European bilateral DFIs to launch new EU-funded guarantee programme, the EDFI MSME Guarantee.
European bilateral Development Finance Institutions (DFIs) are launching a new EFSD+ Guarantee Programme funded by the European Union (EU), aimed at deploying EUR 80 million of EU budgetary guarantees to support MSME finance and private sector development in Sub-Saharan Africa and in the EU’s Eastern and Southern Neighbourhood countries.
The programme is expected to enable EU DFIs to invest EUR 200 million of their own financing into local lenders aiming to generate over EUR 500 million of MSME finance.
The initiative aims to help create over 300,000 new jobs for micro–, small-, and medium-sized enterprises (MSMEs) in the manufacturing, supply chain and agriculture sectors.
This new Guarantee Programme will be managed by EDFI Management Company, a joint financing platform that offers European bilateral DFIs an efficient way to develop and manage joint financing facilities in partnership with the EU institutions and to achieve high impact.
The EDFI MSME Guarantee is the first joint guarantee facility under the EU’s EFSD+ and will be open to 11 EDFI member institutions from EU countries. It is designed to enhance the lending capacity of local financial intermediaries who will then give loans to MSMEs, supporting jobs, economic opportunities, skills and entrepreneurship.
Through this new programme, the EU will mobilise financing for MSMEs based in Least Developed Countries and Fragile States, MSMEs led by young people, women, rural or vulnerable populations, or those still affected by COVID-19. In line with the EU’s Global Gateway strategy, the programme aims to narrow the global investment gap via a Team Europe partnership approach.
Thanks to the crucial risk-sharing support from EU budgetary guarantees, the DFIs are able to mitigate financial risks associated with investment in MSMEs and will help unlock economic growth potential with large social benefit.
“I am very happy to welcome the new MSME Guarantee Programme to scale up inclusive financing for private sector entrepreneurs. On behalf of EDFI, I wish to thank the European Union for supporting this first joint guarantee programme under EFSD+, which will widen the range of DFIs from EU member states that become active in the Team Europe partnership approach. We look forward to deliver on this and future innovative development finance solutions in partnership with the EU institutions that promote inclusive and sustainable private sector development,“ said Søren Peter Andreasen, CEO at EDFI.
About EDFI and EDFI Management Company
EDFI – the Association of European Development Finance Institutions – was established in 1992 to support and promote the work of bilateral Development Finance Institutions (DFIs). With a combined portfolio of €44 billion, and €9 billion in new investments in 2021, EDFI’s 15 member institutions share a vision of a world where the private sector offers people in low-and middle-income countries opportunities for decent work and improved lives, and where private investment flows are aligned with the Sustainable Development Goals and the Paris Climate Agreement. EDFI’s mission is to promote the joint interests of its members, inform policy, and drive innovation in industry standards.
EDFI’s membership includes BIO (Belgium), British International Investments (UK), Cofides (Spain), DEG (Germany), Finnfund (Finland), FMO (The Netherlands), IFU (Denmark), Norfund (Norway), OeEB (Austria), Proparco (France), SIFEM (Switzerland), Simest and CDP Development Finance (Italy), SOFID (Portugal), Swedfund (Sweden).
EDFI established the EDFI Management Company (EDFI MC) in 2016 as a joint platform for promoting financial cooperation with the EU institutions. EDFI MC plays a role in delivering a range of innovative financing solutions supporting private sector development. Examples include EDFI ElectriFI and EDFI AgriFI facilities targeting investments in early-stage enterprises in the agriculture and energy sectors, and the European Financing Partners co-financing facility in partnership with EIB.