Luxembourg, 1 August 2022 – The European Fund for Southeast Europe (EFSE) released its latest Impact Report today. Themed “Enabling Sustainable Transformation” the report explores how the fund navigated challenging conditions such as the recovery from COVID-19, while sustaining its focus on transformation over time working with local partners in the regions in which it operates.
For EFSE, 2021 was a transformational year. The fund ended the year with an outstanding portfolio of EUR 969 million, significantly exceeding the planned targets for 2021. EFSE expanded its footprint by building partnerships with 12 new partner lending institutions, ending the year with a total of 73. It also leveraged a broader range of capital instruments, such as the first Basel III-compliant Tier 2 subordinated loan in local currency made in Moldova, to support key partners in increasing their lending capacity.
Through a strong focus on local currency lending, EFSE significantly expanded its impact footprint in 2021 by providing financing in seven local currencies, including three new currencies: Serbian dinar, Moldovan leu and Azeri manat. More than 49% of the fund’s investments were in local currency, leading to over 76% of EFSE’s outstanding sub-loan portfolio in local currency by the end of the year. Local currency lending reduces the foreign exchange risk for banks like maib and helps develop resilient local economies.
The Development Facility of the European Fund for Southeast Europe (EFSE DF) has worked with EFSE partners and local entrepreneurs to develop bespoke solutions and trainings to use digital tools and cultivate digital transformation as well as to meet the growing anti-money laundering, impact, environmental and social requirements.
EFSE Board Chairperson Klaus Müller said: “The current crisis highlights the importance of EFSE’s transformation agenda towards EU values, standards, and competitiveness, which will continue to grow as it carries out its mission to support sustainability, diversity, digitalization, and entrepreneurship.”
An impact investment fund established in 2005, the European Fund for Southeast Europe (EFSE) aims to foster economic development and prosperity in Southeast Europe and the Eastern Neighbourhood Region by investing in the success of micro and small enterprises as well as improved living conditions for private households. As access to financial services is key to developing this segment, EFSE focuses on helping local financial sectors strengthen their ability to provide responsible financing for this target group. Alongside its investment activities through local partners, EFSE multiplies its impact through the EFSE Development Facility, which provides technical assistance, training, and other non-financial support to entrepreneurs and institutions.
EFSE was initiated by KfW Development Bank with the financial support of the German Federal Ministry for Economic Cooperation and Development (BMZ) and the European Commission. As the first public-private partnership of its kind, EFSE draws its capital from donor agencies, international financial institutions, and private institutional investors.
Finance in Motion GmbH, Germany, serves as EFSE’s advisor and Hauck & Aufhäuser Fund Services SA, Luxembourg, acts as manager.
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