IFC Deepens Support for Micro and Small Firms in Romania
In Washington:
Georg Schmidt
Phone: +1 (202) 458-2934
Fax: +1 (202) 974 4384
Email: Gschmidt@ifc.org
In Bucharest:
Ana Maria Mihaescu
Phone: +4 (021) 211-2866
Fax: +4 (021) 211-3141
Email: amihaescu@ifc.org
WASHINGTON, D.C./BUCHAREST, June 8, 2004
— The International Finance Corporation, the private sector arm of
the World Bank Group, today deepened its support for the development of
micro and small enterprises in Romania, with a $3 million credit line to
the Romanian-American Enterprise Fund (RAEF). RAEF will use IFC’s investment
for on-lending to local micro enterprises.
RAEF regularly implements its lending program through an agency agreement
with Creditare, Asistenta si Pregatire pentru Afaceri (CAPA), a well known
provider of credit to micro and small businesses in Romania with four branch
offices located throughout the country. RAEF has already made available
$4.5 million to CAPA from its own resources for on-lending to micro and
small firms, with individual loans typically averaging the local currency
equivalent of $6,000. Since program inception, RAEF and CAPA have originated
over $20 million in micro loans.
Jyrki Koskelo, IFC Director for Global Financial Markets, said, "This
investment underlines IFC's strategy for Romania of supporting financial
intermediation to accelerate private sector development, and improving
access to finance for local micro and small enterprises.” Khosrow Zamani,
IFC Director for Southern Europe and Central Asia, added, “The loan should
allow RAEF to gain additional experience in the micro lending sector and
double the size of its micro loan portfolio to the equivalent of over $7
million."
Horia Manda, Senior Vice President and Chief Investment Officer of RAEF,
noted, “The loan signed today represents a deepening of relations between
IFC and RAEF in supporting the growth of the SME sector in Romania. This
cooperation started back in 1997 when the two organizations co-financed
a pioneering cashflow lending program operated initially through RAEF and
continued in Banca Romaneasca.”
The impact on the Romanian economy of IFC’s investment in RAEF is expected
to be far reaching, providing support for higher investment in productive
micro-enterprises, stimulating private sector wealth and job creation and
boosting confidence in the banking sector. The investment should allow
RAEF to service over 2,000 new clients.
RAEF is a not-for-profit company based in Delaware, USA, with principal
offices in New York City and a wholly-owned subsidiary in Romania. RAEF’s
mission is to promote free enterprise and entrepreneurship in Romania through
investing in and loaning to small and medium size enterprises. Established
by the US Congress in 1994, RAEF has so far received $61 million in grants
from USAID. It is part of a number of enterprise funds targeting Eastern
Europe that were formed in accordance with the principles of the U.S.’
Support for East European Democracy Act of 1989.
The mission of IFC (www.ifc.org)
is to promote sustainable private sector investment in developing countries,
helping to reduce poverty and improve people’s lives. IFC finances private
sector investments in the developing world, mobilizes capital in the international
financial markets, helps clients improve social and environmental sustainability,
and provides technical assistance and advice to governments and businesses.
From its founding in 1956 through FY03, IFC has committed more than $37
billion of its own funds and arranged $22 billion in syndications for 2,990
companies in 140 developing countries. IFC’s worldwide committed portfolio
as of FY03 was $16.8 billion for its own account and $6.6 billion held
for participants in loan syndications.
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