New Kosovo Bank to Kick-Start Economy

Metal, a foundry in Pristina, is doing good business following the end of the Kosovo war last June.

The company has ambitious expansion plans, but needs investors. "We are looking for partners and money," said Ymer Qerkini, Metal's manager, who, like many Kosovo businessmen, hopes the region's new commercial bank will help their enterprises grow.

The Micro Enterprise Bank (MEB), the first bank to be licensed in Kosovo since last year's conflict, is aiming to meet an urgent demand for financial services. The bank, which began operating last Monday, January 24, said it acquired 70 new clients the following day.

"A bank is an indispensable part of daily life and Kosovo needed one now that life is back to normal," said MEB's general manager Koen Wasmus.

MEB, located near the headquarters of the United Nations Mission in Kosovo, was founded at the initiative of several international financial institutions and investment companies, with substantial funding from the Dutch and German governments.

The bank will provide account management, money transfers, loans and cashless payment transactions to small enterprises, as well as individual customers. Its credits will range from 2,000 to 200,000 German marks, with an interest rate of 18 per cent per year.

"Kosovo's economic recovery will increasingly depend on the availability of basic banking services," said Horst Koehler, president of the European Bank of Reconstruction, one of MEB's backers. "The Micro Enterprise Bank does just that, giving ordinary people the means to provide for their own livelihoods without resorting to handouts.

" It will also serve as a dependable, commercial-oriented source of credit for small businesses, which will form the backbone of a resurgent Kosovar economy."

Wasmus said he considered Kosovo's economy "a pyramid with a broad base of small firms with very strong committed people," but he warned that some bigger corporations would not survive as they needed large investment.

"We have thought that we should assist small enterprises with the aim of turning them into medium-sized ones," he said. "That is why we decided to work from the base of this pyramid and strengthen that."

"We aim to stay in Kosovo for some time," Wasmus said, adding that MEB's shareholders wanted to see their money back in five to ten years.

At the end of the Kosovo conflict last year, the region's financial system was in a shambles, so the MEB had to start from scratch. "We have provided intensive training to a number of young and highly motivated banking trainees - most of whom had no previous banking experience," said Wasmus. "They received on-the-job training with similar micro-credit banks in Albania and Bosnia."

MEB will be based in Pristina with a staff of 31 - 26 of whom are Albanian. Branches are due to open soon in Prizren (early February) and Peje (March or April). After three years, the bank is expected to have seven branches.

A spokesman for the International Finance Corporation, another of the bank's sponsors, said the project would create jobs and improve people's lives. "A major impediment to growth has been the lack of access to credit which is one of the main vehicles for promoting economic growth.

"By demonstrating the commercial viability of properly structured and organized lending institutions, we can catalyze considerable private investments to build credit and other financial services for many poor people in Kosovo."

Llazar Semini is IWPR Project Manager in Pristina.