42572 - KEP Agri 1

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Summary of Investment Information

Project Number

42572

Company Name

KEP TRUST

Date SPI Disclosed

Sep 4, 2019

Country

Kosovo

Region

Europe

Projected Board Date

Oct 7, 2019

Environmental Category

FI-3 - No Impact

Status

Active

Last Updated Date

May 5, 2024

Department

Regional Industry - FIG - ECA

Industry

Financial Markets

Previous Events

Approved : Nov 14, 2019
Signed : Nov 20, 2019
Invested : Dec 27, 2019

Sector

Microfinance and Small Business - Non Commercial Banking

Additional Project Attributes

Blended Finance

Project Description

The proposed investment is an IFC senior debt investment of up to EUR8.0 million, with a Blended Finance contribution from the Private Sector Window (PSW) of the Global Agriculture and Food Security Program (GAFSP) to KEP Trust (KEP, or the Organization). The proposed investment will help to boost the Organization’s micro and small enterprises portfolio, with at least 50 percent of the proceeds to be used for lending to agribusiness borrowers including farmers. The project fits IFC’s and GAFSP’s strategy by directly supporting investment in micro and small enterprises and agribusiness in Kosovo.

Established as an NGO in 1999, KEP is Kosovo’s largest MFI with a market share of 26 percent. It is headquartered in Pristina and an existing IFC client since 2018.

Associated Advisory Engagement

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	4.46
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Agri Finance (Corp./Farmers/Climate)
Straight Senior Loan	Agri Finance (Corp./Farmers/Climate)
Straight Senior Loan	Agri Finance (Corp./Farmers/Climate)
Straight Senior Loan	Agri Finance (Corp./Farmers/Climate)
Straight Senior Loan	Agri Finance (Corp./Farmers/Climate)
Straight Senior Loan	Agri Finance (Corp./Farmers/Climate)
Straight Senior Loan	Loans to Microfinance Borrowers
Straight Senior Loan	Loans to Microfinance Borrowers
Straight Senior Loan	Loans to Microfinance Borrowers
Straight Senior Loan	Loans to Microfinance Borrowers
Straight Senior Loan	Loans to Microfinance Borrowers
Straight Senior Loan	Loans to Microfinance Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

Significant expected developmental impact will be derived from increased access to finance to microenterprises, with a focus on agri-businesses and thereby will improve funding opportunities for small farmers. Despite its contribution to the country's GDP (10.5 percent of GDP as of 2016 and 12.9 percent in 2017) and employment (29.8 percent), Kosovo's agricultural sector remains underserved by banks, due to an unfavorable production structure and high costs of assessing multiple small farmers. As a result, Agrifinancing is becoming the main domain of the MFls with at least 25 percent of loans from MFIs going to agriculture over the past 6 years. IFC's support on this project will help the MFIs to further strengthen their impact in this sector. The expected impact of the co-investment with GAFSP is also critical as it will help to properly price the project, making funding affordable, and consequently, on-lending to microentrepreneurs and end-users in Kosovo. Furthermore, it is anticipated that from this project there will be increased inclusiveness in the micro finance market via demonstration and replication channels.

IFC's additionality is both financial and non-financial: (i) providing needed long-term finance to the Organization, which is entirely reliant on external funding from IFIs and development funds; (ii) mobilizing concessional funding from GAFSP to ensure affordable pricing for end-borrowers; (iii) strengthening the market's perception of the MFI sector and enhance the Organization's ability to attract additional funding from other financial institutions.

E&S Category Rationale / Risks and Mitigation

The environmental and social risks of the overall portfolio of the MFI are considered to be low, and carry minimal or no adverse environmental and social impacts. The project has been provisionally classified as category FI-3 according to the IFC’s Sustainability Policy. For this project KEP who is already an existing IFC client will need to continue proper implementation of its existing basic Environmental and Social Management System to ensure that all loans are screened against the IFC Exclusion List and meet requirements of the applicable environmental and social national laws and regulations in Kosovo. The client will also continue complying with the requirements of the IFC’s Performance Standard 2 on Labor and Working Conditions.

Contacts

For Inquiries About the Project, Contact

KEP Trust
Shpend Nura
Chief Executive Officer
+386 (0) 49 946 582
shnura@keponline.net
Rr. Pashko Vasa,no.6, 10000 Prishtine, Kosove
www.keptrust.org

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This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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