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EBRD Extend Portfolio on Micro-Scale and Small-Scale Business Financing in Azerbaijan

Business Materials 16 April 2008 16:18 (UTC +04:00)

Azerbaijan, Baku, 16 April / Trend corr. I.Khalilova / Increasing its support for microfinance in Azerbaijan, EBRD is going to provide finance to some of the country's leading institutions in the sector. The EBRD is extending a $1 million loan to Norwegian Microcredit LLC ('Normicro'), a $2 million loan to AzerCredit and is participating in the second capital increase of Microfinance Bank of Azerbaijan to maintain its 20 percent-stake. The financing will be used for on-lending to micro and small enterprises (MSEs) especially in the rural areas of Azerbaijan.

AzerCredit was established in 1996 to provide sustainable lending services to entrepreneurs, who are unable to access loans through the banking system. The institution is both active in the urban and rural areas, and targets the agriculture and trade sector. The amount of loans under the EBRD finance will be up to $10,000 and will be exclusively provided to MSEs.

Since 1998, Normicro has been operating in Azerbaijan and is gradually expanding its regional presence. At present, the institution covers 12 districts of the country. EBRD funds will be used for loans to MSEs up to a maximum of $10,000, while at present the average loan size stands at $752. The EBRD finance will enable Normicro to significantly expand its loan portfolio and reach out to new customers.

Both loans will be complemented by Technical Cooperation grants to support institution building through the introduction of best practice, staff training and investments in equipment and software.

In Nov 2006, EBRD became a shareholder in Microfinance Bank of Azerbaijan . The new capital increase will assist in intensifying the development of the country's financial system. Microfinance Bank of Azerbaijan, which was opened in 2002, is a leading provider of financial services to MSEs in the country.

Through its micro and small enterprises programs, the EBRD has supported over three million small enterprises throughout eastern Europe, Russia, Central Asia and the Caucasus. The EBRD currently works with 105 commercial banks and non-bank microfinance institutions to establish or expand specialized micro and small business finance units, and till date has lent over €1 billion to leverage just under €15 billion loans to micro and small businesses in the region.

The correspondent can be contacted at: [email protected]

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