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| Description of company and purpose of project |
| The project involves a $3 million credit line to Romanian-American Enterprise Fund (RAEF) for on-lending to three non-governmental organization-led micro loan programs. These sub-borrowers are Credit, Assistance and Business training (CAPA), Cooperative Housing Foundation (CHF) and Opportunity Microcredit Romania, S.A. (OMRO). RAEF works with these three partners because each serves a different part of Romania, thereby allowing the benefits of micro credit to be spread to the widest number of micro-enterprise recipients. |
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| Project sponsor and major shareholders of project company |
| RAEF is a private not-for-profit Delaware company whose mission is to promote free enterprise and entrepreneurship in Romania through investments in and loans to small and medium size enterprises. Established by the President and the U.S. Congress in 1994, RAEF was capitalized in January 1995 at $50 million through a grant from the United States Agency for International Development (USAID). It is part of a number of enterprise funds targeting Eastern Europe which were formed in accordance with the principles of the U.S. support for Eastern European nascent democracies and encompassed the Support for East European Democracy Act (SEED Act of the US Congress 1989). |
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| Total project cost and proposed IFC investment |
| It is proposed that IFC invest $3 million in the form of a credit line |
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| Location of project and description of site |
| RAEF is headquartered in Bucharest. CAPA operates in Bucharest and Eastern Romania. CHF was launched in Timisoara and operates throughout Western Romania, including Deva, Arad and Resita. OMRO operates in Targu Mures and the Transylvania region. |
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| Project Development Impact and IFC's Role |
| According to Romanian government statistics, over 90% of Romanian companies employ fewer than 10 people. Many of these enterprises are not considered bankable because their businesses are too small and/or they cannot provide suitable collateral for the banks. While there are some other micro finance groups entering the Romanian market they are small and have limited financial resources. By funding this proposal, IFC will enable RAEF and its partners to sustain and expand its operations in outlining areas and a wide spread of second tier cities in which the program currently operates. The benefits to the Romanian economy will be measured in terms of a steady and reliable source of funds that foster business growth and job creation. |
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| Environmental and social issues - Category FI-1 |
RAEF will be required to establish and maintain an environmental management system to ensure that relevant lending activities of its partners are consistent with IFC’s Microfinance Exclusion List and in compliance with applicable Romanian laws.
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| To contact the project company, please write to: |
Mr. Bill Wingate, Chief Financial Officer
Romania
Fax: (40-21) 210-0701 |
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