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GERFO - The German Fund for the Support of Small Entreprises -

A Development Program of the German Government for Rural Russia

In October 2005, after the “German Fund for the Support of small Enterprises” was officially granted the status of a project of the “Russian-German Technical Cooperation,” the fund, abbreviated “GERFO” in Russian, opened its doors for business. The funds of 1 million Euros have been transferred via the Kreditanstalt für Wiederaufbau (KfW) - Entwicklungsbank, a German Development Bank from the German Federal Ministry of Economics and Technology (BMWi) . 

The available resources are distributed to the final borrowers through approximately 20 qualified credit-cooperatives. With the resources the fund provides, credit-cooperatives can make loans to small entrepreneurs representing the full array of economic sectors found in the rural areas including trade, production and services. The crediting-activities are accompanied by additional support for the cooperatives through the transfer of know-how in lending and loan portfolio management. This technical assistance component is also financed by the BMWi: German financial experts train employees of the credit-cooperatives in a credit-technology which is adapted to the peculiarities of Small and Medium Enterprises.

The focus of the GERFO resources for financing rural small entrepreneurs fills an important gap that has existed in the rural credit community. Up to now any financing made available in the rural areas of Russia has been directed primarily to agricultural producers. If the rural communities, usually separated from Russia’s urban areas by great distances, are to develop in a healthy manner, the economic elements serving the local businesses and residents must also be established.  Small business will find this niche if the necessary finance capital is available through local credit cooperatives.

The activities of GERFO additionally represent a vehicle, whereby Russian financial or other institutions, might become engaged in providing resources for rural credit cooperatives, through the extension of loans. For that purpose, GERFO can provide guarantees and comparable kind of collateral.

Through its efforts GERFO hopes to make a significant and sensible contribution toward the intensification of  German-Russian cooperation.

 

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