47141 - Raiffeisen Leasing Kosovo Senior Loan

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Summary of Investment Information

Project Number

47141

Company Name

RAIFFEISEN LEASING KOSOVO L.L.C.

Date SPI Disclosed

May 17, 2023

Country

Kosovo

Region

Europe

Projected Board Date

Jun 20, 2023

Environmental Category

FI-2 - Limited

Status

Active

Last Updated Date

Nov 1, 2023

Department

Regional Industry FIG LAC & EUR

Industry

Financial Markets

Previous Events

Approved : Jun 26, 2023
Signed : Sep 29, 2023
Invested : Oct 30, 2023

Sector

Leasing Services

Additional Project Attributes

Blended Finance

Project Description

The proposed investment consists of senior loan of up to EUR5 million to Raiffeisen Leasing Kosovo (RLKO or the Company), the largest leasing company in Kosovo (the Project). The loan proceeds will focus on women-owned MSMEs and climate related projects by MSMEs and individuals in Kosovo. The Project presents an opportunity for an impactful engagement in Kosovo, an IDA and FCS country, with pressing needs in access to finance for MSMEs and green transition, exacerbated by the impacts of Covid-19 and Russia’s invasion of Ukraine. The Project is expected to be supported by the IDA20 Private Sector Window Blended Finance Facility (IDA PSW BFF), the Women Entrepreneurship Finance Initiative (“We-Fi”) and the Women Entrepreneurs Opportunity Facility (“WEOF”)

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	2.67
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	Loans to MSME (mix of Micro and SME)
Straight Senior Loan	Consumer Loans
Straight Senior Loan	Loans to MSME (mix of Micro and SME)
Straight Senior Loan	Consumer Loans

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

Development Impact

Project Outcome: Stakeholder effects: Access to finance for climate projects and for W-MSMEs: Many cities in Kosovo suffer from poor air quality and a rapid replacement of the obsolete vehicle fleet is pressing not only from climate change but also public health perspective. MSMEs in Kosovo have been financially constrained, particularly following the pandemic and Russia’s invasion of Ukraine. W-MSMEs are scarce and even more constrained. IFC anticipates that the Project will help increase the access to much needed climate finance for MSMEs and individuals in Kosovo. The Project will also support RLKO in establishing a new business line specifically for business owned and/or led by women. Market Creation: Competitiveness: The proposed investment is part of a programmatic approach in Kosovo that is intended to enhance the competitiveness of the MSME finance market through demonstration and replication channels. Under the program, IFC will provide financing to five financial institutions. The overall objective is to expand lending to underserved MSMEs, particularly those owned by women, and farmers, including support for their climate projects.

IFC’s additionality is both, financial and non-financial: (i) Financing structure: IFC loan will be RLKO’s 1st external loan on standalone basis (not provided, nor guaranteed by RBI or its subsidiaries) and a critical step for diversification of its funding; (ii) Risk mitigation: IFC’s engagement will be instrumental in providing comfort to potential lenders, particularly in the current environment where the Covid-19 and Russia’s invasion of Ukraine have adversely impacted investor appetite for emerging markets; (iii) Standard setting: IFC will support RLKO in improving its ESG practices and financial risk management; IFC will also help RLKO grow its climate leasing program and launch a W-MSME business line, setting an example within the financial sector in Kosovo.

E&S Category Rationale / Risks and Mitigation

IFC's investment proceeds will be used to finance W-MSMEs and climate related projects in retail and MSMEs. Overall E&S risks associated with these transactions is considered as medium and therefore, the project has been categorized as FI-2 in accordance with IFC's Sustainability Policy. IFC fund will not be used to support any activities on IFC Exclusion List, coal-related activities, or higher risk business activities that may include: a) involuntary resettlement, b) risk of adverse impacts on indigenous peoples, c) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage or d) significant occupational health and safety risks. For this investment, the client will be required to screen eligible MSMEs loans against the IFC Exclusion List, and Kosovo E&S laws and regulations. In addition, RLKO will be required to be in line with Life & Fire safety requirements, and the requirements of IFC's Performance Standard 2 on Labor and Working conditions.

RLKO follows the RBKO's ESMS which has been developed based on some investor's requirements. The ESMS outlines the E&S policy, procedures, tools, monitoring, reporting and responsibilities for E&S risk management. The E&S staff has been assigned. RLKO is a new IFC's client. For this transaction, RLKO will be required to enhance the ESMS by extending the scope of ESMS to include a leasing activities; maintain proper internal capacity, conduct E&S training to the relevant staff and provide regular reports including implementation records.

Contacts

For Inquiries About the Project, Contact

Raiffeisen Leasing Kosovo L.L.C
Fatos Karacica
Finance and Funding Manager
+383 48 199 707
fatos.karacica@raiffeisen-kosovo.com
UÇK No 222 Prishtinë, 10000, Kosovo
https://www.raiffeisenleasing-kosovo.com/

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Task Title & Description	Anticipated Completion Date
Staff Training	09/21/2023
Enhance ESMS	06/23/2023
Training plan	06/30/2023
Submit ESMS implementation records	12/20/2023

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