WASHINGTON, June 27, 2022 – The World Bank’s Board of Executive Directors approved today financing for the Micro, Small and Medium Size Enterprises (MSME) Competitiveness Project in the amount of $50 million. The project will help the country to reduce the regulatory burden, increase access to finance, enhance the export competitiveness of Moldovan enterprises, and in case of an Eligible Crisis or Emergency, respond promptly and effectively to it.
Moldova’s swift recovery during 2021 will be held back due to the ongoing war in Ukraine: it is expected to have a substantial impact, through the trade and remittances channels, as well as high energy prices and financial uncertainties. The country’s labor market has recovered from its COVID-19-induced low but remains structurally weak while its fiscal and external position is expected to be further challenged. Moldova has a low business density of micro-small and medium-sized enterprises, with only 13.5 MSMEs per thousand inhabitants in 2020. Relatively few Moldovan enterprises export, while the investment climate is still not fully conducive for enterprise development and enterprises face challenges in accessing finance.
The MSME Competitiveness Project will help digitize government inspections and services for businesses, streamline permissive documents, and enhance national quality infrastructure to reduce the regulatory burden faced by enterprises. It will support access to finance for enterprises through credit guarantees and enhance the capacity of the Credit Guarantee Fund. It will also support the development of MSMEs and enhance their export competitiveness.
“The MSME Competitiveness Project will continue the long-standing engagement of the World Bank Group with the Moldovan authorities in finance and private sector development issues that we have had over the last decade,” said Inguna Dobraja, World Bank Country Manager for Moldova. “The project is aligned with the Government strategy to support development of MSMEs and will indeed help to enhance and make business services more efficient through digitalization. It will also enable MSMEs become more competitive and facilitate their access to finance, which will help increase Moldovan exports and add jobs.”
The Project will benefit a broad range of private enterprises as well as public institutions. Firm beneficiaries of the Matching Grants Facility (MGF) will include new and prospective, direct and indirect exporters. The instrument will also benefit business development service providers. In addition, ODIMM will benefit from getting access to an experienced technical and operational team and capacity building activities that will help the institution acquire the necessary knowledge and expertise to implement the MGF. The Project will also benefit female-owned/female-managed firms, which are disproportionately less likely to export than male firms, as well as have more difficulty getting a loan.
Since Moldova joined the World Bank in 1992, over $1.3 billion has been allocated to more than 60 operations in the country. Currently, the World Bank portfolio includes 12 active projects with a total commitment of $638.1 million. Areas of support include regulatory reform and business development, modernization of government services, tax administration, land registration, education, roads, health and social sectors, including the COVID-19 emergency response, agriculture, water and sanitation and energy.