This is discussion about The European Fund for Southeast Europe (EFSE) pioneers a sustainable local currency SME financing window. .
The use of the funds – namely for the provision of first-loss capital – is an illustrative example of innovative public development financing. It facilitates attracting private investors that would otherwise stay away from the region. Thus, EFSE is a trailblazing example of the intelligent use of public budget funds available for development purposes. It displays public-private partnerships at its best: EFSE enables the realization of goals that none of the two parties alone would be able to achieve.
I am pleased to see EFSE achieving a very significant growth in its portfolio and products in its fifth year of operation. This growth is a testament to the success of the Fund, especially in terms of forging a close co-operation between governments, regulatory authorities, development finance institutions and beneficiary financial institutions. EFSE is a great example of public-private partnership, and I expect and hope that it continues to increase its support to the MSMEs in Southeast Europe.
EFSE has been one of the key players in small business finance in the Western Balkans. Long term credit lines provided by EFSE have enabled banks to support especially small enterprises with long term investment loans – which remains as one of the main obstacles to development in the region. The more than 50 partner institutions in the region and the rapid growth of the funds made available through these institutions are an excellent illustration of the importance and success of EFSE in the small business finance sector in Eastern Europe.
I am proud to say that I, as well as my other colleagues from the Central Banks of the EFSE partner countries, are all members of the EFSE Advisory Group. As such, we are involved in EFSE’s work. But it is more than a sole advisory board, serving EFSE as an information source to stay abreast of financial sector developments in the region from a policy maker’s perspective. It provides a platform for regional exchange on financial sector issues. Thus, it is a crucial vehicle to strengthen integration and cooperation in Southeast Europe, which in these current times has never been so important
It is very good that EFSE has contributed in the sustainable development of the SEE countries, other institutions must to learn from EFSE, in order to create an environment that will help in achieving Millenium Goals.
The stability of the financial sector remains the key pillar of a functioning market economy a precondition of general stability. The services it provides like payments, deposits and loans are fundamental for the entire economy, especially for micro and small enterprises. The MSME sector has been hit hard by the financial crisis, not only due to higher interest rates but even more significantly due to the lack of availability of funds for such purposes. In this respect, EFSE plays a key role in providing a stable funding source for development finance and the micro and small enterprise sector. In times of economic crisis, continued access to finance for small businesses is essential. They are at the heart of the economy. Development finance must operate counter cyclically, which means fighting the credit crunch around the globe, in particular in emerging Europe including Southeast Europe, and that is exactly what EFSE does.
On October 27, 2010, the judges reviewed entries for the Changemakers G-20 SME Finance Challenge competition and would like to pass on the following feedback for your entry (below). Thank you for applying and for your hard work in the field. We are excited to archive your entry to serve as a leading solution for the worldwide community of innovators. We wish you continued luck with your innovative, sustainable, and socially impactful initiatives.
All the best,
The Changemakers Team
Besides the financing model itself, there were a number of things that made this an attractive program: it is proven to be working well, it has a great track record, and it demonstrates great impact. The local currency aspect is a very good way to leverage private sector money, and it is clear that the organization is very well run. It does seem to rely on help from others, and there is a concern that it will not be viable if this help disappears. Overall, though, it is an innovative way to hedge risk.