A debate on the funding alternatives and liquidity buffers that microfinance sector needs to sustain through crisis and emergency periods

On Tuesday, June 29, 2021, the Albanian Microfinance Association held a virtual roundtable discussion about the possibilities that should be explored in order to design financial instruments in support of the microfinance sector in emergency situations. In the strategy approved for the Albanian Microfinance Association for 2021, one of the issues that is of concern to the sector and that has not been addressed so far is the impact that crises and emergencies have on the microfinance industry, which is known to be financed by private investors and cannot be supported with liquidity by the Bank of Albania.

To address this issue, it is of particular importance to establish an institutional cooperation with the aim of setting up an emergency intervention fund to support the sector in the presence of crises and situations that cannot be helped by investors or ordinary liquidity suppliers of microfinance institutions.

As the establishment of an emergency fund is a new experience for microfinance institutions, the roundtable was considered quite productive, because it brought valuable information and opinions from various institutional actors, such as the Ministry of Finance and Economy, Bank of Albania, The World Bank Office in Tirana, the European Fund for South East Europe (EFSE) and the Rural Credit Guarantee Fund of KFW Bank, who shared their experience and expertise in this regard, as well as reiterated their support for this initiative which is among the first in the region. In the end, it was agreed on further steps for him to draft appropriate proposals and materialize these efforts in support of the microfinance sector and its clients.

This event was organized with the support of the Microfinance Center (MFC), in the framework of the European Union Program for Employment and Social Innovation (EaSI).