Today, the European Commission and KfW, the German development bank, announced the signature of a guarantee agreement worth up to €135 million to expand access to finance through alternative channels for Micro, Small and Medium-Sized Enterprises (MSMEs) in the Western Balkans, Eastern Neighbourhood, North Africa and the Middle East, and Türkiye. Supported by the European Fund for Sustainable Development Plus (EFSD+), the guarantee will focus on MSMEs that face the greatest barriers to finance. This may include innovative start-ups and businesses led by persons and groups in vulnerable situations and/or exposed to discrimination, such as women-led enterprises as these segments are likely to explore alternative financing options.
Support will be channelled through the Scaling Alternative Finance for Entrepreneurs (SAFE) fund, which provides guarantees to alternative financial intermediaries including crowdfunding platforms, microfinance institutions, leasing companies and venture capital funds. By widening access to alternative sources of finance for underserved firms, the initiative aims to strengthen innovation, inclusiveness and competitiveness across the MSME ecosystem in the regions concerned.
EU Commissioner for Enlargement, Marta Kos, said: “We are increasing our support to startups and entrepreneurs in candidate countries, especially to companies run by women and those facing discrimination. To make sure that as our Union expands, no one is left on the margins.”
EU Commissioner for the Mediterranean Dubravka Šuica stated: “This agreement targets one of the key bottlenecks of small and medium enterprises financing, which is the provision of guarantee for banks and microfinance institutions to serve clients they normally would not work with. This is an excellent way to support economic development and pursue the target of a more integrated Mediterranean region.”
Christiane Laibach, member of the Executive Board of KfW Group said: “We are delighted to join forces with the European Union to support this initiative which represents a valuable addition to the financing landscape in the target region,” said Christiane Laibach, member of Executive Board of KfW Group. “The flexible guarantee approach allows alternative finance providers to share part of the risk and thus play a greater role in improving access to capital for MSMEs in the EU neighbourhood regions. This will tackle bottlenecks to private investment and generate new perspectives for growth.”
Background
The European Fund for Sustainable Development Plus (EFSD+) was established in June 2021 to support public and private sustainable investment in EU’s partner countries, and as a key tool of EU’s Global Gateway initiative. EFSD+ makes available grants and guarantees for investment projects through International Financial Institutions (IFIs) and has €39.8 billion in guarantee capacity globally for the period 2021 to 2027.