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EBRD: Technical Cooperation to enhance company management Moscow, February 2013

EBRD: Technical Cooperation to enhance company management Moscow, February 2013. Dilek Macit Director Technical Cooperation. What is the EBRD?. European Bank for Reconstruction and Development International Financial Institution Founded 1991 Rated AAA

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EBRD: Technical Cooperation to enhance company management Moscow, February 2013

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  1. EBRD: Technical Cooperation to enhance company managementMoscow, February 2013 Dilek Macit Director Technical Cooperation

  2. What is the EBRD? • European Bank for Reconstruction and Development • International Financial Institution • Founded 1991 • Rated AAA • Shareholders: 64 countries; EU and European Investment Bank • Promotes transition to market economies • Works in 34 countries from central and eastern Europe, central Asia and the southern and eastern Mediterranean • Capital base of €30 billion • Since 1991 more than 3,000 projects and €71.1bn of cumulative commitments • In 2011 signed deals worth €9.1bn • Largest investor in the region € bn Cumulative commitments

  3. EBRD’s Objectives To foster the transition of 34 countries from central and eastern Europe, central Asia and the southern and eastern Mediterranean towards open market-oriented economies • Promote transition by investing mainly in the private sector • Mobilise domestic and foreign capital: multiplying effect • Foster a competitive environment • Stimulate and encourage the development of capital markets • Encourage environmentally sound and sustainable development Focus on quality, efficiency, concrete results and return on investment (financial, economic, environmental)

  4. St. Petersburg RO Moscow RO Yekaterinburg RO Krasnoyarsk RO Vladivostok RO Samara RO Rostov RO EBRD in Russia – 7 offices, 120 Professionals

  5. EBRD in Russia: extensive expertise… • EBRD has an extensive expertise in the Russian market • More than 30% of all projects value signed by EBRD in 2011 related to Russia • Total amount of Russian deals reached €2.9bn which is a 27% increase vs. 2010 • Net cumulative business volume was EUR €20.6bn which relates to hundreds of successful projects € billion Net cumulative business volume (NCBV) Annual business volume (ABV)

  6. … across many sectors and regions NCBV breakdown by sectors in Russia • EBRD mainly works with the private sector and also cooperates with government especially in developing infrastructure • EBRD proposes a variety of debt and equity instruments; equity portion of NCBV reaches almost 20% • EBRD has expertise of executing projects in all Federal districts of Russia Annual business volume breakdown by Federal Districts (2011)

  7. Technical Cooperation Activities • The Technical Cooperation funds are used to finance consultants carrying out work to • support the preparation and implementation of the Bank’s operations and projects throughout project cycle • assist the Bank in developing its clients’ capacity and skills, improving efficiency and strengthening institutions

  8. Consultancy Contract Awards byEBRD and its Clients* * Clients are generally the recipients of loans or equity investments ** Including contract awards financed by TC funds, Bank budget and contracts funded from loan proceeds in public sector operations

  9. “Who” in EBRD

  10. Technical Cooperation – Initiatives to enhance company management • Client “buy in” • Cost sharing • Client Selection and Engagement: in 2011, 104 consultancy assignments totalling €29.96 million were contracted and managed by the Bank’s clients as the beneficiaries of services • Implementing the advice

  11. Technical Cooperation activities (non-Project related) • Policy dialogue and public sector reform • Management Consultancy in investee companies • Legal advice to EBRD’s Office of the General Counsel • Economic/political analysis, research • Institution building/training via EBRD’s Enterprise Growth Programme (EGP), Business Advisory Services (BAS), Legal Transition Programme (LTP) • Information Technology • Social and Environmental Consultancy

  12. Why SMEs are Important in EBRD Region? Generate substantial share of employment, drive innovation and cost efficiency Make economies flexible, resilient and interlinked SMEs Investors like countries with strong SMEs Form source of reliable domestic supplies

  13. SMEs, the Engine of the Economy • 55% of GDP produced by SMEs (1) • Employment impact (2) • 67% share of employment provided by SMEs. • 86% of new jobs created by SMEs with 250 employees or less. • Highest employment growth rates by businesses with up to 100 employees and less than 2 years old. • Data based on formal enterprises, informal businesses will increase the figures • SMEs contribute more to employment in low-income countries than higher-income countries • 18% of 18-24 years old are unemployed in Central and Southern Europe and FSU, 28% youth unemployment in SEMED • Median on 24 EBRD countries of operation. • World Bank study of 47,475 MSMEs in 99 developing countries and ILO 2012 study on youth unemployment.

  14. What are the Key Challenges for SMEs in Russia? Lack of available financing Administrative barriers and red tape Weak management practices Tax system • Low share of SMEs in Russia: • different estimates put it at 12-21% of country GDP • significantly lower than in developed countries

  15. EBRD’s Comprehensive and Integrated Approach Technical assistance (SBS) • EGP targets medium size companies in need of management strengthening • BAS aims to help SMEs use local consultants for specific assignment • Typical BAS project €4,000 (50% cost share) and lasts 4 months • Number of SBS projects >12,000 • Over €200mn of donor funds utilised Indirect financial support • Financing to local banks for on-lending to SMEs • Russia Small Business Fund • Energy Efficiency Programme (RUSEFF) • EBRD’s Trade Facilitation Programme • Private Equity Funds • Venture Capital Investment Programme Direct financial support • Debt, equity and quasi equity instruments (RSBF-Technical Assistance) • Term: 3 to 7 years on average; foreign or local currencies • For both new and existing enterprises with €50mn of existing/ prospective revenue • Partnership with other investors or banks • Bank provides for up to 35% of total project cost

  16. EBRD SME Financing via Partner Banks in Russia, the EBRD works through 25+ financial intermediaries, for MSME’s support, including:

  17. Russia Small Business Fund Since 1994 RSBF supports finance for Micro and Small Enterprises (“MSE”) Specialised credit lines to partner-banks + Technical Assistance to help build lending capacity for SME Program size: up to $450m Totalling $1.2bn disbursed and currently outstanding under the RSBF – partner banks leverage EBRD funding with own money About 100,000 sub-loans to SME fits MSE needs Loan size $1-200ths of the partner banks have so far been trained under this programme Over 8,700 loan officers currently co-operate 15 banks covered ~300 cities in Russia

  18. EBRD Russian Sustainable Energy Financing Facility (RuSEFF) Assisting SMEs to implement energy efficiency and renewable energy investment opportunities Engaging local financial institutions Combining credit line with technical assistance $ 200 million of EBRD financing www.ruseff.com

  19. EBRD Trade Finance Facilitation Programme (TFP) Promotes foreign trade to, from, and within the EBRD region Guarantees to international commercial banks (confirming banks, 22 in Russia) TFP Competed 12,500+ transactions supporting over €7.8 bn in trade (June 2012) Assumes political and commercial payment risk undertaken by participating banks (issuing banks, 27 in Russia)

  20. EBRD has invested in 49 Russia/CIS focused funds • 49 funds and 26 fund managers • 80% of the capitalinvested by these funds has been in Russia • EUR 1.17 bil committed to the funds with total capital of EUR 5.06 bil • More than 368 companies have beeninvested in: • 60% of which have beeneither service-related or telecoms/media • ca 65% of whicharenowexited from Active fund relationships in Russia

  21. EBRD’s Small Business Support (SBS) has been helping Micro, Small and Medium sized Enterprises (MSMEs) since 1993 • 2 instruments: the Enterprise Growth Programme (EGP) and Business Advisory Services (BAS) • Run on a not-for-profit basis with donor funding in 24 countries SBS at a glance Over €200m donor funding 1,800+ EGP projects 12,300+ BAS projects Nearly 800 market development activities • Business Expertise in Addition to Financing

  22. EGP supports the introduction of international best practice on a cost sharing basis • SMEs with the potential of becoming future leaders in their market • International advisors with at least 15 years of professional experience and expertise in the specific business sector • BAS assists individual enterprises to engage with local consultants on a cost sharing basis • Specific projects with a rapid payback • Aimed to increase the supply and quality of local advisory services • Targeted market development activities to create a sustainable market of support for the SME sector • Consultants Bring International Know How BAS Fosters Local Expertise

  23. EBRD has a Proven Impact on Enterprise Performance Business Advisory Services (BAS) Enterprise Growth Programme (EGP) • 1,800 projects with SME’s with typically 100-500 employees • 1,300 advisers from 64 nationalities • In 2012, EGP clients secured €62 million of investments • 12,300 projects with MSME’s with up to 250 employees • Nearly 4,000 local consultants engaged • 21% of enterprises received an external investment 43% average increase in productivity 36% average increase number of employees 29% average increase in productivity 37% average increase in turnover 18% average increase in turnover 20% average increase number of employees

  24. BAS projects by industry EGP projects by industry • EBRD SME Clients

  25. Strengthening New Business in Vladivostok BAS helped Sidimi Resort introduce an automated system of cashless payments and restaurant management software 28 staff members were trained Increased efficiency Company’s turnover increased by 53% in 2011 Employment almost doubled

  26. BAS in Federal Districts of Russia • €9.1 million of donor funding • 797 projects undertaken engaging 275 local consultants Far Eastern 439 BAS Projects Kaliningrad 145 BAS projects North West 213 BAS projects

  27. BAS Advice in Russia BAS has supported a wide range of projects

  28. Optimising Electricity Production in Yekaterinburg EGP assisted Ural Technical Rubber Plant to bridge investment plans and costly external engineering required for tender specification EGP provided state-of-the-art solution to long-term energy efficiency The project enables the company to have independent power supply

  29. EGP in Federal Districts of Russia • €15.9 million of donor funding • 225 projects implemented, 10 are ongoing Far Eastern 33 EGP projects North West 68 EGP projects Ural 19 EGP projects Central 41 EGP projects Volga 8 EGP projects Southern 11 EGP projects Siberian 41 EGP projects North Caucasus 4 EGP projects

  30. EBRD Interventions Go beyond Direct Enterprise Assistance • Consultant market development activities strengthen the local business advisory services market • Consultants disseminate market best practices • Business matching initiatives provide businesses access to markets and knowledge exchange • Policy dialogue promotes better business environments

  31. EGP Introduction of industry-specific management expertise to minimum 16-17 enterprises each year Sector Development Activities Total 48-51 projects Over 2013-2015, SBS will assist enterprises in Southern, Ural, Siberian, and Far Eastern federal districts Proposed SBS Support in Russia BAS • Assistance provided by local BAS specialists: minimum 125 enterprises each year • Minimum 12 Market Development Activities • Total 375 projects

  32. Proposed SME Support in Federal Districts of Russia • Approximate annual allocation Far Eastern district 30-35 BAS projects 5 EGP projects Ural district 30-35 BAS projects 4-5 EGP projects Siberian district 30-35 BAS projects 4-5 EGP projects Southern district 30-35 BAS projects 4-5 EGP projects

  33. How to contact us • Project enquiries (existing EBRD projects only) Tel: +44 (0)20 7338 6282 / fax: +44 (0)20 7338 7380 • Business Development and project proposals Tel:+44 (0)20 7338 7168 / fax: +44 (0)20 7338 7380 • Small Business SupportTel: +44 20 7338 7356, Fax: +44 20 7338 7742, E-mail: egp@ebrd.com • Technical CooperationTel: +44 (0)20 7338 6124 / fax:+44 (0)20 7338 7451 • Procurement opportunitiesvia web site: www.ebrd.com • General enquiriesTel: +44 (0)20 7338 6372 / fax: +44 (0)20 7338 6690 • PublicationsTel: +44 (0)20 7338 7553 / fax: +44 (0)20 7338 6102 • eSelection Tel: +44 (0)20 7338 7307 / Fax: +44 (0)20 7338 7451

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