EFSE reconfirms support for small business in FYR Macedonia

EFSE prepared to provide additional EUR 60 million of financing to local financial institutions, thereby ensuring a continuous flow of long-term credit to micro and small enterprises in Macedonia

EFSE Annual Meeting 2010 to take place in Ohrid in two weeks – responsible finance key theme

Skopje, May 26, 2010 – The European Fund for Southeast Europe (EFSE), one of the world’s largest microfinance funds, reconfirmed the support it would give to small business in Macedonia at a press conference held today in Skopje, Macedonia. The conference came in preparation for the Fund’s Annual Meeting to be held from June 8-10, 2010 in Ohrid with more than 200 participating development finance experts, banking and finance practitioners from all over the world. EFSE announced that, over the next five years, it is prepared to provide an additional EUR 60 million of financing to Macedonian financial institutions for on-lending. 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.

As a result of the financial and economic crisis, the availability of particularly medium and long-term credit to businesses in Macedonia has considerably declined. Here, MSEs are predominantly affected.

The investments will enable commercial banks and those specialised on small business as well as microfinance institutions in Macedonia 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.

“EFSE has chosen Macedonia as the host of our Annual Meeting to send a clear signal of our commitment to this country and our region of operation. Small business is the growth engine for the Macedonian economy. As the economy stabilises, it is vital for small business to have access to credit in order to further boost economic growth in this country. And that is where EFSE comes in. The additional EUR 60 million of financing that we are prepared to provide to local financial institutions by 2014 will facilitate approximately 20,000 business and housing loans. We also look forward to exploring additional cooperation possibilities with those financial institutions in Macedonia 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 sector in Macedonia and our region of operation. Despite these turbulent times, there are still sound financial institutions and successful small companies in Macedonia 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.

EFSE began its operations in Bosnia and Herzegovina, Kosovo, Montenegro and Serbia in 2005. It was supported by a variety of investors, including the European Commission and Germany’s Federal Ministry for Economic Cooperation and Development (BMZ) as well as other European governments and international financial institutions. This enabled the Fund to expand to other countries in Southeast Europe, including to Macedonia, where it started operations in 2006. Recently, EFSE began operating in the European Eastern Neighbourhood countries of Armenia, Azerbaijan, Belarus, Georgia and Ukraine.

Since the start of its involvement in Macedonia, EFSE has offered EUR 46 million in financing to local commercial banks and specialised small-business banks. These partner lending institutions have on-lent EUR 52 million of EFSE funds in the form of roughly 3,300 business loans to MSEs and housing loans to low-income private households.

4th EFSE Annual Meeting in Ohrid promoting responsible finance – more than 200 participants expected
More than 200 representatives of EFES's stakeholders from all over the world, including development finance experts, finance and banking practitioners are expected to attend the EFSE Annual Meeting in Ohrid from June 8 to 10, 2010. The Annual Meeting will give participants the opportunity to assess and discuss key current issues in financial sector development in Southeast Europe.

The main theme of this year's Annual Meeting is “Growing Responsibly – Growing Responsibility”. Panel sessions will address various aspects of responsible business practices in the financial sector and include topics such as “Addressing responsible finance for MSEs and private households”, “Understanding the institutional challenges presented by the current crisis” and “Promoting a responsive and responsible financial sector in times of crisis”.

“EFSE has always been a socially responsible lender and will continue to be just that. Responsibility in the financial sector is a vitally important aspect for us. One of the main reasons of the financial crisis was irresponsible lending. That is why we see responsible finance as a key instrument in stabilising and strengthening the financial sectors in Southeast Europe,” said Dr. Klaus Glaubitt. He added: “Now is the right time to make a case for fair treatment of clients, transparency of loan conditions, and improving financial literacy among users of financial services. EFSE will enhance its activities promoting responsible finance and will join hands with its partners in the region, including local central banks, also here in Macedonia, to develop client educational booklets, organise joint conferences and offer staff trainings in our partner institutions.”

In addition to the conference, the Fund will host a meeting with its Advisory Group during the Annual Meeting. It is comprised of 14 high-level representatives from the central banks of EFSE’s partner countries, including Macedonia. The Advisory Group is a valuable source of information and provides EFSE’s fund management with an important tool to stay abreast of financial sector developments in the region from a policy maker’s perspective. As such, it also provides a platform for regional coordination, which the Fund seeks to promote.

About the European Fund for Southeast Europe (EFSE)
The microfinance fund EFSE is aimed at fostering economic development and prosperity in Southeast Europe, including Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, FYR Macedonia, Georgia Kosovo, Moldova, Montenegro, Romania, Serbia and Ukraine. It offers long-term funding instruments to local financial institutions for on-lending business loans to micro and small enterprises (MSEs) and housing loans to private households with limited access to financial services. The activities of EFSE are supported by the EFSE Development Facility, which provides funding for capacity building support to partner lending institutions, as well as awareness raising and market enabling activities. Initiated by KfW (The German Development Bank), the EFSE is a Public-Private Partnership that combines public funding and private investment. The investor base is comprised of donors and international financial institutions, including: European Commission, Federal German Ministry for Economic Development and Cooperation (BMZ), the governments of Austria, Switzerland, Denmark and Albania, KfW, IFC, FMO Netherlands Development Finance Company, European Bank for Reconstruction and Development (EBRD), European Investment Bank (EIB) and Oesterreichische Entwicklungsbank (OeEB). In addition, private investors such as Sal. Oppenheim and Deutsche Bank, contribute to the funding base. EFSE is a privately managed investment fund with Oppenheim Asset Management Services S.à r.l., Luxembourg, as the fund manager and Finance in Motion GmbH, Frankfurt/Main, Germany, as the fund advisor.

Media contact

European Fund for Southeast Europe  Mr. Samir Djikić, Communications Manager, EFSE Tel: +49 (0)69 / 977 876 50-26 E-mail: press@efse.lu

Hauska & Partner  Mr. Siniṧa Pekevski, Consultant, Hauska & Partner Tel: +389 (0) 70 267 466 E-mail: sinisa@yesincubator.org.mk