EFSE Microfinance Fund Reconfirms Support to MSEs in Southeast Europe, Commits EUR 900m

Microfinance Focus, May 27, 2010: The European Fund for Southeast Europe (EFSE) has announced its reconfirmation to support small business in Southeast Europe by committing EUR 900 million for local financial institutions in the region. With its investments, EFSE wants to refresh investors’ confidence in the region where it believes that despite the economic turbulence there are many sound financial institutions and companies. It also announced that EFSE’s Annual Meeting will be held from June 8-10, 2010 in Ohrid, FYR Macedonia, with more than 200 participating development finance experts, banking and finance practitioners from all over the world.

The investments will enable commercial banks and those specialised on small business as well as microfinance institutions in Southeast Europe to address the financing demands of the local small business sector and the demand for better quality housing from low-income, private households. It will also help them to provide medium and longer-term business loans for investments and working capital purposes and to support home improvement, enlargement, (re-)construction and purchase, with maximum loan amounts of up to EUR 100,000. The money is specifically meant to finance scarce long-term loans to small business, in particular to micro and small enterprises (MSEs), as well as housing improvement loans to low-income private households.

“EFSE has chosen Macedonia as the host of our Annual Meeting to send a clear signal of our commitment to this country and the region of Southeast Europe as a whole. Small business is the growth engine for the economies in Southeast Europe. It is vital for it to have access to credit in order to restart economic growth in the region. EFSE will do just that with the EUR 900 million of financing it is prepared to provide to local financial institutions by 2014. This will allow us to facilitate approximately 350,000 small business and housing loans. We also look forward to exploring additional cooperation possibilities with those financial institutions in Southeast Europe that share our mission of extending support to small business”, said Dr. Klaus Glaubitt, Chairman of the Board of Directors of EFSE. “With our investments we also want to refresh investor confidence in the financial sectors in our region of operation. Despite these turbulent times, there are still sound financial institutions and successful companies in Southeast Europe worth being supported.”

Many of EFSE’s investments will also be supported by a technical assistance facility, the EFSE Development Facility. The Fund will step up its service to provide its partner lending institutions with institution-building support. In particular, it will help them in managing the effects of the crisis. Technical assistance will be provided especially in the areas of credit risk & delinquency management, risk management and internal control.

Overall, since its inception in December 2005, EFSE has offered approximately EUR 684 million in financing to commercial banks, small-business banks and microfinance institutions throughout Southeast Europe. These partner lending institutions have on-lent EUR 1.1 billion of EFSE funds in the form of roughly 216,000 business loans to MSEs, and as housing loans to low-income private households.

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