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EBRD expands microfinance in Azerbaijan
Loans to FINCA Azerbaijan and Rabitabank to benefit rural areas
The EBRD is expanding its support for rural areas of Azerbaijan with two loans
to Rabitabank and FINCA Azerbaijan which will benefit micro, small and medium
size enterprises.
The $3 million loan to local commercial bank Rabitabank for on-lending to
local businesses will be the first loan under the enlarged EBRD Azerbaijan
Multi-Bank Framework Financing Facility. The new extension adds $40 million to
the existing $40 million facility which has been totally committed to 8 local
commercial banks to further develop their micro, small and medium-size
enterprise lending. Technical assistance to implement the most efficient small
business lending technologies is being provided through the EBRD’s Early
Transition Countries (ETC) Fund.
An additional $3 million loan to the local microfinance institution FINCA
Azerbaijan is provided under the EBRD’s ETC Non-bank Microfinance Institutions
Framework launched in 2005. The loan builds on the successful co-operation
with FINCA in the Kyrgyz Republic and supports FINCA’s outreach to the
smallest clients in Azerbaijani regions.
Olivier Descamps, EBRD Business Group Director, said the loans will further
support the development of micro and small enterprises in Azerbaijan and of
the country’s banking sector. The EBRD loans will be on-lent to rural
entrepreneurs and allow FINCA Azerbaijan and Rabitabank to expand their
portfolio, product range and regional network.
Both loans are partially funded by the RDI Special Fund established at the
EBRD as part of BP’s Regional Development Initiative (RDI) Programme aimed at
creating transparent and effective access to commercial finance for local
businesses including small and medium size enterprises and micro enterprises.
The RDI Special Fund will cover a three year programme starting in the fourth
quarter of 2006 and provide loans and technical assistance to local businesses
and enterprises through local commercial banks and microfinance institutions.
BP and its co-venturers will contribute $5.25 million to the Special Fund,
while the EBRD will co-finance operations under the Fund in an amount at least
matching the contribution from BP and its co-venturers. The EBRD is supporting
the RDI Programme as part of its financing of the BTC pipeline. The EBRD
provided a $125 million loan from its own resources and raised another $125
million through syndication to commercial banks for the construction of the
BTC oil pipeline in November 2003. The pipeline was opened in July 2006.
The EBRD’s Non-bank Microfinance Institutions Framework for Early Transition
Countries aims at strengthening microfinance institutions in the Bank’s
poorest countries of operations. Loans are provided for on-lending to the
smallest borrowers across the ETC countries Armenia, Azerbaijan, Georgia, the
Kyrgyz Republic, Moldova, Mongolia, Tajikistan and Uzbekistan. The facility is
accompanied by a technical cooperation framework funded by donor governments.
Through its micro and small enterprises programmes the EBRD has supported over
one million small enterprises throughout eastern Europe, Russia, Central Asia
and the Caucasus. The EBRD has worked with 84 commercial banks and non-bank
microfinance institutions to establish or expand specialised micro and small
business finance units and these partner institutions have lent $10.6 billion
in loans to micro and small businesses in the region.
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