SME Finance Institutions and Schemes

Inefficient financial markets are a characteristic of many transition and emerging countries. Usually, the lack of availability of equity and credits affects primarily SMEs as well as micro enterprises. This is why our assistance in the financial sector focuses on financing schemes and institutions for SMEs.

Our work addresses both the supply and demand side of the financial markets. On the supply side, we assist governments, institutions and financial intermediaries in increasing the credit supply effectively available to SMEs. On the demand side, we assist SMEs and business support institutions in applying for loans and distributing information on the availability and conditions of credits.

Examples

set-up and management of credit units;
project identification, evaluation and implementation of direct investments in SMEs for development banks;
selection of financial intermediaries for the management of SME credit schemes;
technical assistance to banks in transition and developing countries;
preparation of procedures and manuals for loan funds;
design and implementation of training programmes for financial intermediaries.

Project Examples

Syria: Under the Management Skill Development Training Programme for the Banking sector PC&A provided trainings in the work and performance appraisal, training of trainers, management training in Human Resources and Strategic Management as well as job analysis and development of job description. Around 60 senior and middle managers and specialists attended the training modules in areas of Human Resources and Strategic Management, and over 80 attendees from junior to senior level staff were trained in communication skills, management of change, team building, conflict management and performance appraisal. Specific attention was given to the training of around 100 bank employees in performance management appraisal and about 200 staff members of the state-owned banks in annual performance appraisal and interview techniques.
Madagascar: One of Madagascar's most pressing development obstacles is the low level of investment in the agricultural sector. PC&A conducted a feasibility study on how to spur investment in the agricultural sector by improving the access to micro, small and medium finance of rural enterprises and the rural population in general. It identified practical measures to increase the availability of micro, small and medium finance especially in those regions previously uncovered by the financial market. The study was presented to the Ministry of Agriculture and recommendations approved for implementation.
Madagascar: PC&A was contracted by the Millenium Challenge Corporation (MCC) to develop opportunities to create, implement and promote new structures and new types of financing instruments and delivery mechanisms to benefit rural producers in MCA (Millenium Challenge Account) Madagascar’s areas of activity. PC&A conducted five studies regarding financial instruments, forms of organization to improve access to credit in rural areas, improvements in transparency, and methods of delivery of financial instruments.
South Africa: The EU implements Local Economic Development (LED) Support Programmes in various regions of South Africa, together with the provincial governments and a broad range of other stakeholders. In this frame, we supported the Programme Management Units in initiating programme activities, especially those related to the establishment of a financial support scheme for micro, small and medium sized enterprises (MSME) in the province.
South Africa: PC&A completed an analysis of the mismatch in the availability of and demand for private financial instruments in Limpopo SMME (Small, Medium and Micro-sized Enterprises) sector and formulated options and recommendations for providing financial instruments for Local Economic Development (LED) in Limpopo Programme
Morocco: PC&A was called upon to improve the “Financial Guarantee Institution Support Programme” (PAIGAM), a 30M EUR EC-funded loan guarantee programme. The overall aim of the PAIGAM is to strengthen the operations of two credit guarantee institutions (CGI) and to facilitate access to credit to Moroccan SMEs. PC&A proposed several measures including the modification of eligibility criteria and the simplification of the capital allocation procedure between the CGI and their final distribution. PC&A also recommended the introduction of a prudential credit ceiling and the complete revision of the manual of operational procedures
Morocco: Pohl Consulting & Associates (PC&A) was called upon to review and make recommendations on improvement to the Programme d’Appui aux Institutions de Garantie Marocaines – PAIGAM, a €30m EC-funded loan guarantee programme. The manual of operational procedures has also been completely revised. Finally an action plan was proposed to be followed up to the end of the programme in May 2009.

Morocco: The Programme “Support to Businesses” is financed by the EU and the government of Morocco in the context of the European partnership. The objectives of this specific project were to provide targeted training to the Management of the National Guarantee Fund. PC&A implemented 6 training modules: Company quotation; Credit File presentation Tools; Follow up and monitoring of credit risk; The handling of failing businesses; Provisioning methodology; The specificity and the practice of banking accountancy within the National Guarantee Fund, with a highly successful evaluation.
Tunisia: PC&A implemented awareness-raising actions towards banks with a view to incite them to subscribe to the new guarantee system managed by SOTUGAR (Société Tunisienne de Garantie) and led an audit in order to validate the procedures, the organisation and the statistic and accounting tools of SOTUGAR.
ACP Countries: PC&A formulated a proposal for the provision of EC development finance to assist in the establishment of the Global Index-Based Insurance Facility (GIIF) for the purposes of facilitating ACP countries’ access to the global reinsurance market, taking into account the questions of need, equity, efficiency and sustainability, and of how to address best the potential conflict of interest between general market development and operations of a (first, innovative) private sector company.
Central America: Exit Strategies for Credit Funds. For the past 20 years the European Union has financed projects to support the disadvantaged regions in Nicaragua, Honduras and El Salvador. The total volume of funds channelled by these projects into credit funds has been in the range of EUR 150 million. An external evaluation undertaken in 2003 concluded that the impact of these credit funds was neither satisfactory nor sustainable. In response to the evaluation results, the objective of the project was to develop exit strategies for those credit funds which had not yet been transferred to national institutions.
Central and Eastern Europe/CIS: Direct Investment Facility framework contract. We provide a range of multi-disciplinary services (legal, accounting, strategic and investment advisory services) to the DIF management-team of the European Bank for Reconstruction and Development (EBRD) to support their operations relating to SME direct investment, privatisation and post-privatisation, and restructuring across all Central and Eastern European and CIS countries. More than 40 different investments have been screened. Due diligences, risk assessments, financial simulations and exit strategies have been prepared.
FYR of Macedonia: Review of the Micro Credit Line and analysis and recommendations for solutions to existing problems and possible future improvements.
Hungary: Evaluation of the EU funded Micro Credit Programme (MCP), and design of an M&E system. At the time the evaluation took place, the MCP had received over 25,000 credit applications and had granted more than 14,500 credits for a total amount of over EUR 40 M.
Jordan: Development of the Jordanian Financial Leasing Industry. We assisted the Ministry of Industry and Trade, the Jordan Loan Guarantee Corporation (JLGC) and financial institutions in facilitating the further development of financial leasing as an instrument suitable for providing funds to Jordanian SMEs seeking to acquire new equipment. Our tasks included a refinement of regulations dealing with financial leasing, the further development of JLGC services to cover financial leasing transactions, and the establishment of an industry association for financial leasing.
Jordan: PC&A assisted the Jordan Kuwait Bank (JKB) in improving the overall provision of banking facilities to Jordanian SMEs, including a continued improvement in the availability of medium and long term finance. As a result of our recommendations, the Jordan Kuwait Bank has developed its products and services and has started to focus on enhancing existing retail products and establishing new services that suit SMEs.
Jordan: PC&A provided technical assistance to various institutions and companies in the Aqaba Economic Free Zone (ASEZ). We identified bottlenecks and weaknesses of the Jordanian shipping, freight forwarding and clearance industry, notably in terms of deficiencies in the institutional support services (customs, port authorities etc.), and made recommendations for improvements.
Kenya: PC&A prepared a programme in support of micro and small enterprise (MSE) development in Kenya. The project covered the development of a favourable legal and regulatory framework, as well as the development of business support services and measures to improve the access of SMEs to finance.
Madagascar: One of Madagascar's most pressing development obstacles is the low level of investment in the agricultural sector. We therefore assisted the Ministry of Agriculture in developing alternative options in a feasibility study on how to spur investment in the agricultural sector by improving the access to micro, small and medium finance of rural enterprises and the rural population in general.
Malta: We assisted the Government of Malta in preparing the country for the implementation of Structural Funds after EU accession in May 2004. We defined five priority areas for implementation of Structural Funds and delivered capacity building measures with the view of familiarising the government with, inter alia the application procedures, selection criteria, co-financing measures, data exchange requirements and monitoring and evaluation systems.
Morocco: PC&A assisted the European Investment Bank (EIB) in launching an equity capital and equity-like capital fund for SMEs. After an assessment of the existing financing mechanisms available to SMEs in Morocco, we identified the instruments and products that should be part of the EIB's portfolio.
Romania: TA for the preparation of the SME Credit scheme under the Phare 2000 Regional Development Sub-Programme. In this assignment we (a) prepared an assessment report of all SME financing instruments in Romania, which included the identification of best practices; (b) designed the overall SME credit scheme; (c) prepared the tender dossier and prepared and published the tender announcement for Romanian banks to operate the scheme; and (d) created a draft operations manual of procedures for implementation of the credit scheme.
South Africa: In the framework of the Local Economic Development Programme of the KwaZulu-Natal province, PC&A assisted in the establishment of a financial support scheme for micro, small and medium sized enterprises (MSME) in the province. After a review of South African capital markets to identify gaps in access to finance for MSMEs, we assisted in the setting up of a 22 M EUR fund, in defining the financial mechanisms under the fund and the conditions for access to finance and in preparing a manual of procedures for the disbursement agency.