IFC Partners with EFSE Fund and Finance in Motion to Boost MSME Growth in Eastern Europe
€50 million to support MSMEs in Albania, promoting inclusive growth. 40 percent of the investment to be directed towards women-owned MSMEs. Frankfurt, Germany, January 24, 2024—IFC has announced a €50 million investment in the European Fund for Southeast Europe S.A. SICAV-SIF (EFSE), a structured debt fund providing financing to micro, small, and medium enterprises (MSMEs) in Southeast and Eastern Europe, including Albania.
The EFSE fund, advised by impact asset manager Finance in Motion, focuses on 15 countries, including Albania, Armenia, Azerbaijan, Bosnia and Herzegovina, Bulgaria, Croatia, Georgia, Kosovo, Moldova, Montenegro, North Macedonia, Romania, Serbia, Türkiye, and Ukraine.
IFC's investment will facilitate the fund's lending to MSMEs in Albania, with a special emphasis on allocating 40 percent to women-owned MSMEs (WMSMEs). This initiative aims to accelerate economic growth, enhance financial inclusion, and reinforce job security, especially in the current challenging economic landscape. The collaboration with IFC will also enable the fund to expand its gender finance efforts and implement comprehensive monitoring measures.
"The EFSE-IFC partnership is pivotal in advancing the Fund's strategy to promote economic empowerment and equal opportunities for women entrepreneurs," stated EFSE Board Chairperson Andrea Hagmann. "This collaboration underscores the impact potential, market opportunity, and investor requirements. By focusing on gender-focused A-shares investment, we contribute to global impact investment standards and advocate for gender equity as a crucial element for development and growth with a gender-lens."
MSMEs play a crucial role in driving growth, innovation, and job creation in Albania, constituting a significant portion of the country's gross domestic product (GDP) and job market. Despite their importance, data from the SME Finance Forum reveals that over a quarter of formal MSMEs in the World Bank's Europe and Central Asia region, including Albania, face unmet financing needs. The finance gap is estimated to be as high as 20 percent of GDP, with women-owned MSMEs being particularly underserved, as 44 percent are either fully or partially financially constrained.
Vittorio Di Bello, IFC Regional Industry Director for the Financial Institutions Group in Latin America and the Caribbean and Europe, highlighted the challenges faced by MSMEs in accessing finance in the current economic climate. He stated, "MSMEs are a key engine of growth, but many in the region are struggling to access the finance they need, especially in the current challenging financial landscape. IFC's funding aims to address that need by crowding in private sector resources to boost their growth, while also building the capacity of lenders to support them."