How much have sovereign guarantees increased business lending? - Banks: They are used very little. Enterprises, unaware
For both banks and microfinance institutions, sovereign guarantee schemes are catalysts for credit growth. However, they have expressed skepticism about the effectiveness that sovereign guarantees have had in Albania.
From the survey carried out by the Investment Council, only 2 out of 6 banks that participate in credit guarantee schemes see them as very effective in increasing credit for micro, small and medium enterprises, while 3 out of 6 believe that these scheme have a moderate impact on credit growth.
While it is true that both businesses and banks require more credit and risk mitigation instruments, the promotion and use of applied sovereign guarantees has so far been relatively low. This is also because businesses have a limited awareness of credit guarantee schemes.
On the other hand, the business community, especially women entrepreneurs, express concerns regarding transparency and institutional support. The business community suggests that the government step up its commitment and provide sovereign guarantees to women who do not have collateral.
Meanwhile, the Investment Council recommends expanding guarantee schemes to facilitate the creation of innovative financial products, such as supporting digital initiatives, specific credit products for women.
Also, the adaptation of innovative models of risk sharing can create a new standard in financing. Some measures that can be taken by the government and the donor community are to increase the use of partial loan guarantee schemes.
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