Private sector absorbs EIB investment loans during the Corona crisis

The Corona crisis has not prevented farmers from executing necessary investments and has not stopped the banks from lending. This fact is corroborated by the level of loan absorption worth Eur 120 million credit line of EIB called “Fruit Garden of Moldova” which finances investments in value chains related to horticulture: All businesses in Moldova operating in the fruit, vegetable, nuts and wine industries are eligible for these preferential loans. While loan absorption was low until 2019, it soared in 2020 despite the pandemic, which generated some uncertainty among Moldovans, but had less than expected impact on horticulture. In Q2 2020, the loans worth more than EUR 7 million were approved for as many as 26 investment projects. The number of small and medium-sized enterprises preparing their investment projects for EIB-financed loans is steadily growing, remaining unaffected by the pandemic. While only 5 projects were financed in the last quarter of 2019, there were already 30 in the Q3 2020.

Photo: Petru Perju received the investment loan for his table grape plantation with the help of a business advisor partnering with the Fruit Garden of Moldova credit line (Picture: A. Musiuc)

The number of investment projects financed by the Fruit Garden of Moldova loans We believe that this achievement is due to the following four factors: i) assistance provided by the Business Development Support (BDS) companies to farmers and entrepreneurs; ii) participation of MAIB in the project since late 2019; iii) high price paid for major fruits produced in Moldova as a consequence of low 2019 harvest in Europe and Russia, but also due to Corona crisis; and iv) extreme drought in Moldova from September 2019 to September 2020 sensitising farmers for the need to invest into irrigation. The drought, however, also led to a significant drop in apple and plum yield, which could reduce the investment capacity of fruit producers in 2021.

In 2020, the Fruit Garden of Moldova credit line was partnering with nine BDS companies which successfully arranged loans for project beneficiaries: AgriSmart, Alternative AID, BizConcept, Gateway, MEGA, OBD, ProConsulting, ProEntranse and United Solutions. 80% of the investment project dossiers were prepared and submitted with the help of these BDS advisors. Their services were largely paid for by the EU-funded Technical Assistance to the Fruit Garden of Moldova credit line. However, as the Technical Assistance is scheduled to end by mid-2021, borrowing is expected to decrease. On the other hand, these nine companies have had the chance to gain the confidence of SMEs in Moldova and are therefore expected NEWSLETTER OF THE DELEGATION OF THE EUROPEAN UNION TO THE REPUBLIC OF MOLDOVA | SEPTEMBER - OCTOBER, 2020 to be able to obtain affordable payment for their quality services. 43