KCGF and MFK agree to cooperate in renewables financing
Millennium Foundation Kosovo, implementing entity of the Threshold Program between Kosovo and US federal agency Millennium Challenge Corporation, has signed a Memorandum of Understanding with Kosovo Credit Guarantee Fund, the country’s foremost guarantee vehicle supporting access to finance for the private sector.
The aim of the MoU is for the two institutions to cooperate on establishing a potential guarantee window for private sector actors seeking project finance to build new solar generation capacities.
MFK and KCGF, in consultation with the Kosovar government and donor community, have worked for the past year to establish a project framework focusing on three complementary interventions: 1) providing technical assistance and capacity building to establish a renewable energy guarantee window in project financing; 2) launching a Project Accelerator focused on qualitative project screening and development of bankable projects by Independent Power Producers; and 3) engaging in market standardization by developing a toolkit for training and project standardization to help KCGF partner banks assess risk factors when evaluating solar generation projects.
Petrit Selimi, CEO of Millennium Foundation Kosovo, stated: “This MoU signed today with KCGF is an innovative approach to unlock capital for the renewable energy actors. Kosovo is keen to diversify the energy supply and many license holders are seeking to obtain bank capital. This project will help the private sector, banks and KCGF develop a new guarantee window that may have a strong effect in the entire energy market”
Besnik Berisha, Managing Director of Kosovo Credit Guarantee Fund, stated: “We are looking forward to working with MFK and MCC in developing a new guarantee window. KCGF has successfully unlocked millions of euros of credit guarantees for SME’s and we are seeking to diversify our portfolio by working both in renewable energy project financing and project financing. This is an exciting development that Board of KCGF believes will help Kosovo economy while protecting fully KCGF from taking additional risk.”
Millennium Foundation Kosovo is an independent foundation set up in 2018 to implement the Threshold Agreement between Kosovo Government and the Millennium Challenge Corporation, worth 49million USD. MCC’s Kosovo Threshold Program addresses two key constraints to Kosovo’s economic growth: an unreliable supply of electricity; and real and perceived weakness in rule of law, government accountability and transparency. MCC’s investments are designed to strengthen the power sector by fostering a market-driven approach to lowering energy costs for households and businesses, encouraging energy efficiency, and developing new sources of electricity generation. The program also supports the Government of Kosovo’s efforts to improve decision-making and accountability by increasing the accessibility and use of judicial, environmental, and labour force data.
The Kosovo Credit Guarantee Fund (KCGF), is a local, independent, sustainable credit guarantee facility issuing portfolio loan guarantees to financial institutions to cover up to 50% of the risk for loans for micro, small, and medium enterprises (MSMEs).
KCGF plays a key role in facilitating MSMEs obtaining more financing for their growth. By reducing the risk of lending to MSMEs, it encourages KCGF partner financial institutions to lend to MSMEs, to increase the amount of lending to MSMEs, to expand products and services available to MSMEs and improve the terms and conditions for lending. KCGF helps financial institutions lend to viable MSMEs that might not have quite qualified without the guarantee to receive a loan, or, if it had a loan, would not have qualified to obtain the additional financing it needed to grow.
Photo by TADI