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SME Policy Index: Eastern Partner Countries 2016

Assessing the Implementation of the Small Business Act for Europe

image of SME Policy Index: Eastern Partner Countries 2016

The SME Policy Index is a benchmarking tool designed for emerging economies to assess SME policy frameworks and monitor progress in policy implementation over time. The Index has been developed by the OECD in partnership with the European Commission, the European Bank for Reconstruction and Development (EBRD), and the European Training Foundation (ETF) in 2006.

For the Eastern Partner Countries, the assessment framework is structured around the ten principles of the Small Business Act for Europe (SBA), providing a wide-range of pro-enterprise measures to guide the design and implementation of SME policies based on good practices promoted by the EU and the OECD. It is applied to the Eastern Partner Countries for the second time since 2012.

The Index identifies strengths and weaknesses in policy design and implementation, allows for comparison across countries and measures convergence towards good practices and relevant policy standards. It aims to support governments in setting targets for SME policy development and to identify strategic priorities to further improve the business environment. It also helps to engage governments in policy dialogue and exchange good practices within the region and with OECD and EU members.

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Access to finance for SMEs (Dimension 6) in Eastern partner countries

Access to finance remains a key challenge for SMEs in the Eastern partner (EaP) region. It is cited by companies in most countries in the Business Environment and Enterprise Performance Survey (BEEPS V) as among the top three most severe obstacles to doing business. This chapter focuses on government policies to encourage SME lending and assesses the availability of finance instruments, in line with Principle 6 of the Small Business Act for Europe. Bank lending remains the main source of finance for SMEs across the region, although the global financial and economic crisis has seen lending generally tighten. Alternative sources of financing, such as leasing, factoring and venture capital, remain limited, while micro-financing is the most common non-bank option in many countries. Some progress has been made to strengthen the legislative and regulatory framework for SME lending. Availability, coverage and accessibility of credit information have generally improved, however challenges remain in enforcing creditors’ rights. Generally, financial literacy remains low and initiatives to raise skills in financial management are limited. Across the region, governments could strengthen their activities to encourage bank lending to SMEs and improve their legal and regulatory frameworks to realise the potential offered by the currently underdeveloped non-banking financial sector.

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