IFC, GAFSP advances US$10m loan to Kosovo’s leading MFIs to boosts access to finance for small agribusinesses, farmers

KOSOVO —IFC, a member of the World Bank Group, and the Global Agriculture and Food Security Program (GAFSP), are providing €9 million (US$9.96 million) in loans to three microfinance institutions (MFIs) to increase access to finance for small agribusinesses and farmers in Kosovo.

The MFIs to benefit from these loans are the Agency for Finance in Kosovo (AFK), KEP Trust (KEP), Kreditimi Rural i Kosoves (KRK).

Kosovo’s agricultural sector is currently underserved by banks, limiting growth of small businesses and farmers.

The loans are part of IFC’s and GAFSP’s broader strategy to support private sector development in Kosovo’s agricultural sector by increasing access to finance for micro and small enterprises, IFC said in a statement.

“Engaging three leading MFIs to achieve a systemic impact is key to the financial inclusion of small and micro enterprises in Kosovo,” said Thomas Lubeck, IFC Regional Manager for Central and Southeastern Europe.

 “Helping finance these small businesses through microfinancing is one of the most direct ways for IFC to fight poverty and develop private enterprises, especially in the farming sector.”

The financing to the MFIs consists of three unsecured blended finance packages from IFC and GAFSP’s Private Sector Window: €2 million to AFK, €4 million to KEP, and €3 million to KRK.

Each loan is shared equally by IFC and GAFSP. Additionally, GAFSP is supporting an Advisory Services project to build agriculture lending in Kosovo.

“In a segment that is severely underserved by banks, IFC’s and GAFSP’s support is key to the sustainability of the businesses of our clients in Kosovo,” said Vahdet Anadolli CEO of AFK.

 KEP’s CEO, Shpend Nura CEO, said “a considerable part of our credit portfolio is allocated to small and micro enterprises in agribusiness and farming.”

Nura further noted that “the loan will significantly increase our lending capacity to farmers in Kosovo.”

“The segment of clients financed by KRK, mostly farmers with low and irregular cash inflows, are categorized as high-risk clients by banks and are not targeted,” said Lulzim Sadrija, CEO of KRK.

“We play a critical role in ensuring that they have access to finance to generate income and create new jobs.”

All three MFIs are existing clients for IFC, with AFK and KEP having received loans from IFC and the GAFSP Private Sector Window in 2018 to support lending operations in the agriculture sector.