MICROCAPITAL BRIEF: European Fund for Southeast Europe (EFSE) Loans $2.6m in Local Currency to VisionFund Microfinance Institution SEF International to Support Rural MSEs in Armenia

The European Fund for Southeast Europe (EFSE), a microfinance investment vehicle domiciled in Luxembourg, recently announced that it has lent local currency approximately equivalent to USD 2.58 million to SEF International, a microfinance institution (MFI) in Armenia, to finance micro- and small enterprises (MSEs) in rural areas. Commenting on the transaction, SEF CEO Garegin Gevorgyan said, “We enjoy our collaboration with EFSE and use it to enable better access to financial services in rural communities through responsible lending. Local-currency funding from EFSE mitigates foreign-exchange risk for our borrowers.”

SEF, which offers consumer, enterprise, farm and housing loans, reports total assets of USD 29.9 million, a gross loan portfolio of USD 24.6 million and 19,000 active borrowers as of 2018. The MFI does not offer savings services.

SEF was founded by US-based Christian relief organization World Vision International in 1997. Its ownership has since been transferred to VisionFund International, a nonprofit subsidiary of World Vision. As of year-end 2018, VisionFund reports total assets of USD 688 million and a gross loan portfolio of USD 494 million outstanding to 1.1 million borrowers. Of these, 70 percent are women, and 63 percent live in rural areas. World Vision had total operating expenses of USD 1.05 billion during 2018.

German development bank Kreditanstalt fur Wiederaufbau (KfW) founded EFSE in 2005 with assistance from the European Commission and the German Federal Ministry for Economic Cooperation and Development (also known by its German acronym BMZ). As of January 2019, the fund has EUR 867 million (USD 973 million) outstanding to retail lenders, which have on-lent those funds to 134,000 end-borrowers in the following countries: Albania, Armenia, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, the Former Yugoslav Republic of Macedonia, Georgia, Kosovo, Moldova, Montenegro, Romania, Serbia, the Ukraine and Turkey. As of 2019, EFSE holds a microfinance label from the Luxembourg Fund Labeling Agency (LuxFLAG), an NGO that certifies that social investment vehicles actually invest as advertised.

By Eugene DeCosse, Research Associate

Sources and Additional Resources

EFSE press release
https://www.efse.lu/news-events/news/detail/efse-and-sef-international-expand-local-currency-financing-for-rural-mses-in-armenia/

SEF homepage
http://sefmicro.org/

MIX profile on SEF
https://www.themix.org/mixmarket/profiles/sef-arm

EFSE homepage
https://www.efse.lu/

EFSE financial statements
https://www.efse.lu/about-the-fund/facts-and-figures/

VisionFund Annual Report
http://www.visionfund.org/library/client/documents/Annual%20Report%20FY18%20-%20Full.pdf

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