Tuesday, April 26 2016 10:48

ArmInfo. The European Bank for Reconstruction and Development (EBRD), with support from the European Union (EU) through the Neighbourhood Investment Facility, is launching the Small and Medium-sized Enterprise (SME) Finance and Advice Facility as an important part of its broader efforts towards the development of the private sector in Armenia, according to the EBRD press-office.

The facility is part of the EU4Business initiative to support firms in Armenia. Within the framework of EU4Business in Armenia, the EU is providing more than ?30 million of support over the next four years.

The facility will deploy EU funds blended with those provided by the EBRD and other investors to support Armenian SMEs. The overarching goal is to improve access to finance for SMEs through a combination of investment projects and technical assistance and a diversification of sources of finance. This is expected to contribute to a number of positive outcomes such as increased employment, increased foreign and domestic investment, higher levels of transparency, capital market development and diversification of economic activity.

With private equity an important but under-represented component of financing in Armenia, one instrument under consideration by the EBRD and EU is an investment in a private equity fund focused on SMEs. The EBRD Transition Report 2015 highlights how equity financing - and private equity capital in particular - can play an important role in supporting investment, increasing productivity and improving management within firms.  Other financial instruments which are currently under-represented or lacking in Armenia may also be considered under the facility.

A further component of the programme is offering business advisory services to SMEs on a cost-sharing basis through the EBRD's Advice for Small Businesses (ASB) team.  ASB will promote international best practices through business advice provided by local consultants, industry expertise provided by international advisers and capacity-building to strengthen local institutions that support SMEs.

The EBRD financed 14 projects with total investments reaching US$ 140 million in 2015, unprecedented level in the 24 years that the Bank has worked in Armenia, and a clear indication of both the investment opportunities in the country and strong demand for EBRD funding.  Since the start of its operations in Armenia in 1992, the EBRD has invested over $1.13 billion in 148 projects in the country's financial, corporate, infrastructure and energy sectors, with 88 per cent of these investments being in the private sector.