Assa-Irada,
16, April 2008

The European Bank for Reconstruction and Development (EBRD) has allocated funds to some of Azerbaijan's leading institutions in the microfinance sector.

The EBRD is extending a $1 million loan to Norwegian Microcredit LLC ("Normicro"), a $2 million loan to AzerCredit and is participating in the second capital increase of Microfinance Bank of Azerbaijan (MFBA) to maintain its 20 percent-stake. The financing will be used for on-lending to micro and small enterprises (MSEs) especially in rural areas of Azerbaijan. AzerCredit was established in 1996 to provide sustainable lending services to entrepreneurs who are unable to access loans through the banking system. The institution is both active in urban and rural areas and targeting the agriculture and trade sector. The amount of loans under the EBRD finance will be up to $10,000 and will be exclusively provided to MSEs.

Normicro has been operating in Azerbaijan since 1998 and is gradually expanding its regional presence. At present the institution is covering 12 districts of the country. EBRD funds will be used for loans to MSEs up to a maximum of $10,000, while currently the average loan size stands at $752. The EBRD finance will enable Normicro to significantly expand its loan portfolio and reach out to new customers.

Both loans will be complemented by Technical Cooperation grants to support institution building through the introduction of best practice, staff training and investments in equipment and software.

The EBRD became a shareholder in MFBA in November 2006. The new capital increase will assist in deepening the development of the country's financial system. Microfinance Bank of Azerbaijan, which opened in 2002, is a leading provider of financial services to MSEs in the country.

Francis Delaey, head of the EBRD's office in Baku, said that with these new commitments the EBRD was demonstrating its dedication to support the sustainable development of Azerbaijan. "Micro and small enterprises are playing a key role in the diversification of the country's economy and in unlocking its potential. The EBRD sees its goal in enabling and promoting private entrepreneurship for the benefit of the whole economy", he added.

Through its micro and small enterprises programmes, the EBRD has supported over three million small enterprises throughout eastern Europe, Russia, Central Asia and the Caucasus. The EBRD currently works with 105 commercial banks and non-bank microfinance institutions to establish or expand specialised micro and small business finance units and to date has lent over ˆ1 billion to leverage just under ˆ15 billion in loans to micro and small businesses in the region.