The European Fund for Southeast Europe (EFSE): The EU Local Currency Partnership Initiative
The Fund aims to foster economic development and prosperity through the sustainable provision of additional development finance, notably to micro and small enterprises (MSEs) and to private households, via qualified local financial institutions.
Objectives
The main goal of the action is to make it possible for EFSE to provide access to medium term credit in local currency for underserved MSMEs and low-income households without exposing them to foreign currency risk. In addition to this, the Action also has the following specific objectives: 1) improving access to finance and job stability/creation; 2) leveraging public and private capital (catalytic effect); and 3) strengthening inclusion of local financial market.
Beneficiaries
Micro, small and medium enterprises and low-income private households
Activities
Provision of local currency loans
Results
The action will address the key areas of vulnerability for businesses in the Eastern Partnership countries:
1. Providing access to medium term credit in Local Currency for underserved MSMEs and low-income households without exposing them to foreign currency risk
2. Improving access to finance and job stability / creation
The objective of the Action is an increase in local banks' lending to MSMEs and low-income households, thereby sustainably improving their access to finance. The ultimate objective of the Action is to promote job stability/creation. By facilitating self-employment there is a target goal to reduce poverty in the region.
1. Leveraging public and private capital (catalytic effect)
The EFSE's collaborative approach aims to generate an important demonstration effect and encourage other market players to participate in financing the MSME sector.
2. Strengthening inclusion of local financial market
EFSE's objective is to develop local financial markets following sustainable and market based principles, set loan standards, reduce shortage of medium and long term financing, and implement rules of responsible finance. In the Eastern partnership countries, the Fund has financed sub-loans to end-borrowers of an average loan size of approximately €10 000 and expects to continue this. In the Eastern partnership countries the Fund is projected to support an additional 74,000 MSMEs or private households with financing to reach a total accumulated number since inception of the Fund in the Eastern partnership countries of around 250,000 beneficiaries by 2037. The Fund expects to disburse an additional total volume of €1 billion of sub-loans to MSMEs or private households in the Eastern Partnership regions. In terms of numbers, the share of micro loans will be clearly dominating.
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