Q: Should companies in Romania take for granted the low interest rates environment in the EU? What are the risks and how can they protect themselves?
Matteo Patrone: The low interest rate environment should continue to stimulate the financial sector for the time being. It is crucial that companies, especially those with a limited exposure to export markets, naturally hedge their foreign risk by financing themselves in local currency.
Moreover, there is ample room for improvement in the process of diversification of sources of financing, for example through private equity. Private equity, further than finance, provides corporate governance and managerial support to the growth process of SMEs. Prospectively, this will create incentives for capital market deepening, as companies that will have reached critical mass turn to public equity for financing their future stages of expansion.
Q: What are the lessons learnt by small businesses from the past crisis? How could they use this knowledge in the new economic cycle?
Matteo Patrone: The main lesson learnt by all companies, particularly by small ones, is that the real market out there is much tougher that the one they knew before the crisis. To stay on that market, they have to be competitive, to innovate and keep their businesses flexible and easily adaptable to the permanent market changes.
Q: What industries does EBRD support in Romania and how are the companies that EBRD works with spread across Romania (Bucharest vs. the rest of the country)?
Matteo Patrone: The EBRD is a leading institutional investor in Romania. The Bank has invested over EUR 7 billion in the country to date and has also mobilised more than EUR 14 billion from other sources of financing. The large majority of the EBRD investment has been in the private sector – 62%. The current portfolio is close to EUR 2 billion, 34% in infrastructure, 29% in industry, commerce and agribusiness, 25% in energy and 12% in financial institutions.
Through its Advice for Small Businesses team, exclusively dedicated to SMEs, the EBRD has enabled more than 650 enterprises to access business advice through local consultants and international industry advisers. The great majority of these are located outside the capital city, and more than 20% are in rural areas.
The 2015-18 strategy builds on a strong history of investment in Romania and sets out three priorities:
- broadening access to finance by inducing lending and developing capital market;
- reducing regional disparities and boosting inclusion through commercialized infrastructure;
- enhancing competitiveness in the private sector through targeted investment.
Q: Are there any tools for measuring the impact of EBRD on Romanian companies (such as effects on job creation, financing, business development and so on)?
Matteo Patrone: We believe that measuring the impact of our assistance is very important. As an example, the support provided by the EBRD to over 650 small and medium sized enterprises through its Advice for Small Businesses team, active in Romania since 1993, has had a substantial impact, as revealed by project evaluations one year after project completion . Within a year of completing an advisory project:
• 62% of the SMEs we worked with 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;
• 16% secured external funding to finance their growth, with over €17 million secured so far.
Data collected since 2008.