24291 - European Microfinance Fund for Southeast Europe

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Summary of Proposed Investment

Project Number

24291

Company Name

The European Fund For Southeast Europe S.A., SA

Date SPI Disclosed

Nov 3, 2005

Country

Southern Europe Subregion

Industry

Financial Markets

Projected Board Date

Dec 4, 2005

Status

Completed

Sector

Microfinance and Small Business - Non Commercial Banking

Department

Regional Industry - FIG - ECA

Environmental Category

Previous Events

Approved : Dec 14, 2005
Signed : Dec 15, 2005
Invested : Dec 22, 2005

Project Description

The proposed project involves the creation of a Euro 500 million collective debt investment vehicle, named “The European Microfinance Fund for Southeast Europe” (EFSE, or the company), which will make investments in microfinance institutions in the Southeast Europe region. EFSE aims to attract investments from multilateral, bilateral, as well as private institutional investors, via multiple closings. The promoter of this project is KfW. The purpose of the project is to provide development finance in the Southeast Europe region through the local financial institutions, focusing on the credit needs of micro and small businesses and private households. The company presents a unique opportunity to create a public-private partnership which leverages private capital and supports the economic growth and job creation in the region. In parallel with the creation of the company, a Development Facility will be established to provide technical assistance to the investee institutions assisting them in their development and growth. The management company will be Oppenheim Pramerica, a prime asset management firm, in consortium with microfinance specialist advisor, Bankakademie.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	0.0
Equity	36.90

Development Impact

The proposed project is expected to have a very high developmental impact in the following areas:

- Financial Sector Development:
Reputable financial institutions that serve Micro and Small Businesses (MSBs) will contribute to building public confidence in financial institutions and encourage more intermediaries, such as commercial banks, to extend financial services to this sector. In addition to encouraging the development of tailored, demand-driven financial products, EFSE will expand the funding sources for the development of MSBs in the region.

- Microfinance Institutions’ (MFIs) Capacity Building:
Non-profit institutions (NGOs) that are dependent on continued donor funding have traditionally dominated the microfinance sector. This project, through technical assistance, will contribute to their organizational strengthening.

- Significant Direct Contribution to Poverty Reduction:
Over the past two decades, leading microfinance operators have convincingly demonstrated that well-managed MFIs can make major contributions to poverty reduction and employment creation in developing countries. With average loans amounting to Euro 5,000, it is expected that the proposed project will benefit about 100,000 micro and small businesses.

IFC’s main role lies in facilitating the process of commercialization of the microfinance industry. IFC''s growing experience in structuring microfinance investment vehicles will ensure that EFSE incorporates best practices.

This is an FI type 1 project. EFSE will commit to appointing a person to be responsible for the environment function within the company and participate in IFC training program. EFSE will commit to ensuring that each of its investee companies has the capacity and commitment to comply with applicable host country standards and IFC’s Microfinance Exclusion List. EFSE will be required to submit an annual environmental performance report to IFC.

Location of environmental documents In locally affected community

Contacts

For Inquiries About the Project, Contact

Mrs Monica Beck,
KfW
Private and Financial Sector Development Europe
Tel: (49-69) 7431 4069
Fax: (49-69) 7431 2547
Palmengartenstrasse 5-9, D-60325 Frankfurt am Main, Germany

This Summary of Project Information (SPI) is prepared and distributed to the public in advance of the IFC Board of Directors' consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC's activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. The following SPI is disclosed in accordance with IFC's Disclosure of Information Policy that went into effect September 1998.

The map is for illustrative purposes and does not imply the expression of any opinion on the part of the World Bank, concerning the legal status of any country or territory or concerning the delimitation of frontiers or boundaries. Country borders or names do not necessarily reflect the World Bank Group's official position. In some cases, available project location information is limited to the country of the project's activities. Locations are approximate.

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