SME Financing in the Middle East Sibel Beadle 11 May 2016

What is the EBRD? International financial institution with the mandate to promote transition to modern and well-functioning markets in 36 countries Owned by 65 countries, the EU and EIB Capital base of €30 billion Highest credit rating from all three main rating agencies Since 1991, EBRD has invested more than €107 billion in over 4,400 projects across private and public sectors in its countries of operations. In 2015: €9.4 billion invested in 381 projects Private sector accounted for 78% share Debt 82%, Equity 14%, Guarantee 4% Net cumulative business investment €107 billion 11 May 20162

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EBRD in the SEMED region Since 2011, nearly 100 projects (€3.5 billion) signed in Egypt, Jordan, Morocco and Tunisia Operational priorities in the region Support for the private sector, with particular emphasis on small and medium-sized enterprises (SMEs) Developing non-sovereign financing solutions for infrastructure, including PPP structures Promoting sustainable energy and energy efficiency initiatives Supporting and developing local capital markets What’s next in 2016: Lebanon expected to become a shareholder and country of operation West Bank & Gaza will receive investment via trust funds 11 May 20164

EBRD’s financial sector portfolio by region 11 May 20165

Strategic challenges for MSMEs in the region 11 May Lack of regional integration Access to debt finance –For micro-entrepreneurs –For women –For SMEs –For “gazelles” Access to growth equity Management expertise Formalisation challenges Access to financial markets Fair access to product/ services markets Access to advice

EBRD’s MSME product 11 May Promoting local banks’ and microfinance institutions’ capacity for lending to private micro-, small- and medium-sized firms (MSMEs). EBRD provides finance for on-lending through financial intermediaries. FI portfolio: €9.6 billion FI MSME portfolio: €3.8 billion Over 200 partner financial institutions in 28 countries of operation Note: as at 31 December 2015 EBRD MSME Portfolio by type of partner FI Targeted lending: Rural, Women in Business, Agricultural, Energy Efficiency

Egypt 11 May Pilot projects launched with NBE for targeted lending -Women in Business: $20m loan + training for women entrepreneurs -EgyptSEFF: $30m loan for energy efficiency projects Nationwide rollout of EgyptSEFF forthcoming with EIB and AfD EBRD’s primary objective in the sector is to provide financing to MSMEs through banks and non-banks To date, EBRD has invested $310m in senior funding and $290m of trade finance limits through 11 projects in Egypt Some loans have been accompanied by technical assistance which have helped improve clients’ practices EBRD FI’s Current Partners in Egypt

Jordan 11 May EBRD’s primary objective in Jordan is to provide financing to MSMEs through banks, leasing companies and microfinance institutions To date, EBRD has invested about $56m in loans and $150m in trade finance limits through 10 projects Examples of technical assistance tailored to clients’ needs : -Introducing a new risk analysis methodology -Developing an MSME-focused product range -Improving internal procedures -Contributing to staff training -Strengthening credit risk and asset/liability management skills Initiatives in Jordan to improve the business climate for MSMEs: -Cooperation with the Jordan Loan Guarantee Corporation -Participation on SME Financing Advisory Committee -Policy dialogue work on insolvency law & secured transactions reform EBRD FI’s Current Partners in Jordan Clients of EBRD’s partner, Microfund for Women.

Morocco 11 May EBRD is also currently developing a Women in Business program, aimed at improving women entrepreneurs’ access to bank finance EBRD FI’s Current Partners in Morocco BCP BMCE SGMB Crédit du Maroc Fondep EBRD’s primary objective in the sector is to provide financing to MSMEs through banks and microfinance institutions To date, EBRD has invested €290m in senior funding and $220m of trade finance limits through 11 projects EBRD has invested $60m in a $300m Eurobond issued by BMCE, a landmark transaction aimed at providing support to the first non-sovereign Moroccan Eurobond MorSEFF: financing facility for energy efficiency and small-scale renewable energy investments -BCP: €10m, co-financed by AFD and KfW -BMCE & leasing subsidiary: €20m, with further €15m co-financed by EIB, AFD and KfW

Tunisia 11 May SME finance is a key focus of IFIs in Tunisia in a context where they have difficulty accessing bank finance (need for collateral, caps on bank lending rates, ‘informal’ sector), while representing the largest potential for employment growth Since January 2014, EBRD has provided €140m of loans to Tunisian financial institutions for on- lending to MSMEs, and $40m in trade finance limits to banks, through 8 projects These loans are typically accompanied by technical assistance which have helped improve clients’ practices EBRD’s policy dialogue efforts in Tunisia include: -Insolvency law reform -Factoring law reform -Reform of the clearing & settlement system -Deposit insurance scheme -Interest rate caps regulation EBRD FI’s Current Partners in Tunisia Amen Bank (bank) Banque de Tunisie (bank) BTK (bank) UBCI (bank) CIL (leasing) Tunisie Leasing (leasing) Enda (microfinance)

Thank you! 11 May

Annexes 11 May

3 key principles of EBRD’s operations 11 May Transition Impact Sound Banking EBRD Additionality Promotes transition to market economies, private ownership and good governance with respect for people and environment Invests in financially viable projects, together with the private sector Supports, but does not replace, private investment. Provides financing at reasonable terms, otherwise not available

EBRD’s mandate in the financial sector 11 May Development of a sound banking sector through improvement of business standards, restructuring and consolidation, and increased competition Supporting resilient and efficient banks Strengthening the financial sector by achieving better diversification (including the development of the non-banking sector) and integration into global financial markets Improving financial sector effectiveness and integration Fostering deeper and broader financial intermediation in countries of operation through innovative financial products to reach under-served market segments and strengthen competition and market effectiveness in the financial sector Enhancing financial intermediation