MICROCAPITAL BRIEF: Armenia’s Small and Medium Business Credit Support Invests $2.6m in European Fund for Southeast Europe’s Armenia Local Currency Facility

The European Fund for Southeast Europe (EFSE), a microfinance investment fund incorporated in Luxembourg, recently announced that the Small and Medium Business Credit Support (SMBCS), a subsidiary of the Central Bank of Armenia, will invest EUR 2 million (USD 2.6 million) in EFSE’s new Armenia Local Currency Facility. The facility, which is intended to support local-currency lending to small and medium-sized enterprises (SMEs) in the country, remains open to further donor funds from international donor agencies and local institutions.

Monika Beck, Chairperson of the EFSE Investment Committee, said, “Though they form the backbone of the Armenian economy, SMEs do not generate the foreign currency income necessary to meet the foreign currency obligations linked with a long-term foreign currency loan. Thus SMEs bear the full risk in case of devaluation of the local currency against the US dollar in which the loan is denominated. The Central Bank of Armenia therefore provides an excellent example of responsible finance by investing in the EFSE Local Currency Facility and thereby facilitating local currency finance for SMEs.”

Financial information on SMBCS is not available.

By Kristha Abores, Research Associate

About Small and Medium Business Credit Support (SMBCS): Incorporated in 2010, Small and Medium Business Credit Support (SMBCS) is a wholly-owned subsidiary of the Central Bank of the Republic of Armenia that supports small and medium-sized enterprise (SME) financing in the country. SMBCS cooperates with international financial organisations specialised in SME lending and seeks to channel funds from international markets to Armenian financial institutions. Financial information on SMBCS is not available.

About European Fund for Southeast Europe (EFSE): Established in 2005, the European Fund for Southeast Europe aims to foster economic development in southeastern Europe and parts of Central Asia by supporting the provision of financial services to low-income households and micro- and small enterprises via local financial institutions. EFSE was initiated by KfW Entwicklungsbank, a German development bank, with support from the German Federal Ministry for Economic Cooperation and Development (BMZ in German) and the European Commission. EFSE is privately managed, with Oppenheim Asset Management Services of Luxembourg acting as fund manager and Finance in Motion GmbH of Germany acting as fund advisor. As of June 30, 2011, EFSE has an outstanding investment portfolio of EUR 676 million (USD 982 million). LuxFLAG, an organization that certifies that microfinance investment vehicles actually invest in the microfinance sector, renewed EFSE’s label as of 2011.

Sources and Additional Resources:

[1] EFSE Press Releause: “Armenian Central Bank subsidiary Small and Medium Business Credit Support CJSC invests EUR 2 million in EFSE Armenia Local Currency Facility to support small and medium enterprises,” http://www.efse.lu/Press-releases—Details—2011-12-05-Armenian-Centra…

MicroCapital.org article, November 24, 2011, “MICROCAPITAL BRIEF: European Fund for Southeast Europe (EFSE) Loans $34m to Banca Intesa Beograd of Serbia for Micro-and Small Enterprises,” https://www.microcapital.org/microcapital-brief-european-fund-for-southea…

MicroCapital.org article, August 14, 2010, “MICROCAPITAL BRIEF: Armenian CJSC Converse Bank Receives Loan of $10m from Microfinance Investment Vehicle (MIV) European Fund for Southeast Europe,” https://www.microcapital.org/microcapital-brief-armenian-cjsc-converse-ba…

MicroCapital Universe Profile: European Fund for Southeast Europe (EFSE), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Eur…

MicroCapital Universe Profile: Small and Medium Business Credit Support (SMBCS), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Small+and+Medium+Business+Credit+Support+%28SMBCS%29

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

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