Moscow, Russia, June 17, 2005 —
The International Finance Corporation, the private sector arm of the World Bank Group, opened a US$ denominated Ruble-linked credit line of US$1.0 million to a Non-Commercial Partnership “Women Microfinance Network”. The Network will use IFC’s credit line to provide micro loans (on average US$1,539 equivalent Average loan size as of 31 December 2004 , 1 USD = 27.8 RUR (as of 11 May 2005) ) to individual entrepreneurs and micro enterprises in Central European Russia.
The Women Microfinance Network was established in 1998 to provide micro loans to entrepreneurs and micro businesses that could not access traditional bank financing. Since then the Network lent $44 708 969 to 36 841 clients across Central European Russia for projects ranging from small retail shops to small manufacturing firms (bakeries, textile producers), services delivery businesses (transportation, hairdressing salons and cafes). Micro financing has proved to be a good business and the Network has decided to commercialize its lending operations to be able to expand its services. The Network is establishing a non-banking credit organization that would take deposits and provide loans under the laws of the Russian Federation as a for-profit financial institution regulated by the Central Bank of Russia. It is estimated that there are currently 4.5 million potential clients for micro financing in Russia.
IFC’s investment represents its first Ruble-linked loan to a Russian NCO, and the Network will establish a regulated microfinance institution and the first non-banking credit organization in Russia, to be regulated by the Central Bank of the Russian Federation.
The Network’s Chairwoman, Ms. Diana Medman, stated “the Network’s decision to pursue the establishment of the non-banking credit organization is due to our desire to follow a path of commercialization and long-term sustainability.” Ms. Medman added “IFC’s loan marks the start of what the Women Microfinance Network expects to mature into an important and long-lasting relationship.”
“The project highlights IFC’s strategic support for sustainable financial institutions that serve micro and small enterprises in Russia. These institutions typically have a strong developmental impact,” Jyrki Koskelo, IFC’s director for global financial markets, noted, “This investment underlines IFC’s strategy for Russia. We support financial intermediation to accelerate private sector development and improve access to finance for local micro and small enterprises.”
“By supporting the Network IFC is hoping to encourage the growth of other microfinance institutions in the market. It is good business and it contributes to the growth entrepreneurship, creating thousands of jobs for the Russian people,” said IFC’s director for Eastern Europe and Russia, Edward Nassim.”
The mission of IFC (
www.ifc.org
) is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY04 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.
Russia joined IFC in 1993. Since then, IFC has committed $1.8 billion, including $200 million in syndicated loans, to finance 92 projects across a variety of sectors. IFC’s portfolio in Russia stands at $1.3 billion. Currently, Russia is the second largest country exposure after Brazil in IFC’s global portfolio. IFC’s investments spread across the country’s most important sectors including banking, leasing, housing finance, infrastructure, mining, agribusiness, pulp and paper, construction materials, oil and gas, telecommunications, information technologies, retail, and health care.
