IFC, a member of the World Bank Group, is investing €18.5 million in the European Fund for Southeast Europe SA, SICAV-SIF (EFSE). The facility will be used for on-lending to micro, small, and medium enterprises (MSMEs) through banks and microfinance institutions in fourteen European and Central Asian (ECA) countries. EFSE is the largest regional debt facility financing MSMEs in the region.
IFC’s investment will increase access to finance for underserved people in the ECA region. The end-beneficiaries of this will be MSMEs and people that currently have limited, unreliable, or no access to finance.
MSMEs are engines of economic growth and important drivers of jobs in the ECA region. Access to finance remains a key barrier to their growth. Research shows that 27 percent of formal MSMEs in ECA have unmet financing needs, with the finance gap in the region estimated at around $740 billion. IFC’s investment will foster greater market competitiveness, demonstrate the viability of local-currency financing, and enable product innovation among lenders.
The investment gains special significance due to the COVID-19 pandemic and its disastrous impact on MSMEs in the region. These businesses now need urgent support to survive the downturn and preserve jobs.
IFC has been a long-standing partner to EFSE since its inception in 2005 and has supported the Fund over several projects. EFSE’s Chairperson Christoph Tiskens said, “We have been promoting financial inclusion and local currency financing in the region for 15 years. EFSE is pleased to continue working with valuable partners like IFC to generate positive impact by investing in the success of the region’s economic backbone: micro and small enterprises.”
Vittorio Di Bello, IFC’s Regional Industry Head, said: “The project will support sustainable financial service providers that address the needs of the underserved MSME segment, including through local currency funding, while enhancing operational capacity and sustainable performances of EFSE’s investee companies. This investment will contribute to IFC’s continuing implementation of the World Bank Group’s financial inclusion strategy.”