Feature story

Small loans have a big impact in Macedonia

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‘Every little helps' is a motto valid not just for the UK’s colossal Tesco grocery store chain. It has even more meaning in a small economy such as Macedonia’s where GDP of $5.3 billion last year compares with the British supermarket giant’s record profit of $3.83 billion in the same period. But after years of serious difficulties, today the former Yugoslav republic is rebuilding its economy step-by-step.

The cornerstones are being laid by a growing number of small entrepreneurs who receive support from ProCredit Bank Macedonia, a development-oriented, full-service bank in which the EBRD holds an equity stake of 12.4 per cent. ProCredit Bank Macedonia is part of the ProCredit global network of financial institutions currently operating in18 countries. It focuses on lending to micro, small and medium-sized enterprises. The majority of loans provided by ProCredit Bank Macedonia are under €10,000.

This comparatively modest amount is tailor-made for the demands of many Macedonian entrepreneurs, as Sasho Kuzmanovski can confirm. He opened a publishing house and the Ikona bookstore in 1999 because he had always loved books and felt the time was right for his country to return to more uplifting pastimes after years of turmoil. Despite the country’s serious political crisis in 2001, his business proved an instant success.

So Mr Kumanovski thought about expanding, and that’s when he approached ProCredit Bank Macedonia with the request for a €6,000 loan. He used the money to finance the purchase of specialised books, technical manuals, foreign language books and dictionaries, which were still rare on the domestic market. Strong demand allowed Mr Kumanovski to expand and today he owns three Ikona bookstores in the capital, Skopje, and plans to open further branches with the help of another loan, this time for €14,000.

Daily bread

But man does not live by books alone. And so it is reassuring to meet people like Goran Gorkievski, an entrepreneur in his thirties who owns the bakery Specijal. Despite his youth he has lengthy experience as a businessman, starting his first micro-enterprise in 1991 with the help of his mother who took care of accounting and organisation. Mr Gorkievski himself concentrated on the development of various bread products.

Strong demand for his delicious goods led to constant expansion. Today he owns three small factories and employs 42 workers. In a country with an unemployment rate of some 35 per cent, it is people like Mr Gorkievski who represent the best hope for the future.

To finance his expansion, Mr Gorkievski turned to ProCredit Bank Macedonia for his first loan ever in September 2003. “I had no experience with banks whatsoever when I came to ProCredit Bank,” he remembers. “I was pleasantly surprised with the promptness and flexibility of the bank and its employees. All procedures were completed carefully, diligently and quickly.”

The first €30,000 loan was used to finance the construction of new business premises with an enlarged bakery. In October 2004, Mr Gorkievski took out another ProCredit loan, for €50,000, to fund further expansion of his business and a foray into new areas. Part of the loan was used to finance a new bakery restaurant in the centre of Skopje; it has become very successful as well.

Good products, clever marketing and a strong spirit of entrepreneurship have made Specijal a household name in Macedonia. The support of the right financial institution also has played a role. Says Mr Gorkievski: “I think that I have found my bank which will stand behind me and the growth of my business for the long run. And that is what we need for the development of our economy, too.”

Written by EBRD press officer Axel Reiserer.

Contact: EBRD small business team

17 May 2005