Azerbaijan, Baku, May 20 / Trend , N.Ismayilova/
The International Finance Corporation (IFC) inked an agreement with the first pilot company - non-banking loan organization CredAgro as part of the second phase of the Azerbaijani Corporate Governance Project (ACGP) Technical Assistance program.
"CredAgro has become the first micro-financing organization which joined the corporate governance project and we hope it will become an example for other non-banking loan organizations in applying corporate governance standards," Head of the IFC Program on consulting services in Europe and Central Asia Tatyana Lozanski said during the signing ceremony.
Lozanski said CredAgro was the 7th company under the ACGP project in Azerbaijan. "The first three companies which succeeded in introducing the standards could draw investments worth $17 million," Lozanski said. "And this fact confirms the role of the corporate governance in drawing foreign investments."
CredAgro General Director Eldar Jafarov said the organization received $8 million loan from the IFC and these funds Were directed to develop small and medium-size entrepreneurship in the country's regions.
"The company developed by three-four times within last two years. Therefore, it is necessary to change the governance structure to become a giant creditor on the country's micro-financing market," Jafarov said.
The project covers two years. Assessment will be held in the first three months. In the following 9 months, CredAgro will implement the project, particularly, form a supervisory board and hold training for the company's management.
CredAgro is a non-banking financial organization and offers services to 15,000 micro-organizations. CredAgro possesses 17 percent of the country's total micro-loan portfolio.
Priority of ACGP phase 2 is that now it insurance companies and microfinance organizations, though earlier more accent was made on bank structures, according to Safarova.
The project aims to improve corporate governance in joint-stock ventures, including commercial banks. Pilot organizations are selected in accordance with investment potential and financial prospects of companies and banks, their disposition to reforms. The selected companies and banks can participate in large programs, stipulating appraisal of corporate governance, consultations over improvement of improving mutual relations between the structures and boards, management and shareholders. Furthermore, assistance will be provided to bring corporate documents in line with the best experience, to develop more transparent and open financial reports.
Participation in the pilot program at the first phase was free. The second phase is paid due to provide loyalty of private companies and bank to participate in ACGP program.
The State Secretariat for Economic Affairs (Seco) assumed financing of the second phase and invested over $4 million.
The corporative governance project helps to introduce corporative governance standards adjusted to the requirements of the Organization for Economic Cooperation and Development (OECD).
The official opening of the project was initiated by IFC and financed by Seco on Jan. 25, 2005. The first phase covered three years worth $2.1 million.
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