News archive - Enterprise Development and Innovation Facility to support development of competitive small and medium enterprises in Western Balkans

Private sector development as a key precondition for increasing the competitiveness of all the economies of the Western Balkans is linked to a number of policy areas including enterprise policy, public administration reform and infrastructure development. It tackles numerous issues such as small and medium size enterprises (SME) policy and financing, human capital development and research and innovation.

Small and Medium Sized Enterprises (SMEs) are the backbone of Western Balkan economies, however their development is hindered by a lack of access to finance and a limited capacity to innovate.

To support the development of SMEs in the region – particularly innovative and high-growth SMEs (IHGSMEs) – economies of the region in partnership with the European Commission, the European Investment Bank Group and the European Bank for Reconstruction and Development will launch the Enterprise Development and Innovation Facility (EDIF) in Paris on 5 December 2012.  A key objective of the Facility is to enable firms to access needed financing by providing direct financial assistance from equity funds and establishing credit guarantees to reduce investor risk. The EDIF is expected to attract approximately EUR 142 million of initial capital from the EC, IFIs, beneficiaries and bilateral donors, resulting in estimated leverage for SMEs of more than EUR 300 million.

The EDIF will also work closely with Western Balkan governments to build policy maker capacity in successfully designing and implementing policy reforms for IHGSMEs. The OECD Investment Compact has led the preparatory work for this pillar by identifying country-specific reforms that will enhance the regulatory framework for high-potential firms and foster the development of venture capital financing in the region.

This reform prioritisation work, which started in March 2012, involved a review of key SME policy and business climate reforms in the region, a donor mapping exercise, a company survey, and stakeholder roundtables in every economy of the region. Each government then identified three priority reforms to be implemented over the next five years with the support of the EDIF.

The project is expected to provide timely equity financing assistance at development and expansion stages in innovative SMEs and provide development and expansion capital to the established SMEs with high-growth potential in their respective markets. It should also improve access of small SMEs to bank lending and lower the cost of borrowing for expansion stage by providing SME loan portfolio guarantees to financial intermediaries, and support beneficiary governments in implementing priority reforms to create favourable regulatory environment for innovative and high-potential SMEs.

Source: RCC

Geographical focus
  • Western Balkans
Scientifc field / Thematic focus
  • Cross-thematic/Interdisciplinary

Entry created by Danaja Lorencic on November 23, 2012
Modified on November 23, 2012