European Fund for Southeast Europe

Microfinance and its Growth in Europe

EFSE’s experience in SEE

European Microfinance Network 2009 Conference

EFSE - A development finance initiative supported by:

Strengthening local financialmarkets

Providing housing finance

The Fund aims to foster economic development and prosperity in the

Southeast Europe region through the sustainable provision of

additional development finance, notably to micro and small

enterprises ("MSEs") and to private households, via qualified financial

institutions.

Income generation

Job creation

Mission Statement

Public-Private Partnership: Public funds are used as a risk-cushion to leverage private capital for development finance

Efficient use of public funds: Scarce public funds are used in a revolving manner

Contribution to regional integration and cooperation

Incorporation of local stakeholders through the Advisory Group (representatives of local central banks)

Implicit coordination platform for private and public investors

Transparent decision-making processes and professional management

„Responsible Banking“: EFSE invests responsibly and promotes social values and high standards of business ethics (e.g. environmental standards, client services)

Largest PPP for Development Finance

What we offer

• Financial Instruments

- Medium to long term loans

- Subordinated loans

- Term deposits

- Subscriptions to bond issues

- Co-investments (syndicated loans)

- Guarantees

- Equity and quasi-equity participations

• Complementary Non-Financial Services

- Technical Assistance

- Training

- Research projects and studies

- EFSE Annual Development Impact Study

Performance

Portfolio Development (December 2008) EUR million

66 6698

180

214246

272

310

345378

414

455

510529

0

100

200

300

400

500

600

launch Dec 05 Mar 06 Jun 06 Sep 06 Dec 06 Mar 07 Jun 07 Sep 07 Dec 07 Mar 08 Jun 08 Sep 08 Dec 08

Investment portfolio by market (as of Dec 2008)EUR million

13.0

163.2

79.5

74.0

65.7

42.8

41.1

31.2

8.3

10.0

Albania

Bulgaria

Supra-Regional

Macedonia

Kosovo

Moldova

Montenegro

Romania

Serbia

Bosnia & Herzegovina

Total Investment Portfolio: EUR 528.8 million

Performance

Performance

Investment Portfolio by Type of PLI (Dec 2008)based on amount outstanding

19 Microcredit Organisations

22%

9 Microfinance

Banks 22%

18 Small and Medium

Banks 27%

8 Large Banks 26%

1 TCX 1%

2 Leasing Companies 2%

Microfinance Institutions 43%

Commercial Banks 54%

Non-Bank Financial Institutions 2%

Amount of sub-loans disbursed since inceptionAmount of sub-loans disbursed since inception

EUR 767 million

Number of sub-loans disbursed since inceptionNumber of sub-loans disbursed since inception

148,037

Outreach to end-borrowers (as of Dec 2008)

Sub-loan portfolioSub-loan portfolio

EUR 442 million

Average sub-loan size outstandingAverage sub-loan size outstanding

EUR 4,506

Number of active end borrowersNumber of active end borrowers

98,087

92% of MSE loans below EUR 10,000

Average sub-loan size disbursed since inceptionAverage sub-loan size disbursed since inception

EUR 5,182

Performance

Crisis-response: increased technical assistance

Crisis management workshops

Enhanced risk management function, especially credit risk management

Improved treasury and financial management functions

Roll-out in Albania and start in Ukraine

Focus on Rural Finance: Specific impact and country studies and development of strategy

Particular support to the consolidation of the microfinance sector

Investment portfolio 2011: EUR 760 million

Number of MSE and housing sub-loans disbursed by 2011: 390,000

Contributed to the creation of more than 400,000* jobs by 2011

* Estimation according to the EFSE Annual Development Impact Study

Outlook and Perspectives

www.efse.lu

Thank you for your Attention!