The European Commission and the European Bank for Reconstruction and Development have signed a new guarantee agreement worth up to €76.75 million to support financing for smaller businesses in several neighbouring regions.
The guarantee is backed by the EU’s European Fund for Sustainable Development Plus (EFSD+), and is aligned with the EU’s Global Gateway strategy, the European Commission informed in a statement on Tuesday.
It is intended to make it easier for small and medium-sized enterprises (SMEs) and “MidCaps” — mid-sized companies — to access finance in the Western Balkans, the Eastern Neighbourhood, North Africa and the Middle East, Turkey, Central Asia and Mongolia.
Support will focus on companies whose projects meet Environmental, Social and Governance (ESG) criteria — standards commonly used to assess how a business manages environmental impact, social issues and corporate governance.
The EBRD will work with local banks to channel financing through two tools: the Supply Chain Solutions Framework, which provides short-term financing to suppliers working with major buyers, and the Risk Sharing Framework, which offers loans and guarantees for capital spending, working capital, acquisitions or business expansion.
What the EU funds and strategy are
Global Gateway is the EU’s strategy to support “smart, clean and secure connections” in areas including digital, energy and transport, as well as health, education and research systems.
EFSD+ was established in June 2021 and provides grants and guarantees for investment projects delivered through international financial institutions, with €39.8 billion in guarantee capacity globally for 2021 to 2027.
EU Commissioner for Enlargement Marta Kos said: “Protecting the environment and citizens’ wellbeing is a core part of becoming an EU member."
EU Commissioner for the Mediterranean Dubravka Šuica said the Commission wanted to ensure small businesses in partner countries “have the means to thrive”, and linked the guarantee to the EU’s Pact for the Mediterranean.
Zsuzsanna Hargitai, the EBRD’s Managing Director for SME Finance and Development, said the programme would support local companies in adopting ESG practices and increase access to finance and technical assistance.
