The European Bank for Reconstruction and Development is to buy a 33% stake in a potato processor in Kosovo.

The EBRD, which has invested in central and Eastern Europe since the fall of Communism in the early 1990s, plans to spend EUR1.9m (US$2.8m) in Pestova, one of Kosovo's few exporters.

Claudio Viezzoli, EBRD director for the Western Balkans, said: "This project demonstrates that even small but profitable and well-managed companies with a strong commitment to corporate governance and a good business plan can benefit from EBRD financing."

In September, the EBRD moved to become a shareholder in a subsidiary of French dairy group Fromageries Bel.