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| 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. |
Summary of Project Information (SPI) |
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| Project number | 11136 |
| Project name | Microfinance Bank Azerbaijan |
| Country | Azerbaijan |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | AccessBank |
| Environmental category | FI |
| Date SPI disclosed | February 21, 2002 |
| Projected board date | April 5, 2002 |
| Status | Active |
| Previous Events | Invested: July 19, 2002
Signed: June 28, 2002
Approved: June 28, 2002 |
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| Project sponsor and major shareholders of project company |
The project sponsors and proposed shareholding group for Microfinance Bank Azerbaijan (MFBA) are IFC (25.0%), EBRD (25.0%), DEG/KfW (25.0%), the Black Sea Trade and Development Bank (BSTDB) (20.0%) and LFS (5.0%), the technical partner.
EBRD and KfW have successfully collaborated with IFC on microfinance projects in Eastern Europe and are shareholders in IFC investee microfinance institutions FEFAD Bank (Albania), MEB (Bosnia), MFB (Ukraine) and MBG (Georgia). DEG recently merged with KfW, and is now the lead institution for equity investments. BSTD, a regional multilateral, was established by the member states of the Organization for Black Sea Economic Cooperation. The three largest shareholders are Greece, the Russian Federation and Turkey. GFA Luso Group (LFS) is a German consulting company specializing in management services for financial institutions primarily dedicated to SMEs. LFS has managed SME credit lines in Azerbaijan (KfW Germany-Azerbaijan Fund), loan programs in Bosnia (EU housing refurbishment loans) and Uzbekistan (EBRD-Japan Small Business Fund) and a microbank in Mozambique (GTZ Sociedade de Credito).
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| Total project cost and proposed IFC investment |
The total project cost is estimated at US$7.7 million. The proposed IFC investment is $1.25 million in equity.
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| Location of project and description of site |
The bank will start operations in Baku but is expected to open branches in other regional centers, including Sumgait and Ganja, in its second year.
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| Description of company and purpose of project |
The project will establish a specialized financial institution providing credit and other financial services on commercial terms to small and medium-sized enterprises (SMEs) in Azerbaijan. The Micro Finance Bank of Azerbaijan (MFBA) will have initial equity capital of US$5.0 million equivalent.
IFC's investment in MFBA is expected to yield a strong developmental impact -- in terms of business growth, employment generation, confidence-building in the banking sector, and the introduction of commercially-oriented microfinance techniques to Azerbaijan. The establishment of a professionally-managed, reputable bank in Azerbaijan is particularly important in light of the weakness of Azerbaijan's private banks and public lack of confidence in the banking system. In addition to poverty reduction and related impact within the MSE target group, IFC's involvement in MFBA is also expected to:
- Encourage replication of commercially-oriented IFIs in the market and downscaling by existing commercial banks to serve SMEs;
- Generate spill-over benefits in the form of trained managers and employees available to other local FIs; and,
- Mobilize SME savings, although this will not be the bank's initial focus.
IFC initiated this project in 1999 as the result of a promotion mission to Azerbaijan and has been the lead institution in developing this transaction, including fostering dialogue with the Government of Azerbaijan and the Azeri Association of Private Banks, securing approval in principle for MFBA with the National (Central) Bank of Azerbaijan (NBA), identifying financial investors, and managing preliminary legal due diligence. IFC is also providing advice to NBA to strengthen the legal and regulatory environment for SME and microfinance lending.
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| Environmental and social issues - Category FI |
This is a category FI Type 1 project according to IFC’s environmental and social review procedure. MBFA must require and use best efforts to ensure that its micro and small enterprise clients comply with applicable local and national environmental, health and safety requirements and IFC's Microfinance Exclusion List. The Environment Department will provide advice to the technical partner on developing a suitable environmental review procedure and appraisal checklist. MBFA must provide IFC with a brief annual environmental report.
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This is a category FI Type 1 project according to IFC’s environmental and social review procedure. MBFA must require and ensure that its SME clients comply with applicable local and national environmental, health and safety requirements and IFC's Microfinance Exclusion List. The Environment Department will provide advice to the technical partner on developing a suitable environmental review procedure and appraisal checklist. MBFA must provide IFC with a brief annual environmental report.
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| To contact the project company, please write to: |
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