Tag Archives: SME

EIB EUR 6.5 billion energy-SME-transport and urban investment

We value regular and intensive engagement with civil society. It strengthens the EU Bank’s contribution to the economy and society everywhere. It builds on detailed consultation concerning specific projects and covers broader issues about strategy and the EIB’s overall role. Our exchange with NGOs and other civil society organisations is always fruitful, including when we come to different conclusions about specific initiatives. Yesterday was no exception. We learnt a lot.” said Werner Hoyer, President of the European Investment Bank.

At its first meeting of 2018 the Board of the European Investment Bank today approved a total of EUR 6.5 billion of new financing for 36 projects in 17 European Union countries and schemes in Africa, Asia and Latin America.

Engagement with Civil Society

The Luxembourg meeting of the EIB’s 28 EU Member State shareholders and the European Commission followed a day of discussions between Board members and representatives of more than 90 different civil society organisations.

Approval of EIB Diversity and Inclusion Strategy

The Board approved the EIB’s Strategy for Diversity and Inclusion that sets out priorities and targets for ensuring that the EIB itself better reflects society.

“A diverse and inclusive organisation increases staff engagement and will strengthen the impact of our activity. The EU Bank is committed to protect equal opportunities and foster a more inclusive work environment. The new Diversity and Inclusion Strategy reaffirms this commitment and sets out a clear path to achieve these goals over the next four years.” added President Hoyer.

New financing approved by the EIB Board

“New financing approved today demonstrates the EIB’s firm commitment to improving education, energy, transport, housing and water needs and ensuring that businesses can expand. This includes both new initiatives to transform the global green bond market and improve daily life in western, central and southern Africa.” highlighted President Hoyer.

Approval of EUR 1.5 billion financing for Trans-Adriatic Pipeline

Following detailed discussions the EIB Board approved EUR 1.5 billion of financing for the Trans-Adriatic Pipeline (TAP) that will cross Northern Greece, Albania and the Adriatic Sea before coming ashore in Southern Italy to connect to the Italian natural gas network.

The project is part of the Southern Gas Corridor, an initiative identified by the Council of Ministers, the European Commission, and the European Parliament as a strategically important component within the EU’s energy policy (Project of Common Interest).

Backing expansion of green bonds to support sustainable investment

Building on the EIB’s role as the first and largest issuer of green bonds worldwide the board approved support for a new USD 2 billion initiative to strengthen use of green bonds in emerging market in cooperation with a number of international financial institutions. This will address the limited issuance of green bonds in developing countries most vulnerable to a changing climate.

Support for renewable energy and security of energy supply

Reflecting the EIB’s commitment to support both renewable energy and strengthen security of energy supply, in addition to the Trans-Adriatic Pipeline, financing was approved for a new 17MW wind farm in Lower Austria, construction of a hydropower plant on the Nenskra river in Georgia and medium sized renewable energy projects across Africa.

New backing for energy distribution includes modernisation of distribution and roll-out of smart meters in Spain, improving reliability of existing distribution networks in Italy and construction of a new waste to energy plant in the Scottish city of Dundee.

Improving transport infrastructure

The board also approved financing for construction of the new Line 4 of the Athens Metro and trains for the new route, expansion and upgrading of Iceland’s main airport at Keflavik, a 7 km extension of the light-rail network in Morocco’s political and administrative capital Rabat including construction of 13 new stations.

In line with the EIB’s broad engagement to support transport across sub-Saharan Africa new financing was also approved for financing a rapid transit bus network in the Senegalese capital Dakar, including construction of 23 stations and acquisition of 144 new buses. The board also approved support to upgrade the Great North Road, a key access route to Indian Ocean ports in landlocked Zambia.

Strengthening support for urban investment

New investment totalling EUR 970 million to improve services, provision of social housing, sustainable infrastructure and reduce energy use in cities across Europe was also approved. This includes new finacing for urban development investment across Greece, renovation of cultural facilities in Innsbruck, and support for urban infrastructure in the north-western Romanian city of Oradea and towns across Poland.

The EIB will also back for a four-year social housing construction scheme in Hamburg and finance retrofitting and building of new housing units with a housing corporate in Rotterdam.

Supporting business investment with local partners

The board agreed more than EUR 1.3 billion of new financing to support investment by companies across Europe. This includes support for leasing activity in Poland, financing for export-focused firms and climate related investment in the Czech Republic and new credit lines with leading local banks in Finland, Italy, Spain and Portugal.

Improving internet access, education and water services

Future financing to improve high-speed internet services in the greater Toulouse region and construction of a new university campus in Helsinki was agreed.

Reflecting the EIB’s unique technical and financial experience supporting water investment worldwide new projects in Friesland and the Rwandan capital Kigali were also approved.

Investment Plan for Europe

Financing for four projects approved by the EIB board will be backed by the Investment Plan for Europe and support overall investment totaling EUR 4.1 billion.

Today’s approvals included the financing of high-speed internet in France and a windfarm in Austria, as well as support for smaller companies in Poland and for the Trans-Adriatic Pipeline.

EESC asks EU for better implementation of SME policies

Photo: EESC European Economic and Social Committee

“There is a need for a visible, coordinated and consistent horizontal policy for SMEs, based on a multiannual action plan and acknowledging the heterogeneity and diversity of European SMEs”, said Milena Angelova, EESC rapporteur for the opinion on Improving the effectiveness of EU policies for SMEs“.

In an opinion adopted at its July plenary, European organised civil society asks the Commission to better formulate and communicate SME policies

Small and medium-sized enterprises (SMEs) are the backbone of the European economy and have a huge potential to contribute to its development. Acknowledging that, the European Economic and Social Committee (EESC) is actively pushing EU institutions and Member States to develop strong SME support policies.

In an opinion approved at its July plenary, the EESC expressed concerns that the existing inefficiencies in the formulation and implementation of SME policies are hampering their effectiveness, and called on the Commission to address these issues.

The EESC’s vice-president, Gonçalo Lobo Xavier, added: “This opinion addresses absolutely essential questions which will have a real impact. I work closely with SMEs in Portugal, and I know the legislative framework is highly important because it does decide the way they work, their access to structural funds and other means of finance”.

The EESC praised the efforts to put SMEs at the heart of economic policies over the last decade. However, it stressed that EU policies are too broadly targeted and do not recognise the diversity and heterogeneity of SMEs. “The ‘one size fits all’ approach is a crucial problem that prevents policies from delivering”, added Ms. Angelova.

EU SME policies should explore the specific needs of microenterprises, family and “traditional” businesses, social enterprises, liberal professions, self-employed people, etc., which have frequently very different legal forms and ways of operation.

In addition, the Committee’s opinion calls on the EC to assess whether the current definition of SMEs corresponds to their heterogeneity, sectoral dynamics, specific features and diversity.

Ms. Angelova stressed: “SMEs often feel that policymakers have no idea of how their businesses actually function. The majority of EU support mechanisms seem unsuited to respond to their pressing needs for fast, clear and effective solutions”.

On the other hand, some small and micro companies are unaware of the existence of support mechanisms and have therefore no access to them. There is a wide communication gap between policy-makers and SMEs, which should be addressed urgently. The EESC pointed to the need to establish strong multi-stakeholder partnerships (SME platforms) and to involve compulsory SME representative organisations at European, national and regional level.

Members also expressed concerns over the implementation of the Small Business Act for Europe, and called on the “think small first” and “once only” principles to be made legally binding at all levels. Effective SME support policies are needed because, unlike in other parts of the world, in Europe companies have to comply with extensive regulations at both national and supra-national level, something which significantly increases the efforts and costs to do business.

 

NEW JOB CREATION AND GREEN GROWTH WITH ECO-INNOVATION

Investment in SMEs working in the area of environmentally innovative technologies is producing above average returns, creating valuable jobs and also alleviating environmental impacts, according to a new report.eco-innovation_Logo

The performance of young SMEs funded over the past two years under the eco-innovation component of the EU’s Competitiveness and Innovation Programme (CIP) has been analysed and shows impressive results. The investment of EU eco-innovation funds shows a 20-fold return – every euro invested has resulted in 20 euros for its beneficiaries. Furthermore each project supported has generated an additional 8 permanent full-time jobs.

European Commissioner for the Environment Janez Potočnik said: “The new study demonstrates that good business, job creation and environmental protection can go together and generate widespread benefits. This suggests that Europe has a strong niche in the green business, a niche which can promote competitive, resource-efficient and sustainable growth.”

The EU’s Eco-innovation funding focuses on five main sectors: material recycling; water; sustainable building products; green business; the food and drink sector (pure energy efficiency investments are not covered).

More than 240 projects funded by the eco-innovation scheme are already underway. The projects have been developed primarily by small businesses with innovative concepts needing early stage capital to realise their growth potential.

The eco-innovation projects which have received funding cover a wide range of sectors and activities from omega 3 fatty acid production from algae, to pollution-free leather production.

An analysis of the performance of the EU funded projects also reveal substantial ‘green’ benefits in the areas of water saving (170 million m3), equivalent to the annual water consumption of an EU city of 350.000 people. The reduced greenhouse gas emissions (11.6 mt when including CO2 emissions reduced by energy savings), equal those from the annual electricity use of 1.7m EU homes, and the 609.000 tonnes of reduced waste make up for the annual waste generation of an EU city of 125.000 people.

Converted into cash terms, the value of these environmental savings is put at more than EUR 800 million in 5 years.

Eco-Innovation is funded via the Competitiveness and Innovation Framework Programme (CIP) and has a budget of approximately EUR 200 million for the period 2008 to 2013. It supports technologically-proven solutions (products, processes, technologies) that help make better use of Europe’s natural resources.

For more details on CIP eco-innovation initiative: http://ec.europa.eu/environment/eco-innovation/

henry BORZI

RESTARTING THE SME CREDIT MARKET

Othmar Karas, MEP (EPP, Austria)  organized with  UEAPME, ACCA (the Association of Chartered Certified Accountants) and AFME (Association for Financial Markets in Europe) a conference “Restarting the sme credit market” some days ago in the  European Parliament in Brussels.

creditmarket

The aim was to discuss how to ensure a careful revival of SME loan securitisation, building on the recent promising developments in this market. The main conclusions indicate that while Europe still remains strongly dependent on bank financing, alternative finance sources need to be explored. Securitisation has the potential to spread risk intelligently, but we need more transparency, public guarantees, regulatory certainty and proper use of information. It is essential to continue the dialogue between institutions, stakeholders, banks and businesses in order to retrieve investors’ confidence.

The roundtable was moderated by Corien Wortmann-Kool, MEP (EPP, the Netherlands). The panel was comprised of Alessandro Tappi, Head of Guarantees, Securitisation & Microfinance, European Investment Fund; Richard Hopkin, Managing Director in the Securitisation Division, AFME;  Vilmos Budavari, Unit SME access to finance, DG Enterprise and Industry, European Commission; Emmanouil Schizas, Senior Economic Analyst, ACCA; Gerhard Huemer, Director Economy Policy, UEAPME.  The event was attended by over 100 participants.

A more detailed report on the roundtable and the power point presentations are available here

http://www.accaglobal.com/en/discover/news/2013/02/sme-capital.html

Discussions revealed that:

o    Further support mechanisms are necessary to help boost the supply of credit for, and encourage investment in SMEs, since 80% of their financing is through loans. Would-be lenders to SMEs typically face two major challenges: high credit risk and higher costs of capital when lending to small businesses. Speakers stressed the need for alternative finance solutions in the long term, involving more equity financing but also collateral or guarantees through public funds. However, they also noted that it will take time to diversify EU SMEs’ financing away from debt – hence in the medium term it is important to facilitate lending to SMEs through securitisation.

o    There is now a consensus that securitisation, used in the right way, could spread the risk involved in SME lending intelligently. It is imperative however to create a proper set of instruments. To achieve recovery in securitisation, simplicity and transparency of structures, as well as regulatory measures will be needed. The European Commission and the European Investment Fund are supportive of the tool and are committed to promoting access to SME bond markets and securitisation. The newly published Green paper on long-term finance includes a section covering securitisation, though some speakers regretted that the Green Paper seemed too soft on the regulatory incentives against investing in SMEs.

o    Securitisation is only another way of combining the same raw materials of finance: information, control, collateral, and risk. The more it relies on information, the better the outcomes for all parties. Credit rating agencies have traditionally helped reduce the cost of producing such information, but current proposals for rating agency liability could make ratings impossible and cause the market to freeze as it did in the US between 2010 and 2011. Another way is to improve the opacity of products through initiatives such as the Prime Collateralised Securities (PCS) label.