By providing reliable access to financial services for MSEs throughout Azerbaijan, the project will give direct support to private sector development. It will also have a strong demonstration effect, encouraging other Azeri banks to enter this market segment.
The growth of the MSE sector in Azerbaijan will help to consolidate the transition by laying a foundation of entrepreneurship at the grass roots level. MFBA will provide continuous support to MSEs that would otherwise have little or no access to formal sector finance. MFBA will also support the development of the financial sector by operating as a best practice institution committed to the principles of complete transparency and strong corporate governance. Support for micro, small, and medium-sized enterprises is at the heart of the EBRD's mandate for strengthening private sector development.
The Micro Finance Bank of Azerbaijan (MFBA) started business in October 2002 as a greenfield microfinance bank founded by EBRD, the IFC, KfW, BSTDB and LfS Financial Systems .
MFBA is the leading provider of financial services to micro and small enterprises in Azerbaijan. Its product range comprises micro, small and medium-sized business loans and other consumer loans, current accounts, national and international payment services, and deposits and other savings products. MFBA is currently operating through nine branches in Baku, Sumgait, Sheki, Ganja and Lenkoran. Since its establishment in October 2002, MFBA has extended over 19,000 micro, small and medium business loans for a total of USD 70 million.
Initial investment: equity investment of USD 1.25 million (EUR 1.0 million), and a senior loan of up to USD 5 million (EUR 4 million) for on-lending to MSEs.
The National Bank of Azerbaijan announced a plan to increase minimum capital requirements for commercial banks to AZM 8.2 million (USD 8.9 million) as of 1 January 2007 and to AZM 10 million (USD 10.9 million) as of 1 July 2007. In order to meet the future minimum capital requirement of the National Bank of Azerbaijan, MFBA needs to increase its capital. All current shareholders are participating in the capital increase.
Proposed Investment: equity investment of up to USD 1.1 million (EUR 0.8 million) and an additional senior loan of up to USD 5 million (EUR 4 million) for on-lending to MSEs across Azerbaijan.
Total project cost will be EUR 7.7 million, of which the EBRD will finance EUR 4.8 million.
Screened FI. MFBA shall comply with the Azerbaijan’s national environmental, health, safety and labour regulations and standards. MFBA is also required to comply with the EBRD Environmental Procedures for Local Banks, which include, inter alia, compliance with the ILO Conventions related to child and forced labour and discriminatory practices at work, and the EBRD Referral and Exclusion List; and submission of the Annual Environmental Report satisfactory to the EBRD.
MFBA has to date benefited from the technical cooperation funds provided by EBRD and KfW. Additional technical cooperation funds are expected to be provided by IFC and KfW to promote MFBA’s regional expansion and lending operation in the rural areas.
Micro Finance Bank Azerbaijan
137 Alovsat Guliyev street
Tel: +99 412 93 0726
Fax: +99 412 93 0796
For business opportunities or procurement, contact the client company.
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