MICROCAPITAL BRIEF: IFC Lends $100m to ProCredit Holding to Finance Small, Medium-Sized Enterprises (SMEs) in Eastern, Southeastern Europe; Ecuador

To support small and medium-sized enterprises (SMEs) during the COVID-19 pandemic, the International Finance Corporation (IFC), the private-investment arm of the World Bank Group, recently issued a senior loan of USD 100 million to Germany-based ProCredit Holding. The financing will benefit ProCredit entities in Ecuador and eight countries in Europe: Albania, Bosnia and Herzegovina, Kosovo, Moldova, North Macedonia, Romania, Serbia, and Ukraine. IFC is funding the loan through Working Capital Solutions, a program that provides one-year, renewable loans to banks to on-lend to SMEs for working capital and trade finance “in markets where macroeconomic factors have caused a reduction in the availability of US dollars.”

IFC’s Regional Head of Industry for Financial Institutions in Europe and Asia, Vittorio Di Bello, maintains, “This financing is designed to support SMEs whose cash flows have been impacted by the pandemic. ProCredit’s SME focus and extensive geographic outreach will be instrumental in improving access to financing to these enterprises, which are usually underserved and in need of it the most.”

ProCredit Holding is the parent company of ProCredit, a group of commercial banks serving SMEs in Europe and Ecuador. Among the roles of ProCredit Holding are to perform: (1) risk management; (2) reporting; (3) maintenance of capital adequacy; (4) provision of equity and debt financing; and (5) implementation of operational standards and policy guidelines for ProCredit institutions as well as helping them develop the necessary procedures to follow these standards. In addition to the nine countries involved in this transaction, there are ProCredit banks in Bulgaria, Georgia and Germany. As of March 2020, ProCredit Holding reports total assets of EUR 6.59 billion (USD 7.54 billion).

IFC offers loans, equity investments, advisory services and technical assistance to private companies with the intent of alleviating poverty and promoting open and competitive markets in developing countries. As of 2019, it reported total assets of USD 94.3 billion.

By Jessica McLeod, Research Associate

Sources and Additional Resources

IFC press release
https://ifcextapps.ifc.org/IFCExt/Pressroom/IFCPressRoom.nsf/0/067DEB131B6AC514852585A4001AA5D6

IFC description of Working Capital Solutions
https://www.ifc.org/wps/wcm/connect/industry_ext_content/ifc_external_corporate_site/financial+institutions/priorities/global+trade/working+capital+systemic+solutions

ProCredit Holding homepage
https://procredit-holding.com/

World Bank Group homepage
https://www.worldbank.org/

ProCredit Holding Q1 2020 Quarterly Report
https://procredit-holding.com/wp-content/uploads/2020/05/2020_Q1_Quarterly_Report_L.pdf

Previous MicroCapital article on IFC
https://www.microcapital.org/microcapital-brief-central-bank-of-solomon-islands-ifc-developing-comprehensive-credit-reporting-system-to-boost-financial-inclusion-of-individuals-msmes/

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