EFSE: Too much focus on urban areas

The European Fund for Southeast Europe (EFSE), which has investments worth 77m euros on the Romanian market, plans to obtain financing from the Romanian-German Fund, to which the Finance Ministry and the German Development and Economic Development Ministry contribute, in order to support domestic microenterprises.
“Part of the money for the Romanian-German Fund could be transferred to the EFSE. This will ensure consistent strategies to support Romania’s sector of small enterprises,” stated Klaus Glaubitt, EFSE chairman.
EFSE is one of the biggest funds that finances microenterprises globally, with assets worth 414m euros. So far, the fund’s investments on the Romanian market stand at 77m euros, placed over the past two years in Romanian financial institutions in the form of financing lines.
EFSE has six partner financial institutions in Romania, while Banca Transilvania financial group has so far attracted the majority the fund’s capital (52m euros).
“The government’s participation in this project could stir private investors’ interest and encourage them to support microenterprises and small entrepreneurs,” added the EFSE president.
The support of small entrepreneurs provides economic stabilisation as banking institutions diversify their exposure, whereas consumer financing is now commercial banks’ main interest, believes Glaubitt.
“Commercial banks focus too much on the urban sector because it has been much easier for them to work with urban customers and transaction costs were better in urban areas. Moreover, consumer finance is easier to handle, by applying scoring to it, whereas in the case of investment finance, banks incur higher expenses,” Glaubitt explained.
Microenterprise finance has a huge potential in Romania, because, as EFSE representative believes, of the rapidly rising financing need of microenterprises and the fact that the agricultural sector has been neglected in the past.
Glaubitt estimates domestic investments will reach 100m euros by 2011, with investments worth around 19m euros earmarked for this year. “We’re focusing on supporting investment loans that contribute to economic growth. This year, we’ll try to cover the extremely high demand for financing coming from the agricultural sector,” concluded Glaubitt.