Stronger Economy: a key priority for the Eastern Partnership
Commitment to a stronger economy through economic development and support for market opportunities is one of the key priorities in the Eastern Partnership (EaP), a joint policy initiative which aims to deepen and strengthen relations between the European Union (EU), its Member States and its six Eastern neighbours – Armenia, Azerbaijan, Belarus, Georgia, the Republic of Moldova and Ukraine – within the framework of the European Neighbourhood Policy, which calls on the need to focus on increasing the stabilisation and resilience of the EU's Eastern neighbours.
EU4Business: channelling EU support for SMEs
The European Union’s EU4Business initiative is an umbrella initiative that covers all EU activities supporting SMEs in the Eastern Partnership countries.
The EU believes that small and medium-sized enterprises (SMEs) are indeed a key ingredient of economic life. In the Eastern Partnership region, SMEs represent between 83% and 99% of all firms, and account for 50% of all jobs according to the OECD in 2017. This, however, still lags behind EU countries, where SMEs account for over two-thirds of employment, and 85% of new employment created in the past five years. SMEs therefore have the potential to create further jobs and drive economic growth, if obstacles to growth can be tackled, such as limited access to finance, red tape, and difficulties entering new markets.
Almost 40 projects and €300 million in support
EU4Business includes almost 40 projects in the Eastern Partnership region, implemented both on a regional and bilateral level. The overall active portfolio amounts to over €300 million of EU support under EU4Business, and has triggered a total of more than €1.5 billion of loans granted by partner banks to SMEs in the region.
Helping SMEs grow
Across the six Eastern Partnership (EaP) countries EU4Business provides:
- Access to finance: including local-currency loans, finance for export-related investments or to adapt to EU standards, support for women entrepreneurs and start-ups; funding is often provided through third parties such as local banks or partner organisations, much of it made possible by indirect finance from the EU in the form of loan guarantees
- Access to markets: through business advice, export training and networking opportunities and trade missions to EU markets
- Access to knowledge: such as provision of advisory services, consultancy and technical support, and tailored trainings to support skills development
Supporting SMEs in DCFTA countries
SMEs in countries that have signed an Association Agreement, including a Deep and Comprehensive Free Trade Area with the EU, get additional support from the DCFTA Facility for SMEs. The DCFTA Facility will receive approximately €200 million of grants from the EU budget to unlock at least €2 billion of new investments by SMEs.
These funds help businesses in Georgia, the Republic of Moldova and Ukraine to adapt to new market requirements, streamlining processes, and investing in new equipment to comply with EU rules in areas such as quality and safety, energy efficiency and environmental compliance, and so make the most of a new more open EU export market.
Working with Business Support Organisations
EU4Business also helps organisations that advise SMEs. Intervention focuses on:
- improving the dialogue between government and business to create a better regulatory and business environment;
- creating networking opportunities between SMEs and BSOs in EU and EaP countries to open up new markets.
In 2017, a regional position paper was submitted to the EaP Business Forum in Tallinn, drafted with the input of around 200 business associations in the six EaP countries, including a set of policy recommendations “to improve conditions for growth and for the best possible business climate”.
EU4Business in figures (2009-2016)
More than €1.5 billion of loans have granted by partner banks to SMEs in the region under the EU4Business initiative, through which the EU has so far supported the creation of at least 10,000 jobs, while more than 110,000 SMEs have benefited from EU support and 20,000 people have received training.
Under the Eastern Partnership’s 20 Deliverables for 2020, endorsed at the 2017 EaP Summit, the EU has set the following targets to support SMEs over the period 2017-2020:
- For 2017-2020, the EU, in close cooperation with the International Financial Institutions, will aim to strengthen the economic opportunities of SMEs and reduce their financial risks by further stimulating lending in local currencies.
- A further €100 million of EU funds will be pledged to make local currency lending even more accessible to companies across the six countries, with the aim to have at least ¼ of EU financial support to SMEs provided in local currency by 2020.
- In addition, the new External Investment Plan includes an innovative guarantee that will help investing into key sectors in the partner countries with the involvement of private sector.
EU4Business programmes are co-funded by the EU and implemented by partner organisations. These include (both ongoing and completed projects):
- European Bank for Reconstruction and Development (EBRD)
- European Investment Bank (EIB)
- Kreditanstalt fur Wiederaufbau (KfW)
- The World Bank
- The International Trade Centre
- EESC (Eastern Europe Studies Centre)
- KAS (Konrad-Adenauer-Stiftung)
- SMEDNC (SME Development National Centre of Armenia)
- Initiatives for Development of Armenia (IDeA) Charity Foundation
- Microsoft Innovation Center Armenia Foundation
The EU4Business Secretariat ensures a coherent and coordinated approach to the implementation of EU4Business, as well monitoring and reporting of projects and programmes, and communication and visibility for the initiative.