Increasing lending to Armenian enterprises

The EBRD is strengthening the Armenian financial sector through a microlending programme.

More than one-quarter of Armenia’s labour force is employed in the micro, small and medium sized enterprises (MSMEs) sector and in the past years the demand for finance has been significantly growing.

Supporting MSMEs

To strengthen the Armenian financial sector and improve the business environment for MSMEs, the EBRD established the Armenia Multi-Bank Framework Facility II (AMBFF II), a credit facility for US$ 320 million which supports Armenian enterprises providing equity and debt financing through financial intermediaries, including local banks, microfinance, leasing and insurance companies.

The Armenia Microlending Programme (AMP) is a component of AMBFF II designed to provide additional loan funding and institution-building to partner financial institutions. The AMP received TC support from USAID for US$ 1.5 million which consolidated the progress made under the AMBFF expanding the programme’s institution-building to ensure increased lending to MSMEs and improved skills and knowledge within the partner financial institutions. Other donors include the EBRD Early Transition Countries (ETC) Fund (€670,000 grant) and the EBRD’s Shareholder Special Fund (SSF) (€400,000).

AMP’s extensive reach

Thanks to US funding, the MSME lending programme was implemented in more than 120 branches, including more than 17 newly established branches and lending units, covering Yerevan, as well as rural areas. Some136 loan officers were trained to develop accessible and profitable MSME loan products, including credit scoring and rural and agri-lending. Best international practices in credit management were introduced allowing participating financial institutions to diversify their loan portfolio. As a result, the number of monthly loans to MSMEs has increased significantly, providing a boost for the expansion of the Armenian private sector.