WASHINGTON, D.C./BUCHAREST, June 8, 2004 —
The International Finance Corporation, the private sector arm of the World Bank Group, today deepened its support for the development of micro and small enterprises in Romania, with a $3 million credit line to the Romanian-American Enterprise Fund (RAEF). RAEF will use IFC’s investment for on-lending to local micro enterprises.
RAEF regularly implements its lending program through an agency agreement with Creditare, Asistenta si Pregatire pentru Afaceri (CAPA), a well known provider of credit to micro and small businesses in Romania with four branch offices located throughout the country. RAEF has already made available $4.5 million to CAPA from its own resources for on-lending to micro and small firms, with individual loans typically averaging the local currency equivalent of $6,000. Since program inception, RAEF and CAPA have originated over $20 million in micro loans.
Jyrki Koskelo, IFC Director for Global Financial Markets, said, "This investment underlines IFC's strategy for Romania of supporting financial intermediation to accelerate private sector development, and improving access to finance for local micro and small enterprises.” Khosrow Zamani, IFC Director for Southern Europe and Central Asia, added, “The loan should allow RAEF to gain additional experience in the micro lending sector and double the size of its micro loan portfolio to the equivalent of over $7 million."
Horia Manda, Senior Vice President and Chief Investment Officer of RAEF, noted, “The loan signed today represents a deepening of relations between IFC and RAEF in supporting the growth of the SME sector in Romania. This cooperation started back in 1997 when the two organizations co-financed a pioneering cashflow lending program operated initially through RAEF and continued in Banca Romaneasca.”
The impact on the Romanian economy of IFC’s investment in RAEF is expected to be far reaching, providing support for higher investment in productive micro-enterprises, stimulating private sector wealth and job creation and boosting confidence in the banking sector. The investment should allow RAEF to service over 2,000 new clients.
RAEF is a not-for-profit company based in Delaware, USA, with principal offices in New York City and a wholly-owned subsidiary in Romania. RAEF’s mission is to promote free enterprise and entrepreneurship in Romania through investing in and loaning to small and medium size enterprises. Established by the US Congress in 1994, RAEF has so far received $61 million in grants from USAID. It is part of a number of enterprise funds targeting Eastern Europe that were formed in accordance with the principles of the U.S.’ Support for East European Democracy Act of 1989.
The mission of IFC (
www.ifc.org
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY03, IFC has committed more than $37 billion of its own funds and arranged $22 billion in syndications for 2,990 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY03 was $16.8 billion for its own account and $6.6 billion held for participants in loan syndications.
