The EBRD is continuing to support the availability of financing to small and medium-sized enterprises (SMEs) in Turkey’s agribusiness sector with a credit line in Turkish lira (TRL) equivalent of up to €20 million to Turkiye Vakiflar Bankasi (Vakifbank) for on-lending to local agribusiness companies operating predominantly in rural areas.
The credit line is part of the EBRD’s €400 million Turkey Agribusiness SME Financing Facility (TurAFF) launched in 2011 to address the demand for longer-tenor financing of agribusiness enterprises.
The small business sector represents a key driver of the Turkish economy, providing around 80 per cent of the country’s employment, while agriculture accounts for around 10 per cent of GDP. Although corporate and consumer lending is picking up in Turkey, the access to financing remains limited for small companies in the agribusiness sector.
The proceeds of the EBRD financing will be used by Vakifbank to support the development of local SMEs operating in the agribusiness sector with loans of up to €2 million, denominated in Turkish lira. The local currency financing will allow sub-borrowers to repay their loans in the same currency as they earn from their operations, thus enabling Vakifbank to mitigate the foreign currency exchange risks for its clients.
“We are pleased to continue our successful cooperation with Vakifbank and to extend a new credit line for the benefit of small and medium businesses in the agribusiness sector. Through this project the EBRD is reinforcing its commitment to support the development of enterprises in Turkey’s remote regions, and contribute to creating jobs and raising living standards in the country,” said Francis Malige, EBRD Director for Turkey in the Financial Institutions team.
“The EBRD and Vakifbank are extending their cooperation to the agribusiness sector under TurAFF. This cooperation is built on a successful experience with Vakifbank under the previous SME facilities. Vakifbank continues to support SMEs in Turkey in line with its strategy through a variety of products and TurAFF will be creating another line for our fast-growing SME business,” said Numan Bek, Vakifbank Executive Vice President for Financial Institutions and Investor Relations.
Previously the EBRD provided over €130 million in credit lines to Vakifbank for on-lending to Turkish SMEs.
The implementation of TurAFF is supported by technical assistance funds provided by the US government and the European Union.
Since the beginning of its operations in Turkey, the EBRD has committed close to €2 billion in various sectors of the country’s economy, which attracted additional investment in excess of €5 billion.