MICROCAPITAL STORY: European Fund for Southeast Europe (EFSE) Provides USD 4.7 Million Loan to FINCA Kosovo

Here is another story coming courtesy of the Microfinance Capital Markets Newsletter of the Consultative Group to Assist the Poor (CGAP) and the MIX, the microfinance information clearinghouse. In a series of three installments, the European Fund for Southeast Europe (EFSE), an investment fund focusing on economic development, has loaned USD 4.7 million to FINCA Kosovo, a microfinance program of the Foundation for International Community Assistance (FINCA), a US-based humanitarian organization. The three parts of the entire loan investment include USD 2.7 million for the FINCA Kosovo’s micro loans to micro and small entrepreneurs (MSEs), USD 1.3 million for the program’s housing microfinance, and USD 671,265 for the program’s rural microfinance.The impact on FINCA Kosovo’s loan portfolio is dramatic: a 30 percent increase from USD 15.3 million as of 2006 (see “Financial Data”). ESFE’s USD 4.7 million loan to FINCA Kosovo rivals all loan portfolio increases FINCA Kosovo received in 2005, which amounted to USD 5.9 million. Considering that FINCA Kosovo’s average micro loan size is USD 1,609, the loan investment could allow the microfinance program to provide an additional 2,290 loans. This would be another significant increase to the program’s microfinance business, as FINCA Kosovo currently has 9,559 active borrowers. As of 2006, the program has experienced a 0.25 percent return on assets.

FINCA Kosovo was founded in 2000, and began with the financial support of USAID, a US government agency providing foreign aid in various forms. While a program under FINCA’s international humanitarian operations, the MIX reports that FINCA Kosovo is legally a non-profit based in Kosovo.

EFSE was founded in 2005 and is a Luxembourg investment firm, with USD 195 million of its assets allocated to 40 microfinance institutions (MFIs) in eastern and southern Europe. The firm’s microfinance investments consist of 53.7 percent of its operations. In the course of this year, the firm expects to increase microfinance investments by USD 90.4 million.

By Quentin Ruiz-Esparza, Research Associate

Additional Resources:

CGAP: “List of Recent Transactions.”

The MIX Market: “Profile for EFSE.”

The MIX Market: “Profile for FINCA – KOS.”

USAID: “About USAID.”

European Fund for Southern Europe: “FINCA International Signs Loan Agreements with European Fund for Southern Europe.”