As of: 10/2023
The countries of the Western Balkans have been severely shaken after the fall of the "Iron Curtain". There were wars, armed conflicts, and the creation of new states. It also means a transition from a state-led to a free economy. The KfW-funded private sector initiative "Western Balkans Enterprise Development and Innovation Facility" (WB EDIF) supports the development and expansion of micro, small and medium-sized enterprises (MSMEs), with the aim of improving their access to financial services and thus creating and safeguarding jobs.
As part of this initiative, the Enterprise Innovation Fund (ENIF) focuses on providing early-stage equity support to young and high-growth companies in the digitalisation and technology sector. This will help to drive progress in digital technologies in the Western Balkans. At the same time, the competitiveness of MSMEs will be improved, economic development will be achieved, and new jobs will be created to also counteract the high level of youth unemployment in the region.
The Western Balkan countries are Albania, Bosnia and Herzegovina, Kosovo, Montenegro, North Macedonia, and Serbia. These are small countries, but they together account for almost 18 million inhabitants and an economic output of more than EUR 100 billion. While there exist conflicts between states, economic exchange works largely smoothly. The Western Balkan countries are linked by the CEFTA free trade agreement. All six countries aspire to join the EU.
MSMEs play an important role in further developing the free market economy in the region. But many companies lack equity capital and sufficient access to financial services for further economic development.
The "Western Balkans Enterprise Development and Innovation Facility" aims to promote economic development and create jobs in the six countries of the Western Balkans. The aim is to improve investment and the development of MSMEs by providing equity and facilitating access to financial services. The initiative supports advisory services for companies, guarantee instruments for local banks and is committed to improving the regulatory and financial framework for the creation and growth of MSMEs in the region.
As part of the private sector initiative, the Enterprise Innovation Fund (ENIF) is to provide young, high-growth MSMEs in the target countries with the necessary equity capital. The first investment took place in February 2016. The main aim is to strengthen modern and innovative companies from the technology sector and thus also support further digitalisation in the Western Balkans. Companies receiving support include, among others, software companies, telecommunications companies, start-ups in the "web and internet" sector and media makers. Such innovative, young companies can receive grants for investments of between EUR 100,000 and EUR 1.5 million.
The total investment foreseen for the Fund is around EUR 40 million. KfW contributes up to EUR 8 million in this through trust holdings. Other funding comes from the European Commission or through the Western Balkan countries' own contributions.
The fund has helped to support the creation and expansion of young, high-growth companies in the fields of "digitalisation" and "modern technologies". For most of the companies supported by the fund, revenues and turnover were low before the investment. A total of 29 companies in five countries were supported. The funding ranged from EUR 30,000 to EUR 3.2 million.
The total revenue of the supported companies was EUR 382,000 in 2016, EUR 41 million in 2020 and EUR 68 million in 2022. The number of jobs in the supported companies is over 1,400, 850 of which were created after the ENIF investment.
Following investments by the ENIF, the companies financed mobilised a total of more than EUR 135 million from other public and private investors. The fund has helped in particular to ensure that private investors have also gained confidence in the performance of the companies supported.
The project contributes to the achievement of these following United Nations Sustainable Development Goals:
/SDG-9_EN_Responsive_1080x608.png){kind=icon}
KfW Group
KfW Development Bank
/SDG-8_EN_Responsive_1080x608.png){kind=icon}
