MICROCAPITAL BRIEF: European Fund for Southeast Europe (EFSE) Announces $1.7m Senior Loan to Kreditimi Rural I Kosoves (KRK) for Microfinance in Rural Kosovo

The European Fund for Southeast Europe (EFSE), a Luxembourg-based investment fund focused on fostering economic growth in 16 Central Asian and Southeast European countries, recently issued a senior loan in the amount of EUR 1.5 million (USD 1.7 million) to Kreditimi Rural I Kosoves (KRK), a Kosovo-based microfinance institution (MFI) that specializes in “agri-lending” to micro- and small enterprises (MSEs). KRK will disburse the money to end-borrowers in loans of up to EUR 25,000 (USD 27,900) each.

As of 2015, KRK reports to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 16 million, a gross loan portfolio of USD 15 million, 7,700 borrowers, return on assets (ROA) of 13.5 percent and return on equity of 43 percent. KRK does not accept deposits. As of 2016, EFSE reports outstanding investments of EUR 898 million (USD 1 billion) in its 63 total partner lending institutions, including 35 microfinance banks and microcredit organizations.

By Michelle Dold, Research Associate

About European Fund for Southeast Europe (EFSE)

The Luxembourg-based European Fund for Southeast Europe (EFSE) focuses on the development of local financial sectors in Southeast Europe and parts of Central Asia by providing “long-term” funding for micro- and small enterprises (MSEs) as well as private households via partner retail institutions. EFSE also operates the EFSE Development Facility, which provides technical assistance, consulting and training services to support capacity building within these partner institutions. EFSE was established in 2005 by German Development Bank Kreditanstalt für Wiederaufbau (KfW), with the financial support of the German Federal Ministry for Economic Cooperation and Development (which is also known by its German acronym BMZ) and the EU’s European Commission. The fund 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. EFSE operates in 16 countries: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, Georgia, Kosovo, Moldova, Montenegro, Romania, Serbia, Ukraine, Turkey and the Former Yugoslav Republic of Macedonia. As of 2016, EFSE reports outstanding investments of EUR 898 million (USD 1 billion) in its 63 total partner lending institutions, including 35 microfinance banks and microcredit organizations. As of 2016, EFSE holds a microfinance label from Luxembourg Fund Labeling Agency (LuxFLAG), an NGO that certifies that social investment vehicles actually invest as advertised.

About Kreditimi Rural I Kosoves (KRK)

Kreditimi Rural I Kosoves (KRK) is a microfinance institution based in Kosovo. Formerly called the Rural Finance Project of Kosovo, KRK aims to assist farmers and other rural microentrepreneurs in restoring agricultural production capacity lost during the Kosovo war of 1998 and 1999. KRK offers financial products such as agricultural and business loans to micro- and small enterprises (MSEs) and home improvement loans to private individuals. KRK is 71-percent held by the European Fund for Southeast Europe (EFSE), a Luxembourg-based, government-backed microfinance investor that aims to foster regional development; Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden NV (FMO), a Dutch development finance institution; and Crédit Coopératif, a French cooperative bank. The percentage of shares held by each of these institutions has not been disclosed.

As of 2015, KRK reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 16 million, a gross loan portfolio of USD 15 million, 7,700 borrowers, return on assets of 13.5 percent and return on equity of 43 percent. It does not accept deposits.

Sources and Additional Information:

[1] Information provided directly to MicroCapital by EFSE and KRK

[2] MicroCapital Universe Profile: European Fund for Southeast Europe (EFSE)

[3] MicroCapital Universe Profile: Kreditimi Rural I Kosoves (KRK)

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