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. Last Updated: 07/27/2016

Firms Vie for a Slice Of Institution Loans

Last month the European Bank for Reconstruction and Development, or EBRD, announced a $100 million loan aimed at strengthening the Russian banking sector. Within the next few weeks the World Bank, along with the EBRD, will unveil a $300 million credit line which will also be used to help Russian banks develop into more solid financial institutions. One of the three main purposes of this recent loan is to modernize the banks' information technology and automation programs.

The U.K.-based computer manufacturer ICL estimates that over the next five years between $500 million and $1 billion will be spent on information technology in Russia, Central Europe and Eastern Europe as part of loans from the World Bank, EBRD, and the European Union.

With so much money potentially available, hardware manufacturers and software companies make big behind-the-scenes efforts to position themselves as potential suppliers.

"The sums are large enough and so strategically important that this kind of intelligence is a crucial part of the whole sales process in these regions," says John Conner, the former head of representation at ICL Moscow who now co-ordinates ICL's monitoring of World Bank, EBRD, and European Union projects.

For computer vendors, the task is complicated by the fact that although most projects will need computers, the lending institutions rarely grant loans purely for the purchase of information technology. Usually the task is to get your company in position to be a secondary contractor, rather than a lead supplier.

For the large vendors, the World Bank, the EU and the EBRD are the most interesting institutions. The World Bank has made central financial stability a priority, which creates sales opportunities in the financial and banking sectors. The EU is looking to help rebuild state infrastructure in public social administration and improving revenue collection by helping governments update taxation and customs systems. The EBRD falls in between, focusing on privatization, enterprise restructuring, small and medium-sized businesses and the financial sector.

With large capital projects there can be as much as a four-year time span between the conception of a project to the actual procurement of computers. World Bank or EBRD projects tend to change as they roll out and are very often delayed. However, the latest $400 million in loans from the two institutions are already fully approved, meaning that the critical moment when the first equipment orders are placed is very close.

Suppliers who have done nothing about these projects until now are already too late. "If any computer company comes in right at the back end and has none of the contacts, relationships or visibility, it is not going to have the credibility to be able to make a serious bid," says Conner.

What is important is to be ready with applications and a relevant solution at the right time. Each of the large manufacturers has people in Washington monitoring the World Bank, in Brussels watching the EU, and in London covering the EBRD. They monitor official publications, but more importantly they try to keep in contact with task managers in these institutions. It is not only important to know what point in the pipeline a project has reached, but also to know the prevailing thoughts on them so as not to waste time and effort on chasing loans which are unlikely to offer real opportunities.

The effort, according to Conner, can be worth it in the end, since it can deliver an important long-term customer and provide a prestigious example which can lead to sales in other countries. "Our view is that these loans can be crucial. In a project the information technology purchased may only total $4-$5 million, but its importance goes beyond that single sale. If you have a global interest in this area then you make damn sure you know what's going on."

Robert Farish is the editor of Computer Business Russia. Tel: 198 6207, Internet e-mail: