German bank changes agro financing mechanism in Azerbaijan

Baku, Azerbaijan, July 24
By Ilaha Mammadli - Trend:

German Development Bank KfW has decided to send the second loan intended for agro financing to the Azerbaijani window of the European Fund for Southeast Europe (EFSE) through which it is planned to continue lending to rural areas by local banks, the KfW Baku office told Trend.

This decision was made after consultation with the Central Bank of Azerbaijan (CBA), particularly with the Risk Management Department. The KfW has not approved the former funding mechanism of the agricultural sector in the country.

In accordance with the previous strategy of the project, KfW funds are allocated in the form of subordinated loan for financing of projects in rural areas, including small business development in the regions, except Baku, Sumgayit and Ganja. And some 1.5 million euros have been allocated to Bank Respublika and two million euros - to NBCO "CredAgro" in the first phase of the project.

"The KfW plans to send another 3.5 million euros within the second phase of the project, the recipient of which could be only one bank. Furthermore, these funds with a period of four years are sent to the second level capital of the banks [in the form of a subordinated loan]. In this regard, the KfW and the CBA considered it reasonable to send credit resources to EFSE, which will cover a larger number of banks, "the German bank's office noted.

Delays in the implementation of the second phase previously were associated with the KfW`s expectation of results of the process of capitalization in the banking sector of the country.

The process of choosing banks was delayed due to expected changes in the Azerbaijan`s banking sector. The CBA initially set the requirement to increase the minimum amount of total capital up to 50 million AZN by January 1, 2014, then those dates were delayed for a year. The CBA recommended to the banks experiencing difficulties with the implementation of this requirement to be merged. Otherwise, their activity on the banking market may be limited," the bank noted earlier. Now the German bank decided to completely change the mechanism of agro financing in the country.

Azerbaijan's cooperation with KfW began in 1994. The strategic directions of the bank's activity include restoration of energy, water and other infrastructures, supporting the development of the financial and banking sectors, the private sector, healthcare systems, environment, etc. Throughout a period starting from the onset of Azerbaijan's cooperation with KfW until January 1, 2014, the country and the bank have signed 13 loan agreements worth 230.3 million euros.

The European Fund for Southeast Europe (EFSE) was initiated by KfW Development Bank (KfW) with the financial support of the German Federal Ministry for Economic Cooperation and Development (BMZ) and the European Commission. It aims to foster economic development and prosperity in the countries of Southeast Europe and the South Caucasus region. As access to finance is a key success factor in developing the micro, small and medium enterprise segments, the EFSE focuses on assisting local financial sectors in strengthening their ability to ensure adequate and sustainable financing. Supporting the EFSE's investment activities is the EFSE Development Facility, which provides partner lending institutions with technical assistance, consulting and training services to build operational capacities and professional management.

The investors of the fund are such financial institutions as the European Commission, German Federal Ministry of Economic Cooperation and Development , the governments of Austria, Switzerland, Denmark and Albania, KfW, IFC, FMO, the European Bank for Reconstruction and Development (EBRD), the European Investment Fund (EIB) and Oesterreichische Entwicklungsbank (OeEB), and Oppenheim and Deutsche Bank permenantly contribute to the stock base.

EFSE fund activity seeks to promote economic growth and prosperity in Southeast Europe, including countries such as Albania, Azerbaijan, Belarus, Bosnia and Herzegovina, Bulgaria, Macedonia, Georgia, Kosovo, Moldova, Montenegro, Romania, Serbia and Ukraine.

The fund offers long-term funding instruments to local financial institutions for lending small businesses, especially micro and small enterprises, including loans for private households.

The first EFSE loan was allocated to Bank Respublika in Azerbaijan in the amount of $5million in 2010. The loan issued for "AccessBank" JSC in the amount of $15 million in 2014 by this fund was the largest one.

Edited by CN

Iran's Bahar Azadi gold coin price continues to fall
Iran's Bahar Azadi gold coin price continues to fall
Review of transactions in national currency at Turkmen exchange for Dec. 2020
Review of transactions in national currency at Turkmen exchange for Dec. 2020
Total amount of transactions on Turkmen Commodity Exchange for Dec. 2020
Total amount of transactions on Turkmen Commodity Exchange for Dec. 2020
Loading Bars
Argentina confirms first case of new variant of coronavirus
Frankfurt airport terminal shut down over man threatening police
Azerbaijani districts to be digitalized within Smart City project
G7 summit to take place in UK’s Cornwall in June
Volume of essential products available in Iranian ports revealed
France's COVID-19 death toll tops 70,000
Fires in central Chile consume over 3,200 hectares
2 IS militants killed, 6 arrested in Iraq
Iran's Bahar Azadi gold coin price continues to fall
Iranian Energy Exchange announces products to be on sale on January 18
President Ilham Aliyev calls President Recep Tayyip Erdogan
WHO reports over 688,000 new daily cases of COVID-19
Tunisian PM appoints new ministers in sweeping cabinet reshuffle
Azerbaijani gymnasts awarded the title of "Honorary Master of Sports"
Thousands march in Vienna against coronavirus restrictions
Uzbekistan's Bukhara oil refinery starts production of RON-95 gasoline under QuWatt brand
Iran's SPGC reveals processing data of its first refinery
Kazakhstan, Greece boost trade turnover year-on-year
Building materials price hikes may increase cost of projects in Georgia
Serbia receives 1 mln Sinopharm vaccines from China
Iran's Rasht-Caspian railway to stimulate development of production
Over 110,000 health workers receive COVID-19 vaccine shots in Istanbul
7 killed in helicopter crash in southern Philippines
New footage from Azerbaijani Aghdam district's Shelli village issued (PHOTO/VIDEO)
Azerbaijan confirms 650 more COVID-19 recoveries
Buy/sell operations at Iran Mercantile Exchange soar
Georgian plans to vaccinate 60% of its population
Turkmenistan's MFA holds briefing dedicated to commissioning of infrastructure facilities (PHOTO)
Kazakhstan reports big increase in revenues from transporting cargo by air
Preliminary cost of building pharmaceutical cluster in Tashkent revealed
Iran reveals COVID-19 data for January 16
Member of Turkey's coronavirus board assures efficacy of CoronaVac
Azerbaijan shares footage from Mirzajamally village of Fuzuli district (PHOTO/VIDEO)
Summary of Operational Headquarters' amendments to quarantine regime in Azerbaijan
Azercell’s Mobile Eye and Mobile Dental Clinics provided free medical service to the hundreds of residents in 2020! (PHOTO)
Nepal approves emergency use of Covishield vaccine manufactured in India
COVID-19 infection rate falling in Azerbaijan - TABIB
Georgia reveals number of COVID-19 cases for Jan.16
Iran's trade turnover with Turkmenistan decreases
Japan interested in creation JVs in Uzbekistan in production and services spheres
Details of agricultural products exported to Iraq via Iran's Mehran customs announced
Turkmenistan's Main State Service opens tender for equipment purchase
Participation in funeral to be permitted via Azerbaijani Interior Ministry's Call Center
Toughened quarantine in Azerbaijan turned out to be effective - President's assistant
Vaccination of people aged over 65 to begin on Feb. 1 - Azerbaijani president's assistant
Storage facilities for COVID-19 vaccines being created in Azerbaijan's Shusha
Nepal requests India for early provision of COVID-19 vaccines
S Jaishankar attends sixth meeting of India-Nepal Joint Commission
At 18 million, India has largest diaspora in the world: UN
Azerbaijan to purchase vaccines via Fund for Combating COVID-19
Baku subway, public transport not to work on weekends until quarantine ends
Azerbaijan reveals volume of imported Chinese Sinovac vaccine
Azerbaijan shares footage from liberated Hajikand village of Kalbajar (PHOTO/VIDEO)
Operational Headquarters of Azerbaijan talks international, domestic flights
Prime Minister Modi Launches pan India rollout of COVID-19 vaccination drive
GM to invest C$1 billion in Canada plant to manufacture electric vans
Azerbaijan to start vaccination from COVID-19 - Operational Headquarters
Barbershops and beauty salons in Azerbaijan to start working soon
Kazakhstan sees decrease in exports to EAEU countries
Review of transactions in national currency at Turkmen exchange for Dec. 2020
Total amount of transactions on Turkmen Commodity Exchange for Dec. 2020
Iran's companies can offer technical services in Azerbaijan's Karabakh
Azerbaijan to resume activity of shopping centers, museums, barbershops
Weekly review of Azerbaijani currency market
Uzbekistan reveals its COVID-19 data for January 16
Ban on entry-exit to some cities, regions of Azerbaijan remains in force
Azerbaijan makes wearing face masks mandatory both indoor, outdoor
Public catering facilities in Azerbaijan to resume activity soon
Aftershock rocks Indonesia quake zone as search continues
Kazakhstan's coal extracting venture to transformer substations via tender
Azerbaijan softens toughened quarantine regime
Turkmenistan, IBRD sign protocol of negotiations on COVID-19 response draft
Azerbaijan cancels SMS-permissions for leaving homes due to COVID-19
Iranian currency rates for January 16
Iran expects balance in foreign currency rates
Azerbaijan's import of grain from Russia's Stavropol for 2020 revealed
Mass inoculation of Russians against coronavirus to begin on January 18
Indonesia quake kills at least 42, injures hundreds
U.S. Health Secretary Azar condemns Capitol violence in resignation letter
UzAuto Motors doubles cars production volume in 2020
France's coronavirus death toll approaches 70,000
Over 600,000 have received Sinovac shots in Turkey's vaccination program
5.4-magnitude quake jolts southern Iran
Hotel occupancy increases in all Georgian regions
Trump directs government to minimize procurement from China
WhatsApp to delay launch of update business features after privacy backlash
Brazil reports more than 1,000 COVID deaths for fourth consecutive day
Number of COVID-2019 cases across globe up by over 709,000 in past day
UN chief calls for "far greater solidarity" in message on 2 millionth COVID-19 death
Money transfers to Georgia up in December 2020
WHO advises against proof of COVID-19 vaccination for int'l travel
BMW to recall 21,693 cars in Russia
We are having tea in pear-shaped glasses, baklava on Jidir Duzu. Let our friends rejoice, enemies get blind! - President Aliyev (PHOTO/VIDEO)
It is such unique feeling to see Shusha, to return to Shusha - President Aliyev
Commander-in-Chief came to Shusha for first time in 30 years and, frankly, does not want to leave - President Aliyev
Those who grew up over 17 years have liberated these lands - President Aliyev
Prepare report here, not in your cabinets - President Aliyev to international organizations
Global COVID-19 deaths surpass 2 mln
People of Azerbaijan will live in Shusha forever - President of Azerbaijan
All martyr families will be provided with apartments and houses by state - President Aliyev
All news