Romania Micro Credit Facility

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The proposed project is being developed in co-operation with the European Commission and the Romanian Ministry for European Integration in order to improve access to finance for micro and small enterprises (MSEs) in Romania, including start-up MSEs. The Bank will extend loans directly to commercial banks and non-bank microfinance institutions which will on-lend funds to MSEs. Particular emphasis will be placed on reaching out to the smallest of MSEs in rural areas including economically less dynamic regions. Further objectives of the project include assisting the non-bank microfinance institutions in their commercialisation process which will ensure their long term sustainability, assisting commercial banks to reach smaller MSEs in rural regions as well as establishing a permanent management capacity in a Romanian public institution (to be determined) for management of MSE lending programmes. The overall size of the on-lending facility is up to EUR 52.5 million, of which up to EUR 40 million will be provided by the EBRD and up to EUR 12.5 million will be provided by the European Commission and the Romanian Ministry of European Integration. The overall amount of the framework may be increased further, subject to commercial syndication of some of the loans to commercial banks. The on-lending funds will be accompanied by EUR 3 million risk-sharing facility designed to support lending to start-up MSEs and EUR 2.5 million of technical assistance funds for institution and capacity building. The first partner lending institution benefiting from the on-lending and TA funds from this facility is Opportunity Micro Credit Romania who concluded the loan agreement in december 2006. The Bank is in the process of including with further potential partner lending institutions. The transition impact is expected to be high to excellent. The project will have four main forms of transition impact. Most importantly, it will increase availability of finance to MSEs, including those MSEs that would not normally be targeted by financial institutions. Furthermore, it will contribute to the strengthening and commercialisation of financially viable non-bank MFIs. In terms of commercial banks, the project will strengthen the institutions by diversification of the banks’ client base. The last form of transition impact stems from the building of management capacity in a Romanian public institution for management of MSE lending programmes. Well established non-bank microfinance institutions operating as per relevant microfinance institutions as well as commercial banks committed to lending to MSEs. Up to EUR 40 million. Up to EUR 52.5 million. Screened FI. The selected participating banks (PBs) and non-bank micro-finance institutions (NBMFIs) will be required to comply with the EBRD’s Environmental Procedures for Small and Micro Loans; they must ensure that borrowers are compliant with relevant national regulations and standards for environment, health and safety and submit Annual Environmental Reports to the Bank. The technical co-operation funding made available in support of this new facility is EUR 2.5 million. Jana Sivcova e-mail: sivcovaj@ebrd.com