G-20 Initiative Honours European Fund of Southeast Europe as one of the Best PPP Models for SME Finance in the World

By European Fund For Southeast Europe efse, PRNE
Sunday, October 31, 2010

FRANKFURT, November 1, 2010 - At the "G-20 SME Finance Challenge", the European Fund of Southeast
(EFSE) was selected as one of the 14 best Public-Private partnership
(PPP) models in the world for the financing of small and medium enterprises
(SMEs). 345 competitors from more than 75 countries participated in this
challenge. EFSE was the only German competitor amongst the winners. The
competition initiated by the G-20 political leaders of industrialised and
emerging economies during the 2009 Annual Summit in Pittsburgh was launched
to identify catalytic and innovative interventions to unlock private finance
for SMEs. SMEs play a major role in economic development, particularly in
emerging economies. SMEs are the single largest contributor to employment and
job creation, and account for a significant share of GDP around the world.
The winners will be invited to the next G-20 Summit in Seoul, South Korea,
where the prize will be officially awarded.

EFSE - track record

Incepted in 2005 by the KfW Entwicklungsbank - The German Development
Bank -, with the financial support of the European Commission and German
Federal Ministry for Economic Cooperation and Development (BMZ), the EFSE has
EUR 760 million in capital commitments from public donors, international
financial institutions and private investors (as at 30/09/2010). It is
managed by Finance in Motion GmbH, a private fund management company
specialised in development finance, as well as Oppenheim Asset Management
Services S.a.r.l. Starting out in Bosnia and Herzegovina, Serbia, Kosovo and
Montenegro in 2005, EFSE now also provides long-term funding for micro
businesses as well as SMEs via local financial institutions in the following
ten countries: Albania, Armenia, Azerbaijan, Bulgaria, FYR Macedonia,
Georgia, Moldova, Romania, Belarus and the Ukraine. The investment portfolio
of EFSE has grown consistently since its inception, with the share of private
capital having continuously increased to its current level of approximately
68 per cent. To date, EFSE has provided long-term funding to more than 60
local financial institutions (banks and micro financial institutions). These
funds have been used to grant loans to SMEs, in particular to smaller
enterprises. Dr Klaus Glaubitt, Chairman of EFSE's Board of Directors,
explained: "EFSE has evolved out of four multi-donor credit programmes
administered by KfW for the reconstruction of the Balkans via the support of
small businesses. EFSE's PPP approach has proven to be highly successful
during the global financial crisis. We are delighted that the G-20 rank EFSE
amongst the most innovative financing solutions for SMEs". Since the fund's
inception in 2005, the fund has facilitated over 247,000 loans, totalling
just under EUR 1.3 billion. As a result, some 215,000 new jobs have been
created. "EFSE's impressive growth demonstrates just how successful the
combination of public and private funds on the one hand and the
administration by a private-sector fund management company on the other can
be. We therefore see EFSE as a blue print for further initiatives in other
regions and sectors," said Monika Beck, head of the Competence Center for
Financial Sector Development at KfW Entwicklungsbank, adding: "It is our hope
that this award will assist us in raising additional public capital, both for
EFSE and other similarly structured development funds. This would enable us
to reach more private investors, thereby increasing the public appeal of this
financing approach and increase its outreach and impact. Within EFSE, we are
currently working on the further expansion of local-currency lending and
would be particularly pleased if we could boost our financing basis with G-20

EFSE - plans for the future

At present, EFSE is planning to launch an investment window for the
granting of long-term local-currency loans by partner institutions. This
reflects the need in the EFSE countries not only for long-term loans but,
more specifically, loans in local currency that protect the end-borrower
against potential currency risk. By 2014, EFSE plans to financially support
400,000 micro and SMEs across 14 countries via its partner financial
institutions. A further 10,000 businesses will benefit from the local
currency investment window. Drawing on a total loan volume of EUR 2 billion,
it is intended to create a further 400,000 jobs by 2014. In addition, it is
intended to expand the investor base by attracting additional public and
private investors into the Fund.

About the European Fund for Southeast Europe (EFSE)

EFSE aims to promote the economic development in Southeast Europe and its
neighbouring regions. In these regions, EFSE offers long-term funding for
qualified local financial institutions to expand the granting of business
loans to smaller but also to medium-sized enterprises (SME) as well as
housing loans to low-income private households. KfW is the initiator of the
Fund, which is based on a public-private partnership model. The capital stock
is provided by public donors and international financial institutions as well
as institutional private investors. EFSE's investors and shareholders include
the European Commission, the German Federal Ministry for Economic Cooperation
and Development (BMZ), the governments of Austria, Switzerland, Denmark and
Albania, KfW, IFC, FMO (Netherlands Development Finance Company), the
European Bank for Reconstruction and Development (EBRD), the European
Investment Bank (EIB), Oesterreichische Entwicklungsbank (OeEB), Sal.
Oppenheim and Deutsche Bank. The Fund is administered privately by Oppenheim
Asset Management Services and Finance in Motion GmbH as fund manager and fund
adviser, respectively.

For further information please visit www.efse.lu

    Media contact
    Samir Djikic
    E-mail: press@efse.lu
    Ph.: +49(0)69-9778-7650-26

Media contact: Samir Djikic, E-mail: press at efse.lu, Ph.: +49(0)69-9778-7650-26

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