Challenge
Several factors have had devastating effects on Moldova’s economy in recent years, including severe droughts, COVID-19, as well as Russia’s unprovoked full-scale invasion of Ukraine which has disrupted market exports. Particularly hard-hit have been Moldova’s small businesses – which account for 98 percent of its overall business sector – chiefly in rural regions as well as those that are owned or led by women.
These small and medium-sized enterprises, or SMEs, face significant challenges accessing finance due to perceived higher risk, high collateral requirements, and regulatory hurdles. Those in the agricultural sector contend with additional challenges, including high interest rates and short-term financing options that do not align with the long-term nature of agriculture.
And though women own or lead a third of all SMEs in Moldova, including in agriculture, they have more limited access to credit compared to their male counterparts due to insufficient financing, collateral constraints, and limited financial literacy.
In the wake of the COVID-19 pandemic, Moldova experienced its worst drought in two decades, leading to a 30 percent drop in agricultural production. Russia’s invasion of Ukraine has also created several knock-on effects for Moldova, including a drop in exports and remittances, as well as disruptions in the transit of gas, for which Moldova was previously fully dependent on Russian imports.
Solution and Impact
DFC is collaborating with Microinvest, a non-bank financial institution established in 2003 that is working to bolster financial opportunities for underserved communities in Moldova, particularly in agriculture. A $30 million direct loan from DFC will support Microinvest’s mission to provide needed capital to the underbanked part of the Moldovan economy. Microinvest will also seek to target 30 percent of new loans to SMEs owned or led by women.
The small businesses with which Microinvest partners will typically be small farmers who grow fruit and vegetables for Moldovan consumption, with the potential for exports to Ukraine and the wider European Union.
Agricultural products, particularly fruits, have represented some of Moldova’s most important exports, including to Russia and to Ukraine, which have been severely disrupted by Moscow’s invasion.
Microinvest reports its on-lending has already supported the creation and expansion of agro-tourism facilities, education centers for children, as well as family farms.
Igor Golban, an entrepreneur who started an agricultural family business that produces oils, flour, almond flakes, and other natural products, has previously received investments from Microinvest that allowed him to modernize his farming processes and equipment. The investments in innovative machinery have helped him to ensure sustainable production and reduce waste.
“I appreciate the company’s personalized approach to each client and business type. The lending decision is quick and reliable – within just a few hours, I received the funds I needed to execute my business plans at the right time,” he said.
Golban applied for his first loan two years ago to purchase equipment and recently secured his second for working capital.
“We express our deepest gratitude to DFC for strengthening the partnership with Microinvest and providing vital financing to support the Moldovan private sector,” Microinvest CEO Dumitru Svinarenco said. “This new financial injection allows us to further amplify our impact, creating even more opportunities for growth, resilience, and the continued success of Moldova’s business community.”
DFC and its predecessor agency have previously provided loan portfolio guaranties supporting two on-lending facilities to Microinvest through WorldBusiness Capital, a direct lender company.
This project was profiled in 2024.