BAKU, AZERBAIJAN, Mar. 27—The International Finance Corporation (IFC) signed loan agreements today totalling US$1.3 million with Azerdemiryolbank, Azerigazbank and Rabitabank, three of the largest private banks in Azerbaijan. The IFC credit lines will be used for on-lending to privately-owned small and medium-sized enterprises (SMEs) to finance business expansions and modernizations and for working capital.
This is IFC’s first project involving the Azeri banking sector and was approved under the Extending IFC’s Reach Initiative, a program which supports investments in the SME sector. A total of US$3.4 million in IFC funds for SME financing was approved in December 1997 to be extended as medium-term loans to private Azeri banks.
In addition, the project includes a complementary program of technical assistance and training to provide know-how to the three participating banks. The technical assistance program is being carried out by Shorebank Advisory Services with financing provided by the United States Agency for International Development (USAID), and is focused on enhancing the banks’ skills in credit evaluation, risk management, and internal controls.
Mr. Khosrow Zamani, Manager in IFC’s Central and Southern Europe Department, said that the project is expected to stimulate economic activity in a number of key sectors, including retail and wholesale trade, and in the transport, construction and construction materials sectors, which provide significant employment in Azerbaijan. It is also likely that IFC’s involvement will help to attract other commercial lenders to the Azeri financial sector.
Azeridemiryolbank, established in 1989, is Azerbaijan’s largest private commercial bank and is an important local source of financing for the transport sector. Azerigazbank, established in 1992, is primarily active in the wholesale trade, food products and transport sectors. Rabitabank, established in 1993, lends to a number of key enterprises in the local telecommunications sector.
Shorebank Advisory Services is the consulting and advisory arm of Shorebank Corporation, a US$700 million U.S. bank holding company, which is a leader in economic development and community-building in the U.S. and internationally. Shorebank’s international projects include small business financing and banking sector support initiatives in Poland, Russia, Bulgaria, and Romania.
IFC’s activities in Azerbaijan include a combination of technical assistance and direct investments. In addition to the financial sector, IFC has also developed projects in the oil pipeline, lubricating oil, and beverage sectors. Including this project, IFC has to date approved eight investments totalling US$25.0 million in Azerbaijan. The Corporation has a local office in Baku and looks forward to increasing the scope of its activities in the country and elsewhere in the region.
IFC, a member of the World Bank Group, fosters economic growth in the developing world by financing private sector investments, mobilizing capital in the international financial markets, and providing technical assistance and advice to governments and businesses.
