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| Summary of Project Information (SPI) |
| This Summary of Project Information is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
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| Project number | 22702 |
| Project name | ProCreditGeorgia |
| Country | Georgia |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | ProCredit Bank |
| Environmental category | FI-1 |
| Date SPI disclosed | March 5, 2004 |
| Projected board date | May 28, 2004 |
| Status | Active |
| Previous Events | Invested: September 21, 2004
Signed: June 25, 2004
Approved: June 24, 2004 |
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| Description of company and purpose of project |
ProCredit Bank (ProCredit, Bank or the company) began operations in May 1999 as Microfinance Bank of Georgia with the guiding principles of establishing itself as a leader in providing credit and financial services to individual entrepreneurs, micro and small enterprises (MSEs) across Georgia. The objective of the investment is to provide ProCredit with the necessary financing to support the rapid growth of its loan portfolio.
The bank officially changed its name to ProCredit Bank as part of an overall marketing strategy by IMI to strengthen its network of microfinance institutions (MFIs) in Eastern Europe under a common corporate identity by linking it to a -strong-universal-bank-image- for the target group. The transformation has been well received by the Georgian media, customers and staff. |
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| Project sponsor and major shareholders of project company |
ProCredit’s current shareholders are the following:
- German-Georgian Foundation for the Promotion of Private Sector Development (the Foundation)/KfW (10%);
- IMI (39%);
- IPC (12%);
- EBRD (20%);
- IFC (16%); and
- Commerzbank (3%).
Technical Partner:
ProCredit's professional management is provided under Management Services Agreement (MSA) with Internationale Projekt Consult GmbH (IPC), a German consulting/financial services company with over 15 years of experience in microfinance programs in emerging markets. IPC has assigned three members of its staff to serve in key management positions. The cost of senior management used to be covered by Technical Assistance but is now fully paid for by the Bank’s own resources – operational earnings.
Founded in 1998 by IPC and its staff, Internationale Micro Investitionen (IMI) is the investment vehicle for IPC-managed micro finance ventures. IMI’s shareholders are the following:
- IPC/IPC Staff (26.63%);
- IFC (15.75%);
- KfW/DEG (6.94%);
- FMO (14.43%);
- DOEN (15.59%);
- BIO (7.33%); and
- ProCredito (6.01%).
IMI acquires equity participations exclusively in existing or greenfield MSE-focused financial intermediaries in developing countries. To date, IMI has invested in 18 MFIs – 10 in Europe, 5 in Latin America, 2 in Africa and 1 in Asia. |
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| Total project cost and proposed IFC investment |
The project involves an IFC credit line of up to $4 million to ProCredit Bank. |
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| Location of project and description of site |
ProCredit Bank is located in Tbilisi, Georgia with thirteen branches located throughout Georgia. |
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| Project Development Impact and IFC's Role |
The developmental impact of this project is high as it achieves the following objectives:
- Speeding the transition from unemployment to self-employment and economic uplift, stimulating private sector enterprise through offering tailored loan facilities for MSEs, promoting entrepreneurship at grass roots level and fostering competition, improving efficiency and satisfying directly or indirectly the credit demand among MSEs.
- Allowing a well-managed microfinance institution to increase its loan portfolio and reach more Georgian micro and small enterprises.
- Stimulating MSE business growth and development, generating employment as well as building confidence in the financial sector.
- Showing a Demonstration Effect: First, the establishment of ProCredit has provided for a best-practice MFI, professionally managed, with sound operating policies and credit analysis, transparent financial reporting, environmental screening procedures and a strong governance structure. Second, IFC's involvement in this project is expected, over time, to lead to the replication of commercially-oriented MFIs in the market and downscaling by existing commercial bank operations to serve MSEs. Third, IFC's investment will send a positive signal to both local and foreign investors as well as commercial banks, by demonstrating that micro and small businesses with viable operations and prudent management can be a profitable business proposition. Fourth, Technical Assistance already provided to ProCredit already has and is expected to continue to generate spill-over benefits to other financial institutions in the form of trained managers and staff. Lastly, ProCredit is expected to contribute to mobilizing MSE savings in due course. |
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| Environmental and social issues - Category FI-1 |
This is an FI Type 1 project. ProCredit Bank must maintain an environmental management system to ensure that investments under relevant operations meet host country environmental, health and safety requirements and are consistent with IFC’s microfinance exclusion list.
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| To contact the project company, please write to: |
Philip Sigwart, General Manager
74A Chavchavadze Ave.
380062 Tbilisi, Georgia
Fax Number: 995 32 331086 |
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