Micro Enterprise Finance Corporation - Moldova Summary Of Project Information (SPI)       Project Name    Moldova - Micro Enterprise Credit      RegionEurope   Sector   Project No009659   Projected Board DateMay 25, 2000   Company NameMicro Enterprise Credit of Moldova S.A.   Technical Partner and/or Major Shareholders    	The technical partner is Internationale Projekt Consult (IPC) and the current 100%-owner is Internationale Micro Investitionen (IMI).   IPC, established in 1980, is a private German consulting and financial services company specializing in development and management of microfinance institutions.  IPC has consulted for or managed microfinance operations in Albania, Bolivia, Bosnia, Columbia, Costa Rica, El Salvador, Haiti, Paraguay, Russia, Ukraine and Uganda.  IFC has a global relationship with IPC, and is currently working with IPC in Bosnia, Georgia, Haiti and Ukraine, in addition to the proposed MEC transaction in Moldova.   IPC-managed microfinance programs have recorded a solid record of success in reaching large numbers of micro and small enterprise (MSE) borrowers, in loan portfolio quality, and in building sustainable institutions.   IMI was established by IPC in 1998, to provide an investment vehicle for IPC-managed microfinance ventures in developing and transition economies.  IMI presently has committed capital of DM12.0 million and has invested in seven microfinance institutions, including Micro Enterprise Credit (MEC) in Moldova.   IMI has invited IFC, the European Bank for Reconstruction and Development (EBRD), Kreditanstalt fur Wiederaufbau (KfW), and the Western NIS Enterprise Fund (Western NIS) to be shareholders in MEC Moldova.      Project Cost Including proposed IFC investment    	It is proposed that IFC make an equity investment of up to US$1.0 million equivalent, representing up to a 20% ownership stake, in Micro Enterprise Credit of Moldova S.A., and provide US$400,000 in grant funds for project development and technical assistance.    Location of project and Description of site    	MEC has one office located in central Chisinau, the capital and principal city of Moldova.    Description of Company and Purpose of Project    	The project is to establish and operate a specialized financial institution, under applicable Moldovan law, which will provide credit and related services to private micro and small enterprises on a commercial basis.  A range of loan sizes between approximately US$1,000 and US$20,000 will be offered to micro and small entrepreneurs and enterprises (MSEs).   	  The large urban population of market stall, retail traders and small service-sector proprietorships in metropolitan Chisinau present an extensive prospective client base for MEC.  Best estimates of the current potential market are about 15,000-20,000 individuals and businesses.  Chisinaus small traders have rapidly filled market niches left by Moldovas underdeveloped transport system, weak distribution networks and lack of high-volume retail outlets, such as hypermarkets.    MSEs in Moldova, however, cannot access financing from the countrys young and weakly-capitalized commercial banks.  Banks in Moldova historically have had little interest in extending credit to the MSE sector and lack the institutional strength to become active in microfinance.  MSE sector lending is considered high risk  because MSEs usually cannot provide "bankable" collateral and generally lack credit history  and expensive, because of the high transaction costs associated with making small MSE loans.  Furthermore, in the wake of the Russian financial crisis and the devaluation of the Lei, the risk aversion of Moldovan banks has become even more pronounced.  Current collateral requirements and credit pricing are beyond the reach of most MSEs.  Lacking a commercial stimulus to diversify into MSE lending, and faced with very limited funds to deploy, Moldovan banks have ignored or withdrawn from this segment of the economy.  MEC is intended to reach this market segment efficiently and fill the gap by providing microcredit on a commercial basis.    	IFC initiated the project in 1999 as the result of a promotion mission to Moldova and has taken the lead in developing this transaction, including identifying financial investors, negotiating project structure, obtaining donor support for technical assistance and liason with the Moldovan government.    Environmental Category and Issues    	MEC is a Financial Intermediary (FI) Type I project, according to IFCs environmental and social review procedure.  The project technical partner/sponsor IPC/IMI has committed to developing an environmental management framework, to ensure that MEC will have procedures in place to ensure environmental screening, review, and supervision consistent with IFCs requirements for microfinance investments.  In addition, disbursement of IFC''s proposed investment in MEC will be contingent on IFCs Environmental Department determination that appropriate arrangements have been made with respect to environmental management and training, including: (i) establishment of MEC environmental guidelines for microlending; (ii) designation of senior MEC staff with line responsibility for environmental review and reporting; (iii) development of environmental awareness education materials for MEC clients; and (iv) attendance by selected MEC staff at Environment and Social Review training, sponsored by IFC     	       Date SPI sent to InfoShop     March 21, 2000      This Summary of Project Information is prepared and distributed to the public in advance of consideration of the proposed transaction by the Corporations Board of Directors.  It is provided for the purpose of enhancing the transparency of IFCs activities and should not be construed as presuming the outcome of IFC Board consideration.    For Additional Information contact:  Corporate Relations Unit -   telephone: (202) 473-7711   facsimile: (202) 974-4384