EBRD’s first local currency financing for micro and small businesses in Moldova

By Ina Coretchi

The EBRD is increasing further the availability of financing to private businesses in Moldova with a Moldovan lei loan equivalent to $5 million to Microinvest for on-lending to micro and small enterprises (MSEs).

Microinvest is currently the third largest non-bank microfinance institution in Moldova with wide geographical coverage, focusing primarily on rural lending.

The global financial crisis has hit Moldova through the significant decline in remittances, which account for 40 per cent of the country’s GDP, reduced internal consumption and contraction in domestic production and exports. These factors, alongside tight capital markets forced banks and micro financing institutions to reduce considerably their lending activities.

The EBRD loan to Microinvest will help the institution diversify its funding base and maintain the provision of credits to micro and small enterprises in the current difficult conditions.

The proceeds of the loan will be used to finance investments and working capital of local micro and small businesses with medium and long-term loans in Moldovan Lei.

The transaction is supported by $100,000 in grant funds, which will be used to strengthen Microinvest’s risk management.

“We are pleased to support our partner, Microinvest, during a challenging period to support its continued lending to the smallest businesses throughout Moldova. This is the EBRD’s first loan in Moldovan lei. It will reduce the foreign exchange risk for Microinvest’s clients and encourage other commercial lenders to continue to provide financial access to local businesses,” said Libor Krkoska, Head of the EBRD Office in Chisinau.

“We are very glad to be able to further develop our relationship with the EBRD. This local currency credit-line is a valuable support to our company and micro-entrepreneurs particularly during such harsh times that befell on Moldova. Therefore, we would like to express our profound gratitude to EBRD and hope that our relationship will further develop to the benefit of Moldovan entrepreneurs and Moldova in general,” added Artur Munteanu, Chief Executive Officer of Microinvest.

Since it was set up in 2003, Microinvest has financed over 13,000 borrowers with loans worth more than $61 million.

To date the EBRD has invested more than €300 million in various sectors of the Moldovan economy.