The development of small and medium-sized enterprises (SME) in Belarus is bounded by a
number of factors, of which the limited access to financial sources is a key problem. Evidence for
that assessment comes from SME surveys and from a quantitative and qualitative analysis of the
Belarusian financial sector. The main sources of finance for Belarusian SME are internal equity and
banking finance. Other sources of external finance play only marginal roles. This fact indicates
that the SME finance market is underdeveloped. Furthermore, the volume of credits extended to
the SME sector, which can only be estimated since reliable data are missing, is rather small
compared to other European countries. To sum up: sources of finance are limited in terms of size
and in terms of types.
International experience shows that policy can facilitate the access to finance for SME.
Firstly, a sufficient database on SME finance in general and SME lending in particular is a
prerequisite for an effective policy design and impact analysis. A regular Belarusian SME banking
credit monitor would be a good start. The set-up of such a credit monitor entails low costs and
has an enormous information power for policy decision making.
Secondly, in order to improve the SME’s endowment with equity finance, policy makers should
facilitate the diversification of equity sources. Above all, an efficient regulatory framework for
private equity markets is needed for Belarus. This includes a framework for Venture Capital
funding, which is especially important for innovative SME.
Thirdly, in order to improve the access to external debt finance, a loan guarantee scheme (LGS) is
international best practice. A good designed LGS that helps to overcome collateral constraints has
a high impact on the targeted credit growth and entails only reasonable public outlays. Other
credit market interventions such as interest subsidies are not recommendable, because they
require high public expenditure and thus have low policy efficiency.
Furthermore, international best practice on SME innovation finance policy might be of interest for
Belarus. Such a public support measure boosts innovation capacity of SME without drawbacks for
the national research and development program. The equal access for both private and state
enterprises to innovation programs and all kind of public support measures is the key prerequisite
for SME finance policy effectiveness.