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Fondi BESA MSME Financing

Albania | Financial Institutions

Identification Code:: OP/21/0012
Total Operation Cost:: 6.000.000 EUR
Maturity:: 36 months
Operation Status:: BSTDB Approved Amount – Approval Date

6.000.000 EUR – 24 Jun 2021
: BSTDB Signed Amount – Signed Date

6.000.000 EUR – 27 Jul 2021
: Status:
Completed
Description and Purpose of the Operation:: —
Countries of Operation:: Albania (100,00%)
Financial Product:: SME's
Sector:: Financial Institutions
Domain:: Private
Borrower/Client:: 4th MSME Finance Facility to FONDI BESA SH.A, Albania
Co-Financers/Participants:: N/A
Guarantors/Sponsors:: N/A
Developmental and Regional Cooperation Impact:: The operation involves a loan for on-lending to micro, small, and medium sized enterprises (MSMEs) that is expected to have modest but favorable economic benefits for the Albanian economy. The most relevant of these is the additional tax revenue gains from increased economic activity resulting from the financing provided. In addition, the financing will help further enhance benefits such as increases in employment, increase in export capacity and competitiveness, and multiplier effects for other parts of the economy. The regional cooperation element is similarly modest but positive. Other BSTDB countries are important trade partners for Albania, so to the extent that MSMEs are benefiting from financing from the operation engaged in export activities, there will be regional cooperation benefits. Strengthening the non-bank financial sector is beneficial as it lies outside the risks which banks in Albania currently face. The operation is consistent with sector and operation priorities outlined in BSTDB’s Medium Term Strategy and Business Plan 2019-2022, which states that "The Bank will finance private infrastructure development as well, while it will continue to provide corporate financing, and SME lending through intermediaries." Similarly, the project is aligned with priorities outlined in the Country Strategy 2019-2022. According to the government development program, within the financial sector, "priorities include support for SMEs development and promotion of trade by providing debt through reliable financial institutions." The Country Strategy 2019-2022 states that "BSTDB will focus in the next four years on providing support for the implementation of the Government development program and priorities, while responding to market demand. The financial support will be in the form of medium to long term corporate loans, short to medium term pre- export financing facilities, SME credit lines, or other investment and working capital facilities." Furthermore, according to the Strategy, "most of the BSTDB’s financing programs will be executed through financial intermediaries. By working through financial intermediaries, the Bank will also support the development of Albania’s financial sector. The Bank will seek opportunities to locate financial intermediaries through which it will be able to promote its financial products, such as trade finance and SME finance or leasing."
Environmental Classification and Impact:: FONDI BESA is engaged in micro and SME lending in Albania by providing its clients business and consumer loans, youth loans and energy efficiency loans. Micro and SME lending is normally not likely to generate significant negative environmental and social impact. Nevertheless, there are certain environmental and social risks associated with such financing for which the FI needs to have the appropriate capability to ensure that these risks are properly assessed and mitigated. The Environmental and Social Assessment of FONDI BESA focused primarily on the existing environmental and social management arrangements, such as policies, procedures, rules and responsibilities, and whether the company is engaged in activities prohibited by the Bank as stipulated in the BSTDB Environmental and Social Exclusion List. The assessment concluded that FONDI BESA has instituted a functioning environmental and social management system which was found commensurable with the level of environmental and social risks associated with its micro- and SME financing activities. The Fund Management appointed an officer and assigned relevant responsibilities to coordinate the environmental and social risk assessment process. In terms of ensuring the legal compliance of its clients with environmental, labor and health and safety regulations and standards in effect the Fund is legally obliging its clients to follow these requirements. The Borrower reported that it is not engaged in financing any activities contained in the Bank’s Environmental and Social Exclusion List. Overall, it is considered that the Operation will contribute to promoting micro, small and medium businesses in Albania and positively impact on poverty alleviation, stimulate self employment, create new jobs and generate revenues.
Operation Leader:: Financial Institutions I
E-mail:: fi1@bstdb.org