funding to finance their growth, with over EUR 17 million secured so far. In addition to drawing on 10 years of SME development expertise, the beneficiaries of the Advice for Small Businesses programme also have access to grants covering between 45 and 75 per cent of the net cost of a consultancy project.

For small businesses that need specific types of know-how, such as the technical knowledge to build a website, to draft a business plan or a feasibility study, to prepare a marketing strategy or introduce a quality management system, the EBRD will provide business advice delivered by local consultants. Typical projects are implemented over 4 to 6 months, and support one of the following types of advisory service: marketing, strategy, organisation, operations, quality management, information and communications technology, engineering solutions, financial management and reporting, energy/ resource efficiency and environmental management.


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