EFSE Launches $ 321 Million Lending Project

TIRANA, March.5 – The European Fund for Southeast Europe (EFSE) launched Tuesday a 244.5 million euro ($321 million) lending project to help promote development in southeastern European countries. The fund will provide up to 150,000 small loans of 4,000-6,000 euros ($5,255-7,883) to small enterprises and farmers in Albania, Bosnia and Herzegovina, Bulgaria, Kosovo, Macedonia, Moldova, Montenegro, Serbia and Romania. “We are convinced that EFSE is the modern version of the Marshall plan of the 21st century,” said Klaus Maurer of the Fund. The administration of these revolving finance funds will be handled by the German government-owned bank KfW. Operations management is trusted to Oppenheim Pramerica Asset Management S.a r.l., established as a joint liability company in Luxembourg in 1988, and Bankakademie e.V., a private association founded in 1957. Supervision will be done by Citibank International Luxemburg.
In the following 5 years EFSE will offer approximately 120,000 loans to small and medium size businesses especially agricultural farmers. It will also offer 30,000 loans for solving the housing problem and open up 30.000 new workplaces in the region.
The launch activity was organized in Tirana and greeted by BoA’s governor, Ardian Fullani. In his speech Fullani gave a summary of BoA’s measures to guarantee a sound financial system properly regulated. He also guaranteed that the bank welcomed this initiative of the EFSE. Fullani emphasized that the project brings two benefits to Albania: the encouragement of small and medium size businesses and the increasing of economic and financial cooperation in the region. ” The presentation of today’s initiative sends a clear signal of confidence towards our developmental practices and ensures the diversification of the financial system into layers of financial spaces available for small and medium size businesses. It is a strong message to SMEs that have great ambitions,” Fullani added.
Finance Minister, Ridvan Bode estimated that approximately 80 million euro will be used out of this fund to help out agricultural and family businesses which are usually small and do not get any preferential treatment by the existing banking sector. “This is a unique opportunity for Albanian business and the fund will have a positive influence on our country’s economic performance,” Prime Minister, Sali Berisha said.
One of the positive aspects related to the financial scheme made available by EFSE is that businesses involved in lunching new products and services but which have not had access to financial capital as yet will now have an opportunity to do so.
The actual micro-credit system in Albania has been so far not very helpful to small businesses though it occasionally allocates short term loans. The existing legal framework prohibits micro-credit agencies to have deposit schemes thus increasing the performance risks. EFSE will use both micro-credit agencies and second level banks to give out the funds. Small enterprises will not need to have collateral but will need to report accurate data on the cash flow and revenue figures of their activity. The decision will be weighted according to this information.
EFSE is an agency funded by the European Union and business donors, provides long-term funding for micro and small businesses, as well as housing and rural finance. It is the successor of various finance funds and has provided more than 45,000 loans worth of almost euro280 million (US$368 million) since being set up in 1998.