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Transcript of Advancing the Mission: Through Financing the Development in Northern Kosovo Presented by John Choi...
Advancing the Mission:
Through Financing the Development in Northern KosovoPresented by John Choi
Managing Director
BZMF
March 25, 2004
Besëlidhja/Zavet MicrofinanceAlleviating Poverty through Microfinance Services
2
Advancing the Mission
» Agenda
Introduction
– Overview
– Geographical Focus Areas
– Demographics
– Political Landscape
Needs Assessment: Background on Northern Kosovo
Meeting the Need: Beselidhja/Zavet Microfinance
Gracanica Case Study
Your Opportunity
Appendix
3
Introduction
» Overview
Development in Kosovo– According to studies conducted by the UNDP in April of 2004, just over 47% of Kosovo’s population is in
poverty with 13% living in extreme poverty.– Due to the lack of financial services to the poor, many entrepreneurs in Kosovo cannot develop their
businesses. As a result, they are vulnerable to economic shocks and are subsequently less capable of moving out of poverty.
– Stabile social, economic and political systems requires a significant amount of investment and time.
Beselidhja/Zavet Microfinance (BZMF), implementing organization– In April of 2000, World Relief established BZMF to help individuals and communities in Kosovo work towards
recovery and reconciliation.– BZMF offers a range of loan products including Business Loans, Agriculture Loans, Kos Loans and Pledge
Loans.– BZMF is headquartered in Pristina and has five strategic locations allowing service to 75-80% of the population
in Kosovo.
The mission of BZMF is to facilitate a transformation in the lives of the poor by:– Providing innovative and customer-oriented financial products that enable micro enterprises to grow and
contribute to the economic development of Kosovo; and– Offering financial services to the underserved markets of Kosovo.
The vision of BZMF is holistic – it seeks to:– Develop local communities economically and socially.– Maintain a financially and operationally self-sufficient institution that satisfies the needs of clients, staff and
investors.
Kosovo has been plagued with economic instability and inter-ethnic conflict. BZMF has emerged as a leader in delivering innovative financial products for the poor and promoting peace and reconciliation.
4
Introduction
» Geographic Focus Areas
Northern Kosovo Focus Areas
Source: “Kosovo As Seen, As Told”, Organization for Security and Cooperation in Europe (OSCE)
The goal of this project is to facilitate economic development through the provisioning of microfinance services in the minority areas of the “Northern Kosovo Focus Areas” which includes the following municipalities: Northern Mitrovica, Lesposavic, Zubin Potok and Zvecan.
Kosovo Administrative Divisions
Zubin Potok
Zvecan
Leposavic
Urban NorthernMitrovica
Zubin Potok
Zvecan
Leposavic
Urban NorthernMitrovica
Zubin Potok
Zvecan
Leposavic
Urban NorthernMitrovica
Zubin Potok
Zvecan
Leposavic
Urban NorthernMitrovica
5
Introduction
» DemographicsAccording to the latest population estimates, approximately 80,000 people live in the Focus Areas.
Focus Areas Population by Region
000s
Albanians6%
Other3%
Serbs & Montenegrins
91%
Focus Areas Population by Ethnic Group2
Note: (1) UN official estimate based on assumption that N. Mitrovica accounts for 30% of total Mitrovica population of ~100,000; (2) Ethnic group figures based on population breakdown percentages implied by 2003 ESI estimates (for N. Mitrovica) and 2005 OSCE Municipal Profiles (for Leposavic, Zvecan, and Zubin Potak)
Source: OSCE Municipal Profiles, February 2005
1
6
Background on Northern Kosovo
» Political Landscape
Source: CSCE Kosovo Political Report, June 2002; “Unrest in Kosovo”, Answers.com
In summer 1999, the Ibar river in Mitrovica became the line of separation between Albanian-dominated south
and Serb-dominated north.
Division resulted from various factors including
ethnic violence and inability of KFOR and UNMIK (local
enforcement officials) to control the situation.
In summer 1999, the Ibar river in Mitrovica became the line of separation between Albanian-dominated south
and Serb-dominated north.
Division resulted from various factors including
ethnic violence and inability of KFOR and UNMIK (local
enforcement officials) to control the situation.
1999199920002000
20012001 2005200520022002
Political leaders in N. Mitrovica formed Bridgewatchers, a group of young men whose purpose was to “protect” the north from extremist
attacks. While membership is fluid, estimates place the group at 150 to
250 people.
Political leaders in N. Mitrovica formed Bridgewatchers, a group of young men whose purpose was to “protect” the north from extremist
attacks. While membership is fluid, estimates place the group at 150 to
250 people.
In February 2001, the murder of an Albanian youth in the
north led to attacks on French KFOR by the Albanians.
In February 2001, the murder of an Albanian youth in the
north led to attacks on French KFOR by the Albanians.
While the violent environment in Mitrovica is not sustainable, situation is also not intractable – solutions can
be found. A number of steps have been taken by various NGOs and the UN to maintain unity of the Mitrovica
municipality and realize political peace and economic prosperity.
While the violent environment in Mitrovica is not sustainable, situation is also not intractable – solutions can
be found. A number of steps have been taken by various NGOs and the UN to maintain unity of the Mitrovica
municipality and realize political peace and economic prosperity.
The Mitrovica region has been marked by political conflict and violence between ethnic Serbs and Albanians. BZMF desires to direct its attention to this area to facilitate economic stability and peace in Kosovo.
2003200320042004
In March 2004, protests in Mitrovica between Albanians and Serbs led to two days of Kosovo-wide riots that
killed 28 and wounded ~600. These riots represented the worst violence in
Kosovo since 1999.
In March 2004, protests in Mitrovica between Albanians and Serbs led to two days of Kosovo-wide riots that
killed 28 and wounded ~600. These riots represented the worst violence in
Kosovo since 1999.
Early in Feb 2000, a rocket propelled grenade attack on a UNHCR (United Nations High
Commissioner for Refugees) bus carrying Serbs near Mitrovica killed three and wounded many
more. Revenge attacks followed in N. Mitrovica, killing ten Albanians.
Early in Feb 2000, a rocket propelled grenade attack on a UNHCR (United Nations High
Commissioner for Refugees) bus carrying Serbs near Mitrovica killed three and wounded many
more. Revenge attacks followed in N. Mitrovica, killing ten Albanians.
In April 2002, a routine traffic check escalated into an armed assault by the
Bridgewatchers on UNMIK police officers, which wounded twenty-two. This was the worst act of violence
against UNMIK personnel since the inception of the mission.
In April 2002, a routine traffic check escalated into an armed assault by the
Bridgewatchers on UNMIK police officers, which wounded twenty-two. This was the worst act of violence
against UNMIK personnel since the inception of the mission.
7
Advancing the Mission
» Agenda
Introduction
Needs Assessment: Background on Northern Kosovo
– Need for Microcredit Overview
– Economic Need
– Social Need
– Spiritual Need
Meeting the Need: Beselidhja/Zavet Microfinance
Gracanica Case Study
Your Opportunity
Appendix
8
Needs Assessment: Background on Northern Kosovo
» Need for Microcredit Overview
Microfinance is a tool that can enhance economic development in Kosovo as a whole and offset the political instability of the Focus Areas.
Economic Need Social Need
N. Mitrovica is an unstable area – As recently as March of 2004, uprisings
occurred between Serbs and Albanians– The continuing threat of violence
undermines the development potential of the region
– Discrimination against minority groups, including the Serbs, has created a marginalized segment of society
Minority groups in the region continue to be disenfranchised.
The private sector in the N. Mitrovica region is underdeveloped
– N. Mitrovica and Zvecan rely heavily on public funding
The vast majority of registered businesses in the region are small enterprises in the trade, construction, and manufacturing sector
Other businesses include small kiosks and shops that often operate without licenses
Demand for credit by small-to-medium enterprises (SMEs) is highest in Prishtina and Mitrovica, suggesting that demand for microcredit is also very high in these areas
Need for Microcredit
9
Needs Assessment: Background on Northern Kosovo
» Economic Need
€000s
Total Monthly Cash Income by Sources, Northern Mitrovica & Zvecan, 2003
Source: “A Post-Industrial Failure? Economy and Society in Mitrovica and Zvecan”, European Stability Initiative (ESI) Report, January 2004
Public EmploymentSocial Transfer PaymentsPrivate Sector EmploymentSOE EmploymentInternational Community Jobs
A large majority of total monthly cash income for N. Mitrovican and Zvecan residents is derived from the Serbian Budget (former Yugoslavia) (61.1%), while a smaller share is from non-governmental economic sectors (15.8%). Heavy reliance on the Serbian government discourages Serbs from integrating with the rest of the Kosovo population and government.
EN PN
10
Needs Assessment: Background on Northern Kosovo
» Economic Need, continued
26.7%
63.3%15.2%
20.9%
42.5%
9.0%
10.3%5.1%1.6%
5.2%
0%
20%
40%
60%
80%
100%
Source: “A Post-Industrial Failure? Economy and Society in Mitrovica and Zvecan”, European Stability Initiative (ESI) Report, January 2004
The N. Mitrovican and Zvecan private economy is less developed than in S. Mitrovica and must rely heavily on the Serbian government for financial aid. As a result, the Focus Areas’ economy is far from achieving self-sufficiency.
Total Monthly Cash Income by Sources, S. Mitrovica vs. N. Mitrovica & Zvecan, 2003
Total Monthly Cash Income (€000s)
Public Employment
Social Transfer Payments
Private Sector EmploymentSOE EmploymentInternational Community Jobs
€2,413 €2,301
S. Mitrovica N. Mitrovica & Zvecan
EN PN
11
47%
70%76%
61%
18%
8%
7%
10%
13%
6%5%
11%
22%17% 18%
13%
0%
20%
40%
60%
80%
100%
Mitrovica Leposavic Zubin Potok Zvecan
Background on Northern Kosovo
» Economic Need, continued
Total Registered Enterprises in Focus Areas by Type of Business, 2002
Note: *Mitrovica refers to entire Mitrovican province, including both N. Mitrovica and S. Mitrovica; total registered business and employee figures and percentage shares may differ for N. Mitrovica; data broken out for N. Mitrovica is unavailable
Source: Statistical Office of Kosovo “Statistical Overview of Registered Businesses”, 2002
Majority of registered businesses and associated employees are small enterprises in the wholesale and retail trade, construction and manufacturing sectors
Total Registered Enterprises
Other
Manufacturing
Construction
Wholesale and Retail Trade; Repair
*
1,032 403 143 193
7.2 7.4 3.4 2.4Avg. # of Employees
per Enterprise
EN PN
12
Needs Assessment: Background on Northern Kosovo
» Economic Need, continued
Northern MitrovicaNorthern MitrovicaNorthern MitrovicaNorthern Mitrovica
Half of all private businesses in N. Mitrovica are the ~300 small kiosks along sidewalks
Remaining businesses include:– Metal-processing company, previously an
state-owned-enterprise (34 employees)– Small textile company (9 employees)– Few small construction companies– 160 various shops inside buildings– 50 cafes, bars and fast-food restaurants– 3 hotels and 2 internet cafes– Few service businesses, e.g. lawyers,
hairdressers, etc.– Various tradesmen, e.g. locksmiths,
carpenters, and plumbers– Fleet of irregular cabs traveling between N.
Mitrovica and Zvecan
Half of all private businesses in N. Mitrovica are the ~300 small kiosks along sidewalks
Remaining businesses include:– Metal-processing company, previously an
state-owned-enterprise (34 employees)– Small textile company (9 employees)– Few small construction companies– 160 various shops inside buildings– 50 cafes, bars and fast-food restaurants– 3 hotels and 2 internet cafes– Few service businesses, e.g. lawyers,
hairdressers, etc.– Various tradesmen, e.g. locksmiths,
carpenters, and plumbers– Fleet of irregular cabs traveling between N.
Mitrovica and Zvecan
ZvecanZvecanZvecanZvecan
The business climate in Zvecan is similar to that of N. Mitrovica
Private sector businesses mostly include:– Small kiosks along sidewalks– Fleet of irregular cabs
There are few remaining SOEs:– Trepca, now a debt-laden company that no
longer produces (600 employees technically still on payroll)
– Kosmet Prevoz, which operates buses to Serbia as well as local lines
– Minel Enim, construction company based in Belgrade
– Auto Moto Drustvo, automobile association– Mlinpek, industrial bakery– Lux (98 employees still technically on payroll,
with few receiving any salary)
The business climate in Zvecan is similar to that of N. Mitrovica
Private sector businesses mostly include:– Small kiosks along sidewalks– Fleet of irregular cabs
There are few remaining SOEs:– Trepca, now a debt-laden company that no
longer produces (600 employees technically still on payroll)
– Kosmet Prevoz, which operates buses to Serbia as well as local lines
– Minel Enim, construction company based in Belgrade
– Auto Moto Drustvo, automobile association– Mlinpek, industrial bakery– Lux (98 employees still technically on payroll,
with few receiving any salary)
In addition to registered enterprises, private sector in the Mitrovica region is comprised of numerous small entrepreneurial businesses that often operate without licenses
Source: “A Post-Industrial Failure? Economy and Society in Mitrovica and Zvecan”, European Stability Initiative (ESI) Report, January 2004
EN SN
13
Needs Assessment: Background on Northern Kosovo
» Economic Need, continued
Demand in Mitrovica Remains High for Microcredit1
– A 2001 survey of small-to-medium enterprises found that credit demand per firm remained highest in Pristina and Mitrovica, while credit demand per employee was highest in Mitrovica.
– Due to the lack of political stability in N. Mitrovica, MFIs have steered away from lending in the Mitrovica area. – Using the small-to-medium enterprise market assessment, we can infer that Mitrovica has a relatively high demand for
credit in the micro-to-small enterprise market.
The demand for microcredit in the region is high based on data on small-to-medium enterprises.
Demand for Credit in SME
Region Avg Credit Demand by Firm
Avg Credit Demand by Employment
Prishtina 1.37 1.09Prizren 0.63 0.60Peja 0.91 0.82Ferizaj 1.01 1.05Gjakova 0.52 0.91Gjilan 1.13 1.09Mitrovica 1.20 2.03
Source: Riinvest Institute for Development Research.
SME Financing and Development. Prishtina, Kosovo (2001).
New Spark Group analysisNote: 1Results refer to entire Mitrovica region; data specifically on N. Mitrovica is unavailableSource: Riinvest Institute for Development Research; SME Financing and Development, Prishtina, Kosovo (2001); newSpark Group analysis
EN PN
14
Needs Assessment: Background on Northern Kosovo
» Social Need
Pictures from the recent March 2004 riots in Mitrovica and the rest of Kosovo:
N. Kosovo has suffered from political instability and racial tension, like in other areas of Kosovo.
EN SN
15
Advancing the Mission
» Agenda
Introduction
Needs Assessment: Background on Northern Kosovo
Meeting the Need: Beselidhja/Zavet Microfinance
– Overview
– Impact
– Donors
– Portfolio Growth
– Financial Performance
– Economic Need - Growth by Sector
– Social Need - BZMF and Diversity
Gracanica Case Study
Your Opportunity
Appendix
16
Meeting the Need: Beselidhja/Zavet Microfinance
» Overview
BZMF, with an experienced professional team and a proven track record, is poised to make a substantial economic and social impact in the Northern Kosovo Focus Areas through its microcredit loan programs.
BZMF’s business model has been successful in many regions of Kosovo, especially the Serb areas.
BZMF’s microcredit program can facilitate the economical and social development in the Focus Areas based on the following premises:
– BZMF has a proven track record in lending to micro and small enterprises, which represents the greatest economic need, yet potential in the Focus Areas
– BZMF has demonstrated a commitment to ethnic sensitivity and tolerance through its lending practices at BZMF and peace and reconciliation activities through its inter-ethnic business linkage program
The BZMF team is highly professional and the only microfinance program with a Serb in the top senior management team.
17
Meeting the Need: Beselidhja/Zavet Microfinance
» Impact
BZMF’s microfinance program has had measurable impact on development in Kosovo. Both average household income and business growth in successive cycle loans show that BZMF’s clients are growing.
Clients have an average net income growth of 103% after just two loan cycles. – The average household net income for first cycle loans is €670 per month. – After two loan cycles, the average household net income grows to €1,364 per month. – These statistics are based on BZMF’s portfolio as of December 31, 2004.
BZMF has had a direct impact on generating 318 jobs over the last two years. – BZMF only tracks employees who are paid regular salaries. – If household members who participate in the enterprises are included, the number would be much higher.
Note: Total monthly net income of active first cycle loans (TNIF): TNIF is derived from the loan application which is used to determine loan amount and term limit during credit committees. This amount is entered into the MIS at every loan disbursement. Number of first cycle loans (NFL). Per MISTotal monthly net income of active successive cycle loans after the first two cycles (TNIS): TNIS is derived from the loan application which is used to determine loan amount and term limit during credit committees. This amount is entered into the MIS at every loan disbursement.Number of successive cycle loans after two cycles (NSL): Per MIS. Calculation: [TNIF / NFL = €670; TNIS / NSL = €1,364; €670 / €1,364 = 103%]Average number of employees for first cycle loans (AEF): For every first cycle loan, the number of employees, if any, is entered into the MIS. From this data entered into the MIS, an average number of employees is calculated for first cycle loans. Average number of employees for all successive loan cycles (AES): For successive cycle loan, the number of employees, if any, is entered into the MIS. From this data entered into the MIS, an average number of employees is calculated for successive cycle loans. Total number of second cycle loans disbursed since January 1, 2003 (TNSL): Per MIS. Only second loan cycles were used because including the third and greater loan cycles would result in double counting the clients. Caclulation: (AES – AEF) x TNSL = 318
18
Meeting the Need: Beselidhja/Zavet Microfinance
» Donors
BZMF and World Relief are internationally recognized and funded. A sample of funders for BZMF include:
Danish International Development Agency
19
Meeting the Need: Beselidhja/Zavet Microfinance
» Portfolio Growth
Disbursements of microcredit have grown rapidly from 2000 to 2004 at a 67.7% CAGR. In 2004, BZMF’ portfolio has grown dramatically in outstanding balance (+80%) and borrower base (+73%). The growth is a reflection of the strong demand for BZMF’s financial services.
174
689
1,404 1,376
1,647
0
500
1,000
1,500
2,000
2000 2001 2002 2003 2004
CAGR(2000-2004)
67.7%
Total Disbursements to Micro Borrowers, 2000-2004BZMF Portfolio Performance
Indicator Actual Value (Dec 31, 2004)
Number of Active Borrowers 2,298
Number of Active Loans 1,334
Loan Portfolio €2,675,298
Portfolio in Arrears 1.8%
Write-Offs of 2004 1.2%
Percentage of Borrowers from Minority Communities
24%
Source: MixMarket Data; BZMF CY2004 Annual Report
From a market assessment, BZMF realized that the loan term was one of the major barriers for clients to invest into their businesses in the most effective manner. BZMF responded to this need by increasing its loan terms. Compare to that of 2003, the average term for loans disbursed in 2004 is 50% greater. This change also had the affect of decreasing the number of disbursements in 2004.
20
Portfolio-at-Risk and Repayment Rate
2000 2001 2002 2003 2004Repayment Rate 95.0% 97.3% 97.3% 98.9% 98.2%Portfolio-at-Risk 14.2% 9.7% 8.5% 3.3% 4.0%Loan Write-Offs 0.0% 3.6% 1.3% 5.2% 0.5%
Meeting the Need: Beselidhja/Zavet Microfinance
» Financial Performance
BZMF’s business model has proven to be highly efficient. Despite increasing expansion in the rural and agriculture markets, BZMF’s operation continues to increase its sustainability.
Note: *Loan write-offs were unusually high in 2003 because of an internal fraud issue. We have completely resolved this issue and have implemented proper controls; Organizational self-sufficiency (OSS) = all income (except donor income) / all expenses; Portfolio-At-Risk % = Outstanding principal of loans that are delinquent / total outstanding balance; loans with delinquent payments over 100 euros is BZMF’s house limit.
Source: MixMarket Data; BZMF CY2004 Annual Report
24%
73%
102%
122%131%
0%
50%
100%
150%
2000 2001 2002 2003 2004
Organizational Self-Sufficiency, 2000-2004 Financial Performance Indicators, 2001-2003Financial Performance Indicators, 2001-2003
-9.5%
0.9%
7.5%
-36.5%
2.1%
18.2%
0.6%5.0%
-8.4%
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
2001 2002 2003
Return on AssetsReturn on EquityProfit Margin
*
21
Meeting the Need: Beselidhja/Zavet Microfinance
» Economic Need – Growth by Sector
BZMF offers products that meet the demands of microborrowers in a wide variety of sectors. Over the years, BZMF has diversified its product line and sector outreach, especially in the agriculture sector.
BZMF Sector Growth – Disbursements by Sector, 2000-2003
Source: MixMarket Data
EN PN
0
200
400
600
800
1000
1200
1400
1600
1800
2000 2001 2002 2003
OtherManufacturing
Services
Agriculture
Trade
22
Meeting the Need: Beselidhja/Zavet Microfinance
» Social Need – BZMF and Diversity
BZMF is committed to lending to all minority groups in Kosovo, including Serbian and Roma communities, and is involved in peace and reconciliation programs that encourage inter-ethnic business development. BZMF is also committed to providing microcredit to women, who comprise only 6% of all registered business owners.
BZMF Business Linkage Program– An inter-ethnic liaison performs business linkages between the Albanian and Serb business people and farmers.– Since the beginning of the business linkage program in September 2002, the inter-ethnic liaison has facilitated 30 business linkages, 8 of which resulted in successful business transactions.
BZMF Business Linkage Program– An inter-ethnic liaison performs business linkages between the Albanian and Serb business people and farmers.– Since the beginning of the business linkage program in September 2002, the inter-ethnic liaison has facilitated 30 business linkages, 8 of which resulted in successful business transactions.
Diversity of DisbursementsEthnicity % of Disbursements % of Population
Albanian 74.8% 88.0%
Serbian 21.1% 6.0%
Other 3.3% 3.0%
Roma 0.3% 2.0%
Boshnjak 0.2% <1%
Goran 0.2% <1%
Turk 0.2% 1.0%
Source: MixMarket Data
EN SN
4.0%
17.0%18.0%
3.6%
14.0%
0%
4%
8%
12%
16%
20%
24%
2000 2001 2002 2003 2004
CAGR(2000-2004)
102%
25 35 175 226 414# of Female Borrowers
BZMF Female Borrowers as % of Total, 2000-2004
23
Advancing the Mission
» Agenda
Introduction
Needs Assessment: Background on Northern Kosovo
Meeting the Need: Beselidhja/Zavet Microfinance
Gracanica Case Study
– Background
– Gracanica Results
– Zavet Business Center
– “Turkish Delights” Success Story
Your Opportunity
Appendix
24
Gracanica Case Study
» Background
Background– Since its inception, the Zavet branch has been involved with lending activities to Gracanica, a Serb enclave.– BZMF is the only microfinance program that has not only a Serbian operation in Gracanica, but also a Serb
senior manager who can give direct oversight to this project.– BZMF developed a unique lending practice customized for the Serb community by initially lowering interest
rate and making procedural changes in order to comply with the legal environment of the Serb region.– As a result, BZMF has the highest number of Serb clientele among all MFIs and Banks in Kosovo.– BZMF also markets itself as a local organization, so that it appeals to the Serb communities.
BZMF has experience serving minority populations in central and southern Kosovo.
25
Gracanica Case Study
» Gracanica Results
BZMF’s Outreach to Gracanica– The Gracanica branch disbursed about €775,500 in loan capital to 578 borrowers for the twelve months
ending December 31, 2004. – As of December 31, 2004, BZMF had an outstanding balance of €449,345, a portfolio-at-risk (PAR)of 0.30%
and no write-offs for the full calendar year. – To maintain a lower cost structure, the Gracanica branch serves all the enclaves located in central and
southern Kosovo.
The Zavet business model is an example of BZMF’s outstanding record serving minority populations.
77,565
198,850
309,600
56
126
161
0
50,000
100,000
150,000
200,000
250,000
300,000
350,000
2001 2002 2003
0
50
100
150
200
Disbursement Amount (in Euros)
Number of Loans
Gracanica Disbursement Amounts and Number of Loans, 2001-2003
26
Gracanica Case Study
» Zavet Business Center
World Relief has assisted in the development of the Zavet Poslovni Center (“ZPC” translated as Zavet Business Center) in the Serb enclave of Gracanica.
– BZMF has provided numerous services including:
» the first ATM to serve this area
» an internet café
» a document scanning and copying facility
» a video and book library
» land line public phone
» fax service
» financial services provided by BZMF
» computer training
» English training
» business training
Zavet Business Center also provides access to important services to Gracanica.
27
Gracanica Case Study
» “Turkish Delights” Success Story
Name: Rasim Kosmaqi
Ethnicity: Serb
Age: 53
Sasha Sekulic, a Kosovar Serb, lives in the enclave of Gracanica, located in the center of Kosovo. In November of 2000, Sasha Sekulic took a €800 loan from BZMF to restart a candy factory he had prior to the war. He used the loan to purchase raw materials and Sasha’s business flourished almost immediately. Sasha continued with BZMF and took five more loans, each successive loan larger in amount and longer in term, reflecting the growth of his business.
In addition, partnering with ZPC, BZMF provided business courses to Serbs in Gracanica which Sasha enrolled into and completed. The business principals he learned through these courses has been helpful to Sasha as he dealt with the increasingly complicated financial and business concerns of his growing enterprise. The partnership also offered inter-ethnic business linkages between the Serb and Albanian communities. Through this partnership, Sasha created business relationships with three large Albanian food wholesalers. Today, Sasha’s business sells his candies all over Kosovo and exports them to countries outside of Kosovo. On average, the factory produces and sells 15 metric tons of Turkish delights every month and employs 15 local Kosovars. Sasha has fully graduated from BZMF and has access to commercial credit from banks to fulfill his capital needs.
Commerce has a profound ability to make people put aside their differences and interact with each other. These interactions form a critical step in promoting peace and reconciliation and hope for future of Kosovo.
28
Advancing the Mission
» Agenda
Introduction
Needs Assessment: Background on Northern Kosovo
Meeting the Need: Beselidhja/Zavet Microfinance
Gracanica Case Study
Your Opportunity
– Northern Kosovo Proposed Office Structure
– Impact Potential
– Conclusion
Appendix
29
Your Opportunity
» N. Kosovo Proposed Office Structure
Office Model– The Gracanica office is run under the Zavet structure and requires its own audit.– The proposed office serving the Focus Areas will report to the Gracanica office.
N. Kosovo Office
Gracanica Office Pristina Office
BZMF Hub Office in PristinaZavet Office for Serbs
Zavet Office for Serbs
Reports to
Reports to
BZMF’s proposed office structure will provide customized products for the Serb population and extend inter-ethnic business development.
30
Your Opportunity
» Impact Potential
In 3 years, BZMF believes it can annual lend in the Focus Areas an estimated 800 loans and €1.2MM Euros, based on similar levels and rates as in Gracanica.
BZMF believes this will have enormous impact to the economic development in this region. BZMF believes this development will create an environment where the peace and reconciliation process between
the Serbs and Albanians will be facilitated.
The growth in Gracanica has been consistent and has led BZMF to become the leading lending institution to Serbs among all MFIs in Kosovo. Your contribution can make a significant impact on poverty reduction and economic development in the Focus Areas.
Note: Assumptions include the following: 1) Disbursement Amount in Euros; 2) The population characteristics between Gracanica and N. Kosovo are roughly the same; 3) Business characteristics and needs are similar; 4) The competitive environment is similar as well.
Potential Loans for N. KosovoYear 1 Year 2 Year 3
Cummulative Loan Disb. 100 300 800Cummulative Loan Disb. Amount 200,000 500,000 1,200,000
31
Your Opportunity
» Conclusion
There exists an enormous potential for development in Kosovo. Microcredit is a tool that can help realize that potential. Microfinance can help lead to a sustainable economy and
stable society in the Focus Areas. BZMF is optimally positioned to help Kosovars redevelop their self-sufficient capacity. BZMF needs your financial support and partnership to help serve and grow the underserved economy of the Focus
Areas. Your funds will have a direct impact on the economic and social well-being of this minority community.
Help us transform the economic and social lives of the Kosovars.
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Advancing the Mission
» Agenda
Introduction
Background on Northern Kosovo
Needs Assessment
Meeting the Need: Beselidhja/Zavet Microfinance
Gracanica Case Study
Your Opportunity
Appendix
– Management Team
– Governance Team
– Audited Financial Statements
– Credits
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Appendix
» Management Team
Management Team
John Choi, DirectorJohn Choi has been Managing Director of BZMF since 2002. Before joining BZMF, John started his career in public accounting and financial advisory services at Ernst and Young LLP and eventually moved into M&A, corporate finance, commodity risk management, and equity trading at an investment firm. John is a certified public accountant. John also sits on the board of Kosovo Credit Information Services (KCIS), Kosovo’s only credit bureau, Association of Microfinance Institutions in Kosovo (AMIK) and Zavet Poslovni Center (ZPC).
Driton Fetahu, Pristina Branch ManagerDriton Fetahu has been the Pristina Branch Manager at BZMF since November of 2003. He is responsible for the Albanian lending originations. Prior to coming to BZMF, Driton worked at FINCA as a branch manager. Prior to FINCA, Driton worked at UMCOR Kosovo as the manager for the stabilization income generation program. Driton also worked at Mercy Corp in the agriculture development and housing reconstruction program. Driton has a bachelors in Economics at the University of Pristina.
Dren Spahija, Director of FinanceDren Spahija has been the Finance Manager at BZMF since April 2003. He is responsible for all financial management and reporting for BZMF. Prior to becoming Finance Manager, Dren managed a private enterprise in Pristina. Dren has a bachelors in engineering at the University of Pristina. Dragan Grbusic, Zavet Program ManagerDragan Grbusic has been at BZMF since December of 2000. He is responsible for the Serb lending originations. Prior to coming to BZMF, Dragan was an engineering manager at the Kosovo power plant. Dragan has a bachelors in engineering at the University of Pristina and a masters in engineering at the University of Nis, Yugoslavia.
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Appendix
» Governance Team
Governance Team
Kenneth L. Graber, Microenterprise Development Director, World ReliefKen Graber has over 35 years of experience in agricultural and microenterprise development. He has been the Microenterprise Development Director at WR since 1989. Mr. Graber administers the centrally-funded WR MED programs and oversees the MED Service Team (MEDST) that is responsible for the technical management of all WR Microcredit operations. Prior to joining WR, Mr. Graber was Associate International Division Coordinator-International Program Manager at Mennonite Economic Development Associates (MEDA). His role also included providing administrative oversight to MEDA programs in Paraguay and Uruguay. Mr. Graber holds a masters degree in Agricultural Economics from Purdue University and is fluent in Spanish and English.
Robert Gailey, Director of MED Consulting, World ReliefRobert Gailey serves as Director of Microcredit Consulting Services. Rob has worked for more than 8 years in economic development, including 2 years as Research Director for the global Microcredit Summit Campaign. Rob has experience in the area of poverty measurement tools and has traveled extensively to provide training and evaluations for Microcredit programs.
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CreditsThis report was completed by New Spark
Group, a general non-profit management
consulting firm based in New York City. The
thoughts expressed in this presentation do
not necessarily represent those of BZMF nor
World Relief.
Project Contacts
Daniel Jang
Moses Choi