PKS organized several professional gatherings, and the last one was held on October 29, at which representatives of microfinance and non-banking institutions from the region presented various models and successful examples of financing the economy, outside the banking system.
Serbia, unlike most European countries, still relies exclusively on commercial banks as a source of financing the economy. Micro, small and medium enterprises (MSMEs) and a large number of entrepreneurs make up the majority of economic entities in the economy and are widely diverse. In addition to size, they differ in age, stage of business development, type of activity, scope, reach, industrial sector, etc. This diversity also affects the different financial needs of MSMEs – types of financing, amounts, duration, security requirements, repayment regimes. Sometimes all these needs can be met only with an appropriate combination of financing instruments, explains Tamara Dundjerovic, head of the Center for Economic Support Programs and micro, small and medium-sized companies of the Serbian Chamber of Commerce.
– The diversity of the offer of financial instruments and sources of financing must be at the top of the priorities in order to improve the economic environment, and it is especially important in cases when the central financing of the economy comes from banks. This is perhaps best seen in the discrepancy in the possibility of financing those who have completed the initial phase of business and have the need to finance the next phase, the phase of further growth, as well as micro and small enterprises – she added.
In the structure of the financial sector of Serbia, banks make up over 92 percent, while in Europe, according to the data of the European Commission, the share of banks in the financial sector is 70 percent.
– Special attention should be paid to the possibilities of financing while respecting the specific needs of different industries, as well as a significant difference in the financing of innovative and technologically advanced MSMEs, from those in traditional industries. It is certainly recommended to consider the introduction of a more flexible normative framework and business opportunities for non-banking institutions – states the representative of PKS.
– Thus, we learned from the Greek example that, after several years of advocating for diversification of funding sources, a good Law on Microfinance was adopted, which took into account quality examples from practice, and the regulation itself is easy to implement. One of the main features is that the “Code of Good Conduct for Microcredit Provision” makes up a large part of the law. The code was developed in the EU on the basis of best practices, so it has become a recognizable mark of the quality of microfinance for the benefit of buyers, investors, donors – said Dundjerovic.
According to her, it is interesting to point out the possibilities of microfinance within the measures to support the economy and the challenges caused by the Covid 19 pandemic. According to the Microfinance Association of Albania, microfinance is very active during the crisis, system, and as many as 40,000 loans have been secured.
It is estimated that the relaxation of the financial system would open the market for social investors and that between 40-60 million euros of direct investments would enter Serbia. An important contribution is the cooperation with international financial institutions and the creation of appropriate guarantee schemes for favorable lending to the economy, especially small businesses. and short repayment terms, mismatch between real demand and available supply on the market, limited number of alternative financing options, expensive bank guarantees – high interest rates, short repayment terms, collateral, loan amount…
The MSME sector makes up over 96 percent of all active economic entities in Serbia, ie 371,502 registered economic entities, of which 94% are micro, small enterprises and entrepreneurs. The sector employs about two thirds of the total number of employees, generates the same amount of total turnover in the economy and contributes with 57.4 percent of the gross value added of the non-financial sector.
What is characteristic is that the economic structure of Serbia consists of a very small number of large companies and almost no medium-sized ones, while on the other hand there are many small and micro companies that at first glance are not able to join the ranks of medium-sized companies. Banks do not respond to demand for “small” loans.
– The risk assessment of investing in the sector of micro, small enterprises with banks is too high, administration costs are high in relation to low loan amounts, and only a few banks in their financial portfolio implement a program for companies with a business history of no more than 24 months – added Dundjerovic, Kamatica reports.
