Downscaling: KfW Micro, SME and Mortgage Financing Programme

The KfW Micro, SME and Mortgage Financing Programme was a financial sector development programme targeted at the promotion of MSMEs and mortgage finance by channeling funds through selected partner banks. The Programme was composed of a EUR 12.3 million credit line for MSME financing, a EUR 5 million credit line for mortgage financing, and technical assistance.

The objective of the technical assistance component was to enable the partner banks to provide loans to MSMEs and mortgage loans to private households in a sustainable and profitable way. As a consequence of the institutional capacity strengthening, the partner banks enhanced and expanded the range of their financial products and attracted refinancing funds that matched with their lending activities.

The Micro, SME and Mortgage Financing Programme had three phases: inception, implementation and phasing out. During the Inception Phase, which started in April 2011, LFS was conducting preparatory works, including due diligences of pre-selected partner banks and recommendations for programme design and distribution of credit lines among PBs and credit products (micro, SME, mortgage). During the Implementation Phase, the advisory services focused on putting the agreed-upon measures and objectives into practice. During the Phasing-Out, all products, processes and procedures were refined and their implementation was assessed, and the responsibility was transferred to the locally created staff and management resources, to enable the banks to operate the newly introduced MSME and mortgage financing technologies and approaches independently.