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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 | 10347 |
| Project name | Georgia Microfinance Bank II |
| Country | Georgia |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | ProCredit Bank |
| Environmental category | FI |
| Date SPI disclosed | October 2, 2001 |
| Projected board date | November 5, 2001 |
| Status | Completed |
| Previous Events | Invested: June 21, 2002
Signed: May 10, 2002
Approved: November 16, 2001 |
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| Project sponsor and major shareholders of project company |
Microfinance Bank of Georgia (MBG or the bank) was established in Tbilisi, Georgia as a closed joint stock company under the laws of Georgia in October 1998. Its shareholders include:
- German-Georgian Foundation for the Promotion of Private Sector Development (GGF);
- International Finance Corporation (IFC);
- Commerzbank;
- Nederlandse Financierungs Maatschappij Voor Ontwikkelingslanden (FMO);
- Internationale Micro Investitionen (IMI);
- European Bank for Reconstruction and Development (EBRD);
- TBC Bank of Georgia; and
- Intellectbank of Georgia. |
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| Total project cost and proposed IFC investment |
| IFC will provide an A loan of US$6 million in two equal tranches to MBG for onlending to micro and small enterprises in Georgia. |
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| Location of project and description of site |
| MBG is headquartered in Tbilisi, Georgia. It has a network of five branches in Tbilisi and regional cities. |
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| Description of company and purpose of project |
The funds of the project will be used for sub-loans to micro and small enterprises (SMEs) in Georgia.
IFC Role: By providing the proposed loan to MBG, IFC is clearly demonstrating its commitment to support the bank. IFC is also supporting MBG's lending to small and medium enterprises (SMEs) that otherwise would not have access to the financial sector in Georgia. In addition, by placing a representative on MBG’s Board, IFC is able to (i) assist in the bank’s strategic development; (ii) gain insights into the Georgian banking sector; and (iii) develop and leverage its experience with microfinance institutions.
Development Impact:
Benefits to small and micro-enterprises: The project will help improve SMEs access to credit, enabling them to raise their productivity and employment. The inability to obtain financing for expansion, modernization, or any other business objective, is one of the most serious constraints to private sector development in Georgia.
Another serious constraint to private sector development is the lack of business know-how among current or potential entrepreneurs, particularly in assessing their own financial situation and needs, and in their general knowledge of and trust in transacting with a formal financial institution. MBG is trying to address this issues and help to build a culture of responsible lending and borrowing.
Benefits to the banking sector: The trust and experience that MBG builds with borrowers will not only benefit the bank, but spillover into the financial sector overall. In addition, MBG is starting to expand regionally, moving into areas where there is only nominal banking activity. In doing so, the bank will contribute to the regional development of Georgia. The bank would also serve as a role model to other Georgian banks by: (i) showing that the SME market can be profitable if it is targeted efficiently, and (ii) highlighting the significance of operating policies, transparent reporting, environmental screening procedures, and a clear governance structure. |
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| Environmental and social issues - Category FI |
MBG has established an environmental policy and procedure to verify that its clients comply with Georgian environmental, health and safety requirements and the IFC Microfinance Exclusion List. MBG provides IFC and other shareholders with an annual environmental report and its environmental performance is considered to be satisfactory. These requirements will also be applied to the proposed IFC loan.
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| To contact the project company, please write to: |
Masahiro Miura, Investment Officer
Email: Mmiura@ifc.org |
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