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Microlending Programme Aleksejs Kanejevs Deputy Head, Programmes Development Department 25.04.2013.

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Presentation on theme: "Microlending Programme Aleksejs Kanejevs Deputy Head, Programmes Development Department 25.04.2013."— Presentation transcript:

1 Microlending Programme Aleksejs Kanejevs Deputy Head, Programmes Development Department

2 Microlending Programme Overall objective:to improve access to micro loans to micro enterprises and self employed persons for setup and development of business activities Overall objective: to improve access to micro loans to micro enterprises and self employed persons for setup and development of business activities Support: Support: Micro loan Micro loan up to 10 thsd. LVL (17.3 thsd. CHF); Grant for repayment of the loan Grant for repayment of the loan - 500/750 LVL (867/ 1300 CHF) Beneficiaries: Beneficiaries: micro enterprises up to 10 employees Budget: Budget: 5.1 mln. LVL (8.9 mln. CHF), of which: Micro loans mln. LVL (8.1 mln. CHF) - 80% financed by the Swiss side; 20% - Hipoteku Banka Grants – 0.44 mln. LVL (0.77 mln. CHF) – solely financed by the Swiss side Duration: Duration: allocation of loans and grants - until the end of 2013 (disbursement of grants – until June 2015) Planned results: - up to 650 micro businesses supported; Planned results: - up to 650 micro businesses supported; - up to 900 jobs - up to 900 jobs (both created and saved)

3 Results (as of ) The Programme was launched in September 2011 Micro loans: mln. LVL allocated 672 micro loans for the total amount of 3.9 mln. LVL (6.8 mln. CHF), incl.,: 656 contracts signed for 3.8 mln. LVL (6.6 mln. CHF), 641 disbursed for 3.6 mln. LVL (6.2 mln. CHF) Implementation status:83% Implementation status: 83% (of the total budget)Grants: 561 allocated 561 grant for 382 thsd. LVL (662 thsd. CHF) or 87% of the total budget disbursed 23 grants for 15 thsd. LVL (27 thsd. CHF)

4 Size of Microloans Average loan size5.9 Average loan size – 5.9 thsd. LVL (10.1 thsd. CHF) Micro entreprises request investment and working capital loan mainly. 15% of loans are for working capital only (no grant available) 20% of loans have been applied for the maximum amount Loans up to 1.5 thsd. LVL (2.6 thsd. CHF) are not widely requested (7%), smallest loans LVL/ 1127 CHF (2 cases)

5 Sectoral Breakdown agriculture Almost half of micro loans are allocated for the projects of agriculture (cereal, dairy, vegetables, meet production etc.) services 28% of loans are provided for services (tourism, catering, training, accounting, beauty services, repairing etc.) trade 15% – for trade (food, wear, shoes, stationery, flowers, sports inventary etc.) manufacturing industry forestry 8% - for manufacturing industry (mainly: woodworking, food), 5% - forestry

6 Regional Breakdown The Programme meets its regional targets – micro loans are well balanced in all the regions of Latvia, less demand in Riga region Micro loans are channeled through Bank branches throughout the whole territory of Latvia (the most active branches in allocating the micro loans are Gulbene (92 loans), Jekabpils (82), Rezekne (78), Daugavpils (68) A positive feature: micro loans are well demanded also in remote border regions and small sized municipalities, e.g., 8 micro loans are allocated in Rozupe, 7 – Iecava, 6 – Belava

7 Jobs Created and Saved Number of jobs: – prior to implementaion of business projects (in average 1.9 per enterprise) – estimated after implementation of business projects (in average 2.4) The Programme foresees 900 jobs created and saved

8 Project Example Individual enterprise in Codes county, Bauskas region Specialized transport services for people with disabilities Specialized transport services for people with disabilities The client has previous experience in social care (worked at assistance service of Order of Malta) Investment loan – 5 thsd. LVL/ 8.7 thsd. CHF + grant 750 LVL/ 1300 CHF (purchase of specialized microbus equiped with a lift)

9 Project Example (2) Enterprise in Gailisu county, Bauskas region Family business (mother and 2 sons) Planting, processing and distribution of cucumbers, cabbage, tomato Planting, processing and distribution of cucumbers, cabbage, tomato (distribution through a retail chain, catering companies) Loan for investment and working capital – 8.2 thsd LVL/ 14.2 thsd. CHF + grant 750 LVL/ 1300 CHF (renovation of product packing premises)

10 Project Example (3) Enterprise in Ventspils Female owned business (education in music pedagogy and business management) Production of singing toy bears Production of singing toy bears (components come from abroad while the 7 lullabies are recorded by the owner of enterprise) Distribution through toy shops (plans to start exporting to Baltic countries and Scandinavia) Working capital loan – 5 thsd LVL/ 8.7 thsd. CHF (purchase of relatively large stock of components in order to cut production costs)

11 Publicity Advertisement campaigns (banners in the business newspaper «Dienas Bizness», 2012) Advertisement campaigns (banners in the business newspaper «Dienas Bizness», 2012) Billboards (30 places in Riga, Aug./Sept. 2012) Billboards (30 places in Riga, Aug./Sept. 2012) Press release on achievements (Sept.2012) Press release on achievements (Sept.2012) Regular information on conditions of the programme (www.hipo.lv; leaflets in the premises of the branches) Regular information on conditions of the programme (www.hipo.lv; leaflets in the premises of the branches)www.hipo.lv Dissemination of information in events (seminars / conferences organized by other institutions) Dissemination of information in events (seminars / conferences organized by other institutions) Short film (arranged by the Swiss Embassy, to be presented at the Annual Swiss Ambassadors Meeting in Bern, ) Short film (arranged by the Swiss Embassy, to be presented at the Annual Swiss Ambassadors Meeting in Bern, )

12 Perspectives The funds available will be allocated by July, 2013 Re-allocation from the Latvian – Swiss Cooperation Programme: In May, 2013 the Bank will allocate additional 99 thsd. CHF in the Loan Fund as Banks co-financing and submit Advance Reimbursement Request for additional 444 thsd. CHF Additional funding (543 thsd. CHF) allows to continue allocation of micro loans / grants in July/August, 2013 Additional funding (543 thsd. CHF) allows to continue allocation of micro loans / grants in July/August, 2013 (at least 50 more micro projects to be financed) Afterwards new micro loans will be provided from repayments only Afterwards new micro loans will be provided from repayments only (no allocation of grants) 2014 – disbursement of allocated grants; monitoring of projects etc – disbursement of allocated grants; monitoring of projects etc.

13 Conclusions In the frame of previous and current micro lending programmes the Bank has already supported more than 1000 micro businesses! obtained competence and gathered experience in micro lending process The Bank has obtained competence and gathered experience in micro lending process and in examination of needs of micro enterprises availability to be near the clients The presence of regional branches has ensured availability to be near the clients – micro enterprises throughout the country micro loans are permanently well demanded, including remote border regions and small sized municipality In the frame of current programme micro loans are permanently well demanded, including remote border regions and small sized municipality (thus the programme positively contributes to the socio-economic needs: creation or maintanence of jobs; development of economic activities; increase of incomes) Commercial banks are relucatant to deal with microloan segment Commercial banks are relucatant to deal with microloan segment (relatively high administrative costs; additional bureaucracy related to programmes, special reporting req. etc.). Also non-bank lending towards micro businesses (e.g., credit unions) is not developed yet The Microlending Programme should be continued in the future years!

14 Thank you!


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