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SME Policy Index: Eastern Partner Countries 2020

Assessing the Implementation of the Small Business Act for Europe

image of SME Policy Index: Eastern Partner Countries 2020

The SME Policy Index: Eastern Partner Countries 2020 – Assessing the Implementation of the Small Business Act for Europe is a unique benchmarking tool to assess and monitor progress in the design and implementation of SME policies against EU and international best practice. It is structured around the ten principles of the Small Business Act for Europe (SBA), which provide a wide range of pro-enterprise measures to guide the design and implementation of SME policies. This report marks the third edition in this series, following assessments in 2012 and 2016. It provides a comprehensive overview of the state of play in the implementation of the ten SBA principles, and monitors progress made since 2016. It also identifies remaining challenges affecting SMEs in the Eastern Partnership (EaP) countries and provides recommendations to address them based on EU and international good practice examples. The 2020 edition also features a novelty: An assessment of three new dimensions going beyond core SME policy (competition, contract enforcement and business integrity) looking at key structural reform priorities that are critical to establishing a level playing field for enterprises of all sizes and ownership types.

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Pillar C – Access to finance

Access to finance remains a major obstacle for SMEs across the Eastern Partnership region, and features prominently in the Small Business Act as key to SME development. This chapter assesses the policies in the region that support SMEs’ access to external sources of finance, assessing progress in establishing a comprehensive legal and regulatory framework to support external financing, the availability of bank and non-bank finance, venture capital and financial literacy. Overall, the region has made some progress, but the lending environment remains difficult and financial inclusion remains low, particularly in countries that have suffered from difficulties in their banking sectors in recent years. All countries have a robust legal and regulatory framework in place to support lending, though the need for enforcement remains critical. Financial sector supervision has strengthened, and the availability and accessibility of credit information has improved. Bank lending remains the single most commonly used type of finance, and many countries have or are working towards putting credit guarantee schemes in place to support lending expansion. In contrast, non-bank financial instruments such as microfinance, leasing and factoring, and equity financing remain largely underutilised. Some countries are currently undertaking reforms to better regulate leasing and factoring, which is expected to increase uptake in the medium term. Lastly, notable improvements have been made in the area of financial literacy. All countries now have a financial literacy strategy in place, although thorough implementation and monitoring will be essential to gauge long-term and systemic impact.

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