Identification of best NPBI model for Estonia

Identification of best NPBI model for Estonia

The Commission supports Estonia in its aims to identify the most effective National Promotional Banks and Institutions (NPBI) model for Estonia to enhance the capabilities of Estonian Business and Innovation Agency (EIS).

Context 

The Estonian government, under its long-term strategy "Eesti 2035," aims to transform the national economy into one that is innovative, sustainable, and knowledge based. This transformation aligns with various national policies, such as the Development Plan for Research and Development, Innovation, and Entrepreneurship and the Industrial Policy 2035, which prioritise economic resilience, digital innovation, and environmental sustainability. Central to this agenda is the need to diversify financing sources for businesses and improve access to finance. 

In response to these priorities, Estonia established the Estonian Business and Innovation Agency (EIS) in January 2022 through the merger of the KredEx Foundation and Enterprise Estonia. Building on the core missions of both institutions, EIS’ mandate is to strengthen Estonia’s global competitiveness and foster entrepreneurship. EIS is also responsible for accelerating the triple transition (green, digital and innovation) and improving the Estonian business environment. However, it has a limited mandate and faces limitations in addressing its strategic goals due to its funding model and legal framework. The project, therefore, aims to identify the most effective National Promotional Banks and Institutions (NPBI) model for Estonia to enhance the capabilities of EIS. The project is financed by the European Commission via the Technical Support Instrument (TSI) and provided by Bpifrance.

Support (to be) delivered  

The project provides the Estonian government with support in the following areas:

• Revision of EIS’ difficulties in fulfilling entrepreneurs' expectations, particularly in underserved market segments; 
• Proposal of the most economically viable solutions (in terms of financial instrument, processes, etc.) for addressing market failure from the perspective of State finances; 
• Establishment of options for the best operational model for offering financial instruments and the creation of a specific action plan to implement the optimal NPBI model;
• Propose processes and financial autonomy to create financial instruments to effectively address various crises. 

This support is delivered in form of peer-to-peer exchanges, expert advice, and reports.

Expected results 

The general objective of this project is to support Estonia in its effort to implement the best NPBI model for EIS. The technical support will allow delivering the necessary reports, information, and recommendations to enable the Estonian government to make a more informed decision regarding the reform of the institution and the design and offering of financial instruments in Estonia. 

The expected long-term effect of this project is to contribute to the improvement of the financial capability of the EIS for guaranteeing large-scale projects, green and innovative investments, and the expansion of Estonian companies into foreign markets. This will ensure optimal capital utilisation and effective risk mitigation when offering financial instruments in the Republic of Estonia.