The EU boosts youth employment in the Western Balkans with €10 million for small and medium enterprises

Thanks to a €10 million guarantee package financed by the European Union, businesses offering employment or training to young people in Albania, Bosnia and Herzegovina and Kosovo will benefit from €85 million in loans. An estimated 1,200 businesses will be able to benefit from these loans, which will allow them to create 1,300 vocational training courses, internships and employment opportunities for young people.

Across the Western Balkans, up to 99% of all businesses are of small or medium size and provide employment to over 70% of the workforce. At the same time, unemployment rates among young people are the highest in the world. They vary from 28.3% in Albania to 55.4% in Kosovo (2018). Many young workers are engaged in temporary jobs, in the informal economy, and with a high incidence of skill mismatches.

To address youth unemployment, a key economic and social challenge for the region, the EU, through the European Investment Fund, has provided additional guarantees that will enable banks in Albania, Bosnia and Herzegovina and Kosovo[1] to offer loans on favourable terms to small and medium enterprises (SMEs).

Olivér Várhelyi, European Commissioner for Neighbourhood and Enlargement, said: ‘We continue to help the SMEs as they provide many jobs in the Western Balkans. Supporting businesses that employ young people is a particular priority. Investing in youth gives momentum for a stronger, more innovative and dynamic economy in the region.’

Alessandro Tappi, Head of Equity Investments and Guarantees at the European Investment Fund, said: ‘Strengthening SMEs and creating new employment opportunities for youth is a key that can unlock faster economic and social development in the Western Balkans. The EU`s Western Balkans Enterprise Development and Innovation Facility is an important contribution to economic and social sustainability and the EIF is proud of the opportunity to act on behalf of the EU and support the region on its growth trajectory.’

The EU is providing support as part of the initiative ‘EU for Youth Employment and Entrepreneurship’ implemented under the Western Balkans Enterprise Development and Innovation Facility (WB EDIF).

Background:

Western Balkans Enterprise Development and Innovation Facility (WB EDIF) is a comprehensive financing platform combining loans, equity, guarantees, incentive grants and technical assistance to support SME growth. Since 2012, the EU has provided over €190 million through the WB EDIF, supporting 113,000 jobs and 5,400 SMEs across the Western Balkans.

The guarantee instrument is one of the four pillars of the WB EDIF. This is one of the first portfolio guarantee instruments in the Western Balkans. It is specifically designed for the local economies, preparing the financial ecosystem to implement larger EU funded guarantee programmes supporting competitiveness and innovation, such as the programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises (COSME) and EU Finance for Innovators (InnovFin), or the Employment and Social Innovation programme (EaSI).

This guarantee pillar of WB EDIF is managed on the EU’s behalf by the European Investment Fund (EIF), part of the European Investment Bank group. EIF’s central mission is to support Europe’s micro, small and medium-sized businesses by helping them to access finance.

The EU funded the guarantee pillar of the WB EDIF with a total of €69.4 million. By 2019, these EU funds alone have supported over 3,000 SMEs across the Western Balkans, and mobilised a total €490 million in loans on favourable terms.

Following the success of initial guarantee instruments, additional EU funding of €30 million was allocated in 2019, of which €20 million was provided to a national window for SMEs in Serbia. The remaining €10 million has now been disbursed to five commercial banks in Albania, Bosnia and Herzegovina and Kosovo.

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