Increased Assistance from EBRD in the Face of Belarus Challenges
The European Bank for Reconstruction and Development (EBRD) has announced significant investments in Belarus, aiming to bolster the country's small and medium-sized enterprises (SMEs). The loans, totalling $20 million, have been extended to two Belarusian companies - PP Polesie, a children's plastic toy producer, and Belarusky Narodny Bank (BNB).
The loan to PP Polesie, worth €10 million, will be used to strengthen the company's balance sheet and introduce energy-efficient technologies. As part of the EBRD's Finance and Technology Transfer Centre for Climate Change (FINTECC) programme, PP Polesie will also install and operate a trigeneration plant for energy savings.
BNB, on the other hand, will receive a $20 million syndicated loan to support local SMEs. BNB has become the first financial institution in Belarus to join the EBRD's Women in Business programme, using the loan to improve access to finance and mentorship for women-run SMEs.
The EBRD syndicated loan for BNB involves four international co-lenders, including Bank im Bistum Essen (BIB), the European Fund for Southeast Europe (EFSE), the Dutch development bank FMO, and Triodos Investment Management. The loan has a maturity of up to four years, which is quite long for Belarus.
IHS Markit senior economist Lilit Gevorgyan stated that the EBRD's support in bringing liquidity to Belarus is positive, but it will have a limited impact on the country's economy. Belarus' economy is very exposed to the issues affecting Eastern Europe, particularly the fall in commodity prices and tensions between Russia and Ukraine.
While the weaker currency in Belarus may help make its exports more competitive, Belarusian firms still face challenges in branching out to new markets. These challenges include limited access to financing, infrastructural and regulatory obstacles, and the need to comply with evolving international standards, including sustainable business practices. Lack of specific guidance and support mechanisms tailored for SMEs can hinder their capacity to expand globally.
However, by providing blended finance and dedicated SME lending programs, the EBRD enables SMEs to diversify products and services, including digitalization, which is crucial for entering new markets and enhancing export potential. The loans to PP Polesie and BNB are expected to play a crucial role in this regard.
As of now, the EBRD has invested almost €1.8 billion in about 70 projects across various sectors of the Belarusian economy. The bank's broader regional initiatives focus not only on funding but also on improving the business environment, promoting responsible business conduct, transparency, and governance, which indirectly benefit Belarusian SMEs by fostering a more conducive ecosystem for growth and internationalization.
- The emerging markets industry in Belarus could benefit significantly from the EBRD's investments, as shown by the $20 million loan extended to Belarusky Narodny Bank (BNB) for trade finance, aiming to support local small and medium-sized enterprises (SMEs).
- Investing in personal-finance initiatives, such as the EBRD's Women in Business programme, can play a vital role in empowering women-run SMEs by providing access to finance and mentorship, as demonstrated by BNB's participation.
- By utilizing blended finance and dedicated SME lending programs, businesses in Belarus, like PP Polesie with its new energy-efficient technologies, can diversify their product offerings and digitalize their services, thereby enhancing their export potential in emerging markets and overcoming barriers to global expansion.
