- EBRD provides local currency equivalent of up to US$6 million of financing to local lender
- Bank Respublika aims to finance smaller businesses in rural areas and attract new clients
- European Union funds support focus on agribusiness as Azerbaijan works to diversify its economy
Micro, small and medium-sized enterprises (MSMEs) in Azerbaijan are to benefit from greater access to finance as the EBRD is providing financing in Azerbaijani manat, equivalent to up to US$ 6 million, to Bank Respublika, a key local lender.
The local currency equivalent of up to US$ 4 million will be on-lent to MSMEs across the country while the equivalent of up to US$ 2 million will be provided under the Azerbaijan Agricultural Finance Facility (AZAFF) to agricultural businesses. AZAFF, supported by EU funds, aims to step up financing for the country’s agricultural sector, boosting its development.
Bank Respublika is planning to direct most of the EBRD financing to companies outside large cities and to new clients. Further expanding access to finance for local businesses by encouraging lending by banks is among the EBRD’s priorities in the country.
The EBRD is also working to help diversify Azerbaijan’s economy beyond oil by supporting the development of the private sector in other sectors, especially in agriculture.
Earlier this year the EBRD and the European Union launched an innovative tool – AzALES – to help local lenders evaluate loans to agricultural companies. The system covers all commercially viable crops and animal products in Azerbaijan and helps banks assess risk more effectively, process loan applications faster and improve small private farms’ access to finance. The EBRD is also providing financial literacy training to farmers and this year alone has trained 130 farmers across the country. The learning programme covers planning, accounting, bookkeeping, estimating cash flow and profitability, making savings and taking out loans as well as the basics of working with lenders.
The EBRD is a leading institutional investor in Azerbaijan and has so far invested close to €3.3 billion in almost 170 projects across various sectors of the economy. The Bank’s new strategy in the country focuses on efforts to help Azerbaijan diversify the economy and develop the private sector in non-oil sectors.