Project Experience

Russia

Downscaling: Northern Caucasus MSME Development Finance Project, 2010-2011

EBRD’s North Caucasus Development Initiative was an institution building project implementing lending to micro, small and medium enterprises (MSME’s) in the North Caucasus Federal District of Russia (NCFD). The Technical Assistance was financed by the European Union. The project worked with five Partner Banks/Organisations. The first (and for a long time only) Partner Bank was VTB24, which is among the leading banks in retail and MSME lending in the Russian Federation including experience from under the Russia Small Business Fund. Bank Vozrozhdenie and the Microfinance Organization FINCA joined the programme in April 2011, Center-Invest Bank and Rosselkhozbank in May 2011. 

The project had a twofold impact. It provided a stable source of financing to the MSME sector in the NCFD, and it strengthened the financial sector/banks, building the skills and giving them the tools to make MSME lending a profitable business in the difficult conditions of the region. The project started in late 2009 in a challenging operating environment, and was implemented under difficult security conditions. After an intensive preparation phase which included three market studies and detailed negotiations and preparatory work with VTB24 and other banks, lending operations started in February 2011 with VTB24 in Vladikavkaz/North Ossetia-Alania. The programme was later extended to Pyatigorsk/ Stavropolskiy Kraj, Nalchik/Kabardino-Balkaria, and Stavropol/Stavropolskiy Kraj.

At the end of the project in December 2011, the outstanding loan portfolio had reached USD 44.3 million in 1,692 loans. The PAR>30 was below 1 percent. The project was successfully finished at the end of December 2011

Consulting Services in Order to Analyze and Explore the Energy Efficiency (EE) Potentials of Existing Publicly Owned, Privately Owned and for Office Buildings, Including Industrial and Commercial Buildings of SME Facilities in the Russian Federation,2011- 2012

The energy intensity of Russia’s GDP is 3.1 times higher than in EU countries. This is due to natural factors like the cold climate, but also highly energy inefficient equipment and buildings The Energy Strategy Paper of the Russian Federation aims to fully utilize the potential of (technical) energy savings and thus decrease the energy intensity of the Russia’s GDP by 27 percent by 2020. EBRD and IFC already support this effort with EE finance programmes, and KfW intends to enter into this field.

In October 2011 therefore KfW commissioned LFS (Consortium Leader) and FICHTNER (Consortium Partner) to carry out a study (i) to analyse the EE potentials of industrial, commercial and residential buildings in Russia, (ii) to analyse the existing EE lending programs, and (iii) to develop proposals for new financing mechanisms (loans) for EE investments in the building sector that are economically feasible and efficient in terms of energy savings and reduction of CO2 emissions. The project is conducted by International Experts of LFS and FICHTNER that work at their corporate headquarters and conduct short-term missions in the field, and Local Experts of FICHTNER that work in the field.

Support to Asian Pacific Bank in SME Lending and Risk Management 2011 – 2012

In October 2011, LFS was contracted by Asian Pacific Bank (APB) to assist the institution in strengthening its capacity to assess and monitor the risk related to lending to SMEs in line with best international practice and taking into account the Russian environment. The project was financed by EBRD, which was considering to extend a senior loan to APB for on-lending to SMEs to Asian Pacific Bank. The project was successfully finished in August 2012 and a certificate of recognition was issued by the Bank for our services.