Start up facility

active

Although more than 65% of all employees in Serbia work in micro, small and medium-sized enterprises (MSMEs), they have little access to the financial market. This particularly affects start-ups or young companies. The development policy support for start-ups in the country is of great importance in view of the high unemployment (Q3/19 approx. 9.5%), especially among young people (Q2/19 approx. 24.4%), and the increasing number of emigration. At the request of the Serbian government, the Federal Financial Supervisory Authority has developed a structuring approach to develop a start-up financing program in Serbia as part of an SBF-funded consultancy assignment. The facility is intended to (1) set up a guarantee mechanism for banks under which loans to start-ups are secured, (2) award start-up grants and (3) provide accompanying advice for banks and start-ups. Based on the needs analyses for the start-up financing business in Serbia, a credit gap of around EUR 20 million can be estimated per year. The total annual requirement of a comprehensive start-up program in Serbia for the capitalization of loan guarantees and for start-up grants is estimated at up to EUR 15 million. The project is a sensible addition to the ongoing development cooperation commitment in the focus area of sustainable economic development (NaWi) and is part of the target strategy of the German-Serbian Initiative for Growth & Employment. A broad target group in Serbia should be able to benefit from the measure. Anyone who is interested in becoming self-employed in Serbia should have access to the services offered and thus be supported in starting a business. Given the high youth unemployment rate in Serbia, we assume that young people in particular will benefit from the measure. But public sector employees who have become unemployed as part of restructuring measures in Serbia, returnees and minorities (such as the Roma) who have few prospects on the regular labor market in Serbia will also benefit particularly from the measure. The targeted support of start-ups is intended to improve employment and income opportunities for this target group and offer new prospects on the labor market. In addition, incentives are to be created for previously informal private sector activities to move out of the shadow economy. An innovative start-up scene also promotes competitiveness and sustainability in Serbia. Supporting the Serbian government in setting up and financing a start-up facility in Serbia enables German development cooperation to be a visible donor and to actively support the Serbian government's approach to promoting growth and employment at the highest government level. German development cooperation can offer a significant and structural transfer of knowledge and added value in terms of development policy thanks to KfW's extensive experience in domestic start-up financing and its 16 years of experience in financial system development in Serbia.