The EBRD is further increasing the availability of financing in local currency to private businesses in Azerbaijan, with a new credit line to AccessBank for on-lending to micro and small enterprises (MSEs).
The EBRD is providing its first synthetic loan in Azeri Manat (AZN) to AccessBank, for an amount equivalent up to $10 million. Under the synthetic loan structure, the EBRD is providing the financing in US dollars, while AccessBank’s loan obligation is the AZN value of the provided funds. The synthetic loan, a cost-effective tool, helps the institution to manage its foreign exchange risk, to increase the term of its local currency funding, and to expand its portfolio of AZN loans, particularly needed in rural areas of the country.
The EBRD loan will also enable AccessBank to meet the high demand for loans from micro and small enterprises in Azerbaijan, which still have limited access to financing.
The proceeds of the credit line will be used to finance investments and working capital of local businesses with medium and long-term loans. Additionally, a part of the loan will be used to increase lending to women entrepreneurs in Azerbaijan.
“The EBRD is pleased to continue in providing support to the development of the private sector in Azerbaijan by providing the much needed financing for small businesses. This transaction is tailored to meet the high demand for loans in local currency. It will offer a boost to the lending activities and will help businesses in Azerbaijan better manage their risks”, said Nick Tesseyman, EBRD Business Group Director for Financial Institutions.
Dr. Andrew Pospielovsky, General Manager of AccessBank, added: “This AZN loan will allow AccessBank to provide more loans to Azerbaijani businesses in the local currency. Consequently, it will remove currency risk and provide further assurance to our customers because their monthly instalments will be in the national currency and will not depend on currency fluctuations. This is excellent news for the Azeri business community.”
Established in 2002 by the EBRD, KfW Development Bank, International Finance Corporation and Black Sea Trade and Development Bank, AccessBank is currently the leading provider of financial services to micro, small and medium-sized businesses in Azerbaijan.
To date the EBRD, which holds a 20 per cent stake in AccessBank, has supported the institution through three facilities worth a total of $43 million, which includes a syndicated loan of $28 million.
Since the beginning of its operations in Azerbaijan, the EBRD has committed over $1 billion across more than 90 projects in corporate, financial, infrastructure and energy sectors.