Loan Guarantees Allow Kosovo’s Businesses to Grow

Empowering Local Businesses through  Access to Finance
An expanding business climate and workforce result from greater to access to financing.
USAID EMPOWER Credit Support
Access to financing expands sales, profits and jobs
“Without the loan, I would not have been able to get the finance required and most probably would lose the investment opportunity.”

June 2017—Creating opportunities for businesses to grow in Kosovo is crucial for private sector development. One of the main challenges that Kosovar micro, small and medium-sized enterprises (MSMEs) continuously face is limited access to financing.

To overcome this obstacle and to stimulate economic growth, USAID, through the EMPOWER Credit Support Program, established the Kosovo Credit Guarantee Fund (KCGF), which issues loan guarantees to financial institutions to cover up to 50 percent of the risk for loans to Kosovo businesses.

The fund issued the first credit guarantees for MSME loans in late September 2016. Since then, a total of 321 loans exceeding 13.7 million euros have been granted for the purchase of production machinery, agricultural equipment, and investments in energy efficiency.

In less than a year of issuing loans, the initiative is showing positive impact in business empowerment and job creation. Beneficiaries report that banks have been more responsive in issuing loans despite insufficient collateral. The guaranteed loans enabled businesses to obtain needed finance on time, allowing them to complete their investment transactions as projected, if not earlier.

Beneficiaries also report that the transactions could not be completed without the support of the guarantee issued by KCGF. USAID is committed to helping businesses thrive by overcoming this credit shortfall. Through the credit guarantee, Naim Beqiraj, the owner of a central heating and installation firm, Ital Term, in Prizren, was able to expand his business to a new location, with better positioning and the potential to add a showroom. Ultimately, Ital Term’s sales, client base and number of employees all increased.

“Without the loan, I would not have been able to get the finance required and most probably would lose the investment opportunity,” said Beqiraj. 

Similarly, Besnik Spahija of IKRE Pharm in Peja, another loan beneficiary, sees the guarantee fund as a great financial tool to expand his business by investing in new premises and purchasing inventory without any collateral.

The KCGF promotes the principle of “additionality,” which means that the guarantee results in the “addition” of a new client/loan, adding to Kosovo’s economic growth; without the guarantee, the bank would not issue the loan. The fund, with USAID’s support, achieved additionality by stimulating new lending to Kosovar businesses, including women- and minority-owned businesses.

USAID’s EMPOWER Credit Support Program ran from June 2014 to May 2017. The Kosovo Credit Guarantee Fund continues as a sustainable local credit institution that partially guarantees bank loans to SMEs.


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