The EBRD's turnaround management and business advisory services programmes have received €11 million from donors for its western Balkans projects.
The money will be used for initiatives in Serbia, Montenegro and Kosovo. The biggest donation, worth €6.5 million, comes from European Agency for Reconstruction (EAR), an EU agency created to support the western Balkan countries.
The EBRD's turnaround management (TAM) programme helps restructure ailing small enterprises. The bank calls on some of the world's most experienced business leaders to act as consultants to help modernize management practices and improve productivity.
The business advisory services (BAS) initiative helps train local consultants who, in turn, advise micro-enterprises and SMEs on business performance.
Although the bank has over 500 active TAM/BAS projects throughout the region, it is focusing most of its efforts on south-east Europe, Russia and the CIS, according to Charlotte Salford, director of both businesses at the EBRD.
Serbia and Montenegro, for example, is the multilateral's most active nation for turnaround management. The bank has 48 TAM projects there and is gearing up to sign another 40 in Serbia alone. Much of the work will concentrate on restructuring white goods companies.
The process is fairly straightforward, says Salford. The bank has over 3,000 advisors, who are on special contracts, who are sent to work with a particular company to help increase productivity and turnover. These advisors are experienced specialists in the ailing company's field. "We always look at what each company needs to change," she says.
Salford cites one example in the Czech Republic when the bank spent three months finding a specialist in chunky dog food to work on a particular project. These advisors, who are former chief executives, can spend up to 18 months helping management restructure.
"Every project is actively managed," says Salford. "The company doesn't pay a consultancy fee though the management has to follow our recommendations. We can leave at any time [in the process] if we think we are not getting appropriate responses."
The EBRD, she adds, doesn't buy shares in the enterprise or take up a position on the management board but once a company is restructured then it may be recommended to the bank as a potential investment. "There is no commitment from either side, though," she says.
The bank helps small enterprises. The average number of employees for each company is 400 and the average turnover is €1-2 million. The projects are 100% donor funded. The only criteria the EBRD uses in choosing potential firms is that the "management must be willing to change," says Salford.