IFC is helping financial institutions enter the microfinance business and expand their range of products and services for low-income clients. With large branch networks, these banks can have a significant development impact by reaching more underserved clients, helping reduce poverty and improve lives.
A Recipe for Progress in Azerbaijan
 Making financial markets work for everyone is a key part of IFC’s business. The Aliyevs, a family that owns a small farm in Azerbaijan, show how our work benefits small-scale entrepreneurs. They earn extra income from vegetable preserves and jam that they make using their favorite recipes. But first they must invest upfront in costly ingredients and equipment. This has led to cash flow problems for the family business, particularly at seasons when sales are slow. |
For years even a small amount of financing would have helped, but this was almost impossible to find. Last year, Goshgar Aliyev, the eldest son, walked into a branch of the Microfinance Bank of Azerbaijan, an IFC client, and made his case. The bank saw his business’s potential and extended a microloan, which the Aliyevs invested in new jars, sugar, and vinegar. Like most of the bank's clients, the Aliyevs had never received a loan for their business. Today, they sell pickled gherkins and walnut jam in local tea houses and restaurants, and their business is booming. That first loan is now fully repaid, and the family has taken a larger one.
 Acting as both an equity investor and an advisor, IFC helped the lead sponsor LFS Financial Systems of Germany launch the Microfinance Bank of Azerbaijan in 2002. Demand was high from day one. With no local bond or interbank loan markets to rely on, the bank needed outside capital to grow, but no mainstream investors would take the chance.
IFC took the first step, providing a $750,000 commercial loan in 2005. This encouraged Deutsche Bank, Dexia, and others to follow suit, and today the bank is one of the 10 largest in Azerbaijan, reporting six-fold growth in the past two years. |
A Successful Global Program
IFC's microfinance program is also successful in other regions of the world. It puts special emphasis on women and small business owners. To promote the industry worldwide, we have:
- Supported more than 90 individual microfinance institutions and invested in several funds and holding companies that have attracted significant private capital into the sector.
- Provided advisory services that have helped improve lending technologies, corporate governance, risk management, and other operational priorities of microfinance institutions.
In 2006, IFC's direct microfinance investee clients disbursed 7 million loans totaling $8.2 billion.
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Next Steps
As part of its growth strategy, IFC will double total commitments in the sector to reach $1.2 billion over the next few years. This will help improve access to finance for entrepreneurs in developing countries, create jobs, and raise incomes. IFC's support will allow its microfinance institution clients to provide $30 billion in business loans to over 25 million people, boosting lending and promoting sustainable development in many countries.
Read IFC's
microfinance fact sheet...[pdf]
For more information contact:
Lotte Pang
Communications Officer
Phone: +1 (202) 458-0952
E-Mail:
lpang@ifc.org
Published on July 2, 2008
