IFC Helps Finance Small Businesses in Rural Armenia
Unable to support their elderly parents with small salaries from the government, Karine and Narine Petrosyan opened a small shop in their home village of Mrgashat, in Armenia’s Armavir region.
Boosted by IFC-backed loans from Inecobank, their business has in just three years grown from a one-shelf store into a full-sized supermarket with three employees and an adjacent bakery.
“We are even thinking of packaging the bread and sending it to a couple of stores in Yerevan. This way we will hire more people in our community to work in two shifts,” said Karine."We have built this business from scratch. We didn’t even have a refrigerator when we started.”
IFC helped Inecobank identify lending gaps and alter its policy to make more loans to small businesses like that of the Petrosyan sisters. This work is part of IFC’s Performance-Based Grant Initiative, a new resource meant to fund results-oriented projects and develop innovative business models to expand access to financial services. These funds are given to projects that define measurable performance targets to be achieved during implementation, rewarding institutions that develop strategies to reach underserved segments.
“IFC’s innovative instrument, the performance-based grant, has helped Inecobank roll out a microfinance product, which is an important tool to improve livelihoods, especially in underserved households in rural areas of Armenia,” said Thomas Lubeck, IFC Regional Manager for the South Caucasus. “This will benefit those who often find it difficult to access finance to modernize and expand their businesses.”
In the village of Eghegnut, also in the Armavir region, Razmik Margaryan feeds his family of five by working the land. To increase his income, he recently built a 400-square-meter greenhouse – helped by a $1,000 loan from Inecobank. Razmik has now hired three locals to help him grow seasonal vegetables and greens, and plans to employ more during harvest.
“Without the loan, I wouldn’t have been able to complete the construction and pay for the electricity to maintain the necessary temperature in my greenhouse,” he said. “This was very timely and helpful.”
With IFC’s support, Inecobank has originated more than 100,000 microloans since 2010. Around 84 percent of these loans went to borrowers in rural areas, boosting employment and cutting local poverty.