The European Investment Fund (EIF) and ProCredit Bank Kosovo have signed a EUR 20 million loan guarantee agreement to support Small and Medium-sized Enterprises (SMEs) in Kosovo under the Western Balkan Enterprise Development and Innovation Facility (WB EDIF).
The WB EDIF support will allow ProCredit Bank Kosovo to supply additional finance to and support the development of Very Small and Small businesses in Kosovo over the next two years.
The loans offered by ProCredit Bank under this agreement will be disbursed to entrepreneurs at preferential conditions and with maturities of up to 10 years. Loans will be granted for working capital and investment purposes and to businesses who comply with the bank’s ethical social and environmental standards. Companies can take advantage of the preferential conditions by withdrawing instalment loans, credit lines, overdrafts, etc. The WB EDIF promotes the emergence and growth of innovative and high-potential companies, as well as the creation of a regional venture capital market. The EUR 145 million of capital pulled together under this Facility by the EU, international financial institutions (IFIs), beneficiaries and bilateral donors will effectively translate into over EUR 300 million in direct financing for SMEs in the region.
Regional Business Development Director Hubert Cottogni said: “With this signature, the European Investment Fund makes its first venture into the SME market in Kosovo, following closely in the footsteps of the European Investment Bank, which signed a EUR 10m credit line to support SMEs with ProCredit in November last year. These two signatures will complement each other insofar as the liquidity provided by the European Investment Bank (EIB) will be matched by risk-sharing offered by EIF. I am confident that the EIF and ProCredit can work closely to improve access to finance for Kosovar SMEs.”
The CEO of ProCredit Bank, Ilir I. Aliu, highlighted the importance of this agreement in Kosovo:
“Our co-operation with the European Investment Fund has a significant impact on the development of our core business segment - Very Small, Small and Medium enterprises – as it will certainly increase the capacity and activity of our bank to make an important contribution to supporting our clients in their investment plans or working capital needs. Moreover, the agreement confirms the European Investment Fund’s commitment to supporting the local economy and the private sector. It also confirms that our institution has gained a solid reputation as a reliable and stable institution with a very high level of expertise in supporting Small and Medium enterprise. We are convinced that this business sector is the main driver of local economic growth and makes the largest contribution towards generating employment and prosperity.”
The Facility is co-ordinated by the European Investment Fund and implemented in close co-operation with the governments of the Western Balkans, the European Commission, the EIB and the European Bank for Reconstruction and Development (EBRD). IFIs, international organisations and bilateral donors active in the region, such as the World Bank, DEG, OECD and others, are invited to participate in order to streamline the efforts to develop the private sector in the Western Balkans.
This is the first regional initiative in the private sector development area channelled through the Western Balkan Investment Framework.
About EIF
The European Investment Fund's (EIF) central mission is to support Europe's Micro, Small and Medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. EIF’s total net commitments to private equity funds amounted to over EUR 7.9bn at end 2013. With investments in over 435 funds, EIF is a leading player in European ventures due to the scale and the scope of its investments, especially in high-tech and early-stage segments. EIF’s guarantees loan portfolio totalled over EUR 5.6bn in over 300 operations at end 2013, positioning it as a major European SME guarantees actor and a leading microfinance guarantor.
About WB EDIF
WB EDIF is an EU-funded initiative which aims at increasing the financial resources made available to SMEs based in the Western Balkans, as well as technical assistance for strategic investments, particularly in infrastructure, energy efficiency and private sector development, to support socio-economic development and EU accession across the Region.
WB EDIF will include four components aiming at:
- Early to development stage equity financing in innovative SMEs – this will be done by the new Enterprise Innovation Fund (ENIF)
- Provision of development and expansion capital to established high-growth potential SMEs – this will be done by the new Enterprise Expansion Fund (ENEF)
- Improvement of SMEs access to bank lending and lowering the cost of borrowing by providing SME loan portfolio guarantees to financial intermediaries – this will be done under a regional Guarantee Facility
- Creation of a favourable regulatory environment for innovative and high-potential SMEs – this will be done through a Technical Assistance Facility supporting beneficiary governments in the implementation of priority reforms
If you would like to find out more about the EIF’s partners under the WB EDIF please see here.
