The European Commission and KfW, the German development bank, have signed a guarantee agreement worth up to €135 million to expand access to finance for MSMEs that face the greatest barriers to funding in the Western Balkans, Eastern Neighbourhood, North Africa and the Middle East, and Türkiye. The initiative is backed by the EFSD+ and targets underserved firms including innovative start-ups and businesses led by persons in vulnerable situations.  

Under the agreement, support will be channelled through the Scaling Alternative Finance for Entrepreneurs (SAFE) fund, which provides guarantees to alternative financial intermediaries such as crowdfunding platforms, microfinance institutions, leasing companies, and venture capital funds. By widening access to alternative sources of finance, the initiative aims to strengthen innovation, inclusiveness and competitiveness across MSME ecosystems in the regions concerned. EU Commissioner for Enlargement Marta Kos said the effort increases support to start-ups and entrepreneurs in candidate countries, especially companies run by women and those facing discrimination.  

Christiane Laibach, member of the Executive Board of KfW, said the flexible guaranteed approach will help alternative finance providers share part of the risk and play a greater role in improving access to capital, tackling bottlenecks to private investment, and generating new growth opportunities. The EFSD+, established in June 2021, will provide guarantees and technical support for sustainable investment in partner countries until 2027.

For more information, visit the official press release from the European Commission.