Supporting jobs and economic and financial inclusion

As a result of this commitment, in 2024 the Bank financed eight loans valued at over €48 million to boost microfinance in five different countries, as well as about €350 million across two loans to help improve access to credit for MSMEs in two countries. Examples from the CEB’s project portfolio in Bulgaria and Croatia are detailed below.

Support access to microfinance in Bulgaria

Micro- small and medium enterprises (MSMEs) are the backbone of the Bulgarian economy, representing 99% of all Bulgarian enterprises. Bulgarian MSMEs account for 65.3% of value added and 75.7% of employment, well above the EU average of 56.8% and 66.6%, respectively [1]. Despite their prominent role in the economy, financing conditions for Bulgarian MSMEs are often challenging. Banks dominate the financing landscape, accounting for 83% of total financial sector assets, but are often reluctant to lend to start-ups and young innovative firms, seeing them as too risky. [2] Microfinance institutions are well suited to fill this financing gap, but require further support to grow the national microfinance sector.

The CEB’s €3 million loan, backed by the InvestEU guarantee programme as well as the CEB’s Social Impact Account (SIA), to SIS Credit, a Bulgarian microfinance institution, will support the expansion of SIS Credit’s service offer to microbusinesses as well as help grow the country’s microfinance sector. The end-beneficiaries of the loan will be micro- and small businesses across the country including student entrepreneurs, young business owners (under 29 years-old) and female-led businesses. With a focus on supporting people from vulnerable backgrounds, SIS Credit also has a reputation for sustaining start-ups, particularly in agriculture, catering, hospitality education services. SIS Credit also benefits from CEB technical assistance through the InvestEU Advisory Hub to undertake a social impact study to assess the socioeconomic impact of SIS Credit financing for microbusinesses and agriculture producers.

Financing municipal infrastructure and support to MSMEs in Croatia

In Croatia, MSMEs employ about 71% of the workforce. They also contribute to 56.5% of the value added. [3] The registered unemployment rate in November 2023 was 6.4%, though for women it was 7.8%. Regional disparity in unemployment rates is quite high, with the unemployment rate in the eastern counties being much higher than the counties in the central, north and north western parts of the country.

The CEB’s €250 million loan to the Croatian Bank for Reconstruction and Development (HBOR) will partially finance social infrastructure investments in municipalities and counties, as well as allocate 40% of the loan to funding productive MSME investment projects and their working capital requirements. Eligible end-borrowers for these funds include MSMEs with a role in economic or infrastructure development in Croatia, as well as recipients of specialised HBOR loans designed for enterprises led by women and young people.

[1] European Commission, SBA Factsheet 2019, Bulgaria
[2] Overview of the financial sector in Bulgaria, Black Sea Trade and Development Bank, 2020
[3] 2023 SME Country Fact Sheet Croatia – European Commission

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