The European Commission has invested an additional €40 million into the European Fund for Southeast Europe (EFSE) to help combat the economic effects of the coronavirus pandemic in the Western Balkans and EU Eastern Neighbourhood Region. The capital will be used to bolster the ability of local financial institutions to support micro and small enterprises in overcoming the challenges of the crisis.

The majority of entrepreneurs in these benefiting regions have reported severely negative consequences on their businesses from the coronavirus outbreak, including suspension of operations and drastic declines in revenue. According to a study conducted by the EFSE Development Facility, four out of five small businesses in these regions have experienced ‘negative to extremely negative impact’ on their operations, with others reporting temporary layoffs that could become permanent. By providing new and restructured business loans, local financial service providers play a key role in keeping these enterprises afloat.

To support these efforts, the EU has invested an additional €40 million into the fund. EFSE was one of the first vehicles to use a blended finance structure that leverages public capital to mobilise private investments for impact. The new funding will contribute to providing financial institutions in the EFSE target region with the means to continue serving micro and small enterprises.