Micro crediting to alleviate poverty and develop entrepreneurship

Skopje, 22nd September 2016 (MIA) - Although microenterprises in Macedonia comprise 90% of the enterprises, employ one third of the total number of employees and generate 23% of the total GDP value added, they have limited access to basic banking services. Therefore, microfinancing institutions, which are developing for 20 years now in the country, having 12 of them operating, play an important role in supporting the development of microenterprises. Today’s regional conference “Financial Inclusion through Microfinance”, organized by the Alliance of Microfinance Organizations, supported by USAID, is aimed at developing the microfinancing.

- Although microenterprises as a whole are an important segment in the economy, their access to the capital market is limited, since they are small entities, employing up to 10 persons. Hence, the role of microfinancing is of essential significance for the development of this segment, as well as the development of entrepreneurship in the country, Minister of Finance, Kiril Minoski, said at the Conference held in Skopje.

He also added that the Government of the Republic of Macedonia recognized the importance of microenterprises as driving force of the economic development and job creators, therefore, in order to support their development, it strived for facilitating the access to capital by implementing adequate policies and measures.

- Macedonian Bank for Development Promotion is the institution implementing these activities, and it launched, through the Government of the Republic of Macedonia, a special credit line aimed at supporting the micro businesses. Starting last year, Innovation Fund commenced operating, the goal of which is to encourage and support innovation activity in micro, small- and medium-sized enterprises. So far, 33 projects, being awarded funds in the amount of EUR 1.3 million, have been financed through the Fund. The objective is to encourage microenterprises to focus on innovation approach in their operations, which will provide for the economy to move forward towards building a knowledge-based innovative economy, Minoski underlined, saying that employment measures are also providing for a significant support.

In order to facilitate the access to crediting the small- and the medium-sized enterprises, Law on Financial Undertakings was adopted in 2010, providing for non-banking institutions to perform crediting in the form of loans, credit cards, guarantees and factoring.

NBRM Governor, Dimitar Bogov, underlined that banks in most of the countries, as well as in our country, prevailed in the credit and the deposit base, but non-banking institutions, such as saving houses, microfinance institutions, financial unions, also play an important role in providing financial services.

They, as he explained, usually collect deposits and approve loans, however, their importance is their service to higher percentage of citizens. They work with citizens who have limited or no access to banking products. They work with vulnerable groups of citizens facing great difficulties in having access to the classical banking products, Bogov said.

Today, there are 12 financial undertakings operating on the financial market in Macedonia, which undertakings have concluded around 30,000 loan agreements since the beginning of the year. This market has been developing for 20 years in the country and micro and small-sized enterprises are its target groups. According to the President of the Alliance of Microfinance Organizations, Goran Lazarevski, tens of thousands of loans were awarded, whereby it was not the amount that mattered, since it was а case of people falling within the vulnerable categories, who needed the funds for existence.

He underlined that it was important that rate of loan repayment was high, which was one of the features if compared to the banking system.

James Stain, USAID Mission Director to Macedonia, underlined that over 2 billion people throughout the world had no access to formal banking services and, therefore, financial inclusion was an important factor to poverty alleviation and economic development.

He explained that, through the Project, and together with the Alliance, they focused on financial inclusion and innovations so as to provide the small- sized enterprises and the microenterprises and the households, having no access to finance, access to such finance and support for their ideas.

- In addition to low-income households, we also focus on micro and small-sized enterprises, which comprise dominant part of the national economy, are important for the development, and this is how they will realize their ideas, Stein said.

He believes that microfinance sector in Macedonia has been growing in the past years, underlining that, with the USAID support, they will focus on developing technical solutions so as to bring the products closer to as many people as possible.