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Mar 05

AGC Launches Supply Chain Finance Pilot in Kosovo

  • 05 Mar 2014
  • News
  • Eastern Europe

Agriculture is Kosovo’s biggest industry, and is dominated by small farmers and producers (SMEs) who find it difficult to expand their businesses. They need working capital to pay their employees and purchase inputs, and often cannot wait for payment of up to 180 days from their buyers. The SMEs find it difficult to access bank loans due to high collateral requirements and have limited sources of new financing, so they are often unable to increase their orders when buyers demand it, subsequently losing out on business

Supply Chain Finance (SCF), sometimes called ‘reverse factoring’, is a financing mechanism that works with large corporate buyers to provide working capital to its SME suppliers. SCF relies on the creditworthiness of the large buyer rather than the smaller suppliers. This reduces the risks for the lender, improves access to finance for the suppliers and creates efficiency for the buyer so it benefits all parties involved.

AGC launched a pilot in Kosovo to provide SCF to SMEs in the supply chain of two supermarkets: Meridian Express and Interex. SCF is a new concept in Kosovo, and AGC is providing training to the supermarkets and its SME suppliers to demonstrate its viability. So far, AGC has provided over $460,000 in financing to 4 SMEs for over 6,000 invoices. The pilot has proven successful with 100% repayment rate so far. AGC will expand SCF to more of the supermarkets’ SME suppliers as well as additional supply chains in Kosovo and regionally. Hear what one of our SME suppliers has to say about AGC’s program.

Hear what one of our SME suppliers has to say about AGC’s program.

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