CEB to boost microfinance sector in Bulgaria and Serbia

Paris - The Council of Europe Development Bank (CEB) has signed today two loan agreements aimed at supporting micro-businesses in Bulgaria and Serbia. The agreements were signed with SIS Credit in Bulgaria for a total of €3 million, and with 3Bank in Serbia for an amount of €6 million.

In Bulgaria and Serbia rural entrepreneurs, small farmers and start-ups face difficulties in accessing credit from mainstream commercial banks. The newly signed operations seek to address the increasing demand from vulnerable parts of the populations who rely on microfinance for their livelihood.

SIS Credit, established in 2006, is the largest private non-banking microfinance institution in Bulgaria. Known for its advocacy of social entrepreneurship, SIS Credit has been instrumental in supporting young start-ups, female-led businesses, and financially underserve individuals in the country.

The loan to SIS Credit is backed by the InvestEU Guarantee instrument and will be complemented by support from the InvestEU Advisory Hub. A study funded by the latter will assess the social impact of microcredits provided by SIS Credit, focusing on financial and social inclusion, income changes, quality of life improvements and poverty reduction.

3Bank, the only institution in Serbia specialised in microfinance, is dedicated to providing financial services and advice to the financially excluded. Targeting underbanked microentrepreneurs and farmers, 3Bank aims to strengthen this segment and promote financial inclusion in Serbia. The loan to 3Bank is guaranteed by the CEB's Social Dividend Account, which uses Bank profits to support projects with high social impact.

"Microfinance is instrumental in advancing social and financial inclusion of the most vulnerable. Through the loan agreements with SIS Credit and 3Bank the CEB will significantly boost microfinance in Bulgaria and Serbia, where this sector remains largely underdeveloped", said CEB Governor Monticelli.

"SIS Credit in Bulgaria, and microfinance in general, is effectively meeting numerous market failures, especially in financing starting entrepreneurs, with focus on youth and women, and micro family businesses that lack collateral, history, or are operating in remote parts of the country. The partnership with CEB will ensure the sustainable growth of SIS Credit and will support its mission for jobs creation in Bulgaria," said Martina Grigorova, CEO of SIS Credit.

"Through the agreement with CEB, 3Bank will be able to balance its deposits and debt portfolio more efficiently and secure longer-term financing to our small farms and small businesses clients," said Vladimir Vukotić, CEO of 3Bank.

About InvestEU
The InvestEU programme provides the EU with long-term funding and comprises three components: the InvestEU Fund, the InvestEU Advisory Hub, and the InvestEU Portal. The InvestEU Fund is implemented through financial partners who invest in projects using the fund as a budget guarantee of €26.2 billion. The InvestEU guarantee backs investment projects of the implementing partners, increasing their risk-bearing capacity and thus mobilising at least €372 billion in additional investment.

About InvestEU Advisory Hub
The InvestEU Advisory Hub support is aligned with the objectives of the InvestEU Programme, and it will be delivered through a number of thematic advisory initiatives in the InvestEU eligible sectors and priorities. The InvestEU Advisory Hub aims to:

• Support the identification, preparation, development, structuring, procurement and implementation of investment projects
• Enhance the capacity of promoters and financial intermediaries to implement financing and investment operations
• Support awareness raising and preparatory activities for investment areas that show a clear market gap

More details on CEB and investEU can be found here: CEB and InvestEU

Social Dividend Account
The Social Dividend Account is used to support highly social projects. It is financed mainly by contributions from the CEB member states, through allocations from the Bank's annual profit, which amount to €122 million since its creation in 1996. To date, the Account has financed €16 million in grant contributions and €5 million in technical assistance grants. The SDA has also subsidised €2.1 billion and guaranteed €67 million in CEB loans respectively.

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