European Union Initiative for Financial Inclusion
What is it?
MSMEs significantly contribute to GDP and job creation across the southern Mediterranean region of the Middle East and North Africa. Thus, they have the potential to make even greater contributions to their respective economies when given the right funding. However, most MSMEs do not have access to funding in the Neighbourhood South, a factor that significantly limits their growth.
In light of this, the European Commission created the European Union Initiative for Financial Inclusion (EUIFI), in partnership with four leading European finance institutions (EFIs), namely: the European Investment Bank (EIB); the European Bank for Reconstruction and Development (EBRD); Kreditanstalt für Wiederaufbau (KfW); and Agence française de développement (AFD).
The EUIFI main aim is to extend financing to micro, small and medium-sized enterprises (MSMEs), including support to innovative start-ups, in the Neighbourhood South. Through facilitating access to finance and providing MSMEs with the right tools, the EUIFI aims to increase their competitiveness, which in turn creates much needed jobs and powers economic growth.
How does it work?
The EUIFI provides funding to MSMEs through the Neighbourhood Investment Facility whereby the European Commission (EC) blends its grants with loans from the four leading EFIs. The EUIFI total budget amounts to €1.5 billion, with the European Commission contributing €150 million.
The EUIFI is structured into five complementary regional facilities, with different lead financiers, representing a comprehensive package that addresses different aspects and tools for MSMEs in the region. The initiative has the potential to reach up to 200,000 MSMEs in the region through:
What will it achieve?
A key feature of the EUIFI is coordination and experience sharing between financial institutions during its implementation as well as joint visibility. Knowledge sharing takes place through the Coordination Platform on MSMEs finance with the participation of the European Commission and EFIs implementing MSME facilities in the region. Another key objective is the leveraging of policy dialogue to improve the regulatory environment on access to finance in each country. THE EUIF is co-financed by the European Commission through the EU Neighbourhood Investment Platform (NIP).