EBRD and Bank CenterCredit launch supply-chain finance framework

• The EBRD and Bank CenterCredit launch €18 million supply chain finance facility
• The EBRD to share half of the risk on supplier financing provided by BCC
• First project under the facility will support suppliers of Air Astana

The European Bank for reconstruction and Development (EBRD) and Kazakhstan’s major private lender Bank CenterCredit (BCC) have agreed to launch a €18 million supply-chain finance (also known as reverse factoring) framework, under which the EBRD will share half of the risk on supplier financing that BCC provides.

The first operation under the framework, in which the EBRD will participate on an unfunded basis and the BCC will act as administrator, will support local suppliers of Air Astana, Kazakhstan’s flagship carrier and an EBRD investee company.

The proceeds of the five-year, reverse-factoring facility will be used to provide Air Astana’s selected suppliers with early payment for their invoices, at a discount, which will enhance their cash flow and reduce their reliance on traditional working capital financing. In turn, Air Astana can extend payment terms, helping to strengthen supply-chain relationships.

Air Astana’s supply chain includes the procurement of office supplies, catering, maintenance and entertainment services. The company sources many of these – more than 30 per cent of operating costs – from local suppliers.The facility is expected to provide financing to suppliers, the majority of which are local small and medium-sized enterprises (SMEs) and will benefit from the stable access to financing. SMEs are the backbone of Kazakhstan’s economy. They contribute nearly 40 per cent of the country’s GDP and employ more than 4.4 million people.

After adopting new procurement standards and attaining the relevant certifications, Air Astana will begin requesting environmental impact data from its suppliers, particularly in relation to carbon emissions. The EBRD will offer tailored support to help these suppliers meet environmental, social and governance standards through its Advice for Small Businesses programme.

The EBRD has invested almost US$ 12 billion (€10.2 billion) in Kazakhstan to date through 345 projects, making the country the largest and longest‑running recipient of EBRD investment in Central Asia.