 |
CURRENT PROJECTS CURRENT PROJECTS Azerbaijan & Central Asia Microfinance Transformation Support Project
Several MFIs in Azerbaijan and Central Asia have experienced explosive growth over the past few years and while the recent general economic downturn has slowed this, they are still operating at levels which are multiples of where they were three or four years ago and, in many cases, competing with banks for clients. This growth is strongly correlated to their strengths in microfinance, though the speed of their growth and the recent downturn has highlighted for these institutions that to grow further in a sustainable manner they will need to expand the reach of their organizations. In particular: reviewing the areas they cover; products, funding, and operational aspects; and, possibly in the longer term, even considering transformation into commercial banks. Transformation is a difficult and time-consuming process that requires expertise and skills in a wide number of areas, including financial management, risk management, HR, and internal auditing. This merely serves to emphasize that this is not a process to be entered into lightly; change involves taking risks, focusing resources away from existing areas of profitability, and undertaking activities an institution has not experienced before. But change can also bring substantial rewards in terms of profit, outreach and sustainability. In such a situation there is no substitute for careful planning and controlled implementation of change and it is to this end that IFC established the MFI Transformation Support Project. The Project seeks to provide advisory services or consultancy to those MFIs that wish to undertake a strategic change in their activities. The IFC Approach Transformational support for MFIs is a relatively new field of advisory services for IFC. The Project provides solutions by developing a modular package of fee-based advisory services to MFIs. The modules cover two broad areas: The first is identifiable with institution building (e.g. financial management, assets and liabilities management, funding strategies, treasury, development of deposit products, risk management, and internal audit and control, HR, and MIS systems). The second is more focused on corporate strategy and mentoring (e.g. advice on structuring equity transactions, corporate planning, investment presentations, investor relations, and management). We recognize that at any given point in time this will not be for every MFI, but for those that have reached a specific point in their development where such a transformation makes strategic sense. The Project works with organizations that meet the following main criteria: 1) willingness to transform; 2) willingness to contribute fees for advisory services; 3) currently a client for IFC investments or the potential to become one. IFC targets those top MFIs with good management, an established business, and which do not require significant intensive levels of support for their existing operations. Their requirements should best be described as rather needing more flexible, intermittent missions with a high emphasis on coaching and mentoring of senior management. This work will be undertaken by consultants who have experience in those activities and operations in which the management wish to develop. The ability to provide mentoring is one of the most significant elements undertaken by the Project because it allows senior MFI management to tap into relevant knowledge and experience that is not just MFI-based but also stems from the types of institutions they wish to become. Achievements to date as of June 1, 2009 IMON INTERNATIONAL MICROLENDING ORGANIZATION – BASED IN KHUJAND, TAJIKISTAN IFC provided IMON with an investment in the form of a $2.5 million senior debt facility in May 2008 to develop IMON’s funding base and inter alia to provide support in anticipation of its transformation plans. The MFI Transformation Support Project assisted IMON during its change of status from non-profit to a for-profit limited liability company by providing corporate advisory services to senior management and facilitating investor negotiations. It has also assisted IMON by: BAI TUSHUM MICROFINANCE INSTITUTION – BASED IN BISHKEK, KYRGYZ REPUBLIC Bai Tushum became an IFC investment client in the Kyrgyz Republic, having signed a $4 million loan agreement in 2009 and $1.2 million in 2005 to finance micro and small entrepreneurs in urban and rural areas through individual and group lending products. Bai Tushum and Partners is one of the leading microcredit companies in the country, accounting for 27% of the local microfinance market in terms of loans outstanding, combining stable growth with good profits. The MFI Transformation Support Project is supporting this Kyrgyz microfinance institution in its transformation to becoming a deposit-taking organization and has provided the management board with corporate and strategic advisory services on its equity raising efforts. CREDAGRO LIMITED LIABILITY NON BANK CREDIT ORGANIZATION – BASED IN BAKU, AZERBAIJAN Credagro is also an IFC investment client in Azerbaijan, having signed a $6.0 million senior loan and a $4.0 million subordinated convertible loan in 2008 to finance micro, small, and medium enterprises throughout the country. The MFI Transformation Support Project is supporting the transformation process of Credagro and has recently provided senior management with assistance in specifying and implementing its Credit Risk Management Unit, as well as in investor relations and negotiations. ARVAND MICROLOAN DEPOSIT-TAKING ORGANIZATION – BASED IN KHUJAND, TAJIKISTAN The MFI Transformation Support Project is assisting Arvand in the transformation process for it to become a microloan and deposit-taking organization. www.ifc.org/cacgp 2006 – present Supported with IFC funds The project helps local joint stock companies and banks strengthen their corporate governance practices with a view to improving their operations and increasing their ability to attract investment and financing. In addition, the project works with policymakers to improve the regulatory framework for corporate governance and increase the region's overall investment climate and the business-enabling environment. The project covers Kazakhstan, the Kyrgyz Republic, and Tajikistan.  More...Azerbaijan and Central Asia Primary Mortgage Market Development Project Phase 1, 2005 – 2006, supported with funds from the State Secretariat for Economic Affairs of Switzerland (SECO) Phase 2, 2006 – present, supported with funds from the Ministry of Economic Affairs of the Netherlands, and the State Secretariat for Economic Affairs of Switzerland (SECO) The project focuses on improving the housing finance legislative framework in Azerbaijan and Central Asia by building institutional capacity for mortgage lending and raising mortgage awareness. By partnering with policymakers, banks, and key stakeholders in the mortgage market, the project works to increase access to affordable housing in Azerbaijan, Kazakhstan, Kyrgyz Republic, Tajikistan, and Uzbekistan. More...Business Plan for Operational Review and Business Plan for Kazakhstan Mortgage Company 2004 - current Funded by IFC’s Global Financial Markets Department In addition to issues identification in the region’s existing housing systems (see Central Asia regional housing finance survey), a key strategy in IFC’s approach to housing sector growth is the establishment of primary and secondary housing finance institutions. IFC has just completed work on a strategy and business Plan for Kazakhstan Mortgage Company. The program consisted of an examination of the demand for a secondary mortgage market in Kazakhstan, a full review of the structure and operations of the existing state owned Kazakhstan Mortgage Company, and an analysis of its future potential for growth and profitability. | SITE TOOLS  
|
