IFC, the private sector arm of the World Bank Group, has signed an agreement to provide further funding to Azerbaijan’s Rabita Bank to increase its lending to micro, small, and medium enterprises (MSMEs) and to individuals.
IFC’s long-term US$2mn loan will provide Rabita with much needed term funding. IFC will have an option to convert the outstanding amount of the loan into up to 20% of the bank’s equity.
In addition, IFC will assist the bank with advice on credit management, strategy development and risk management. This advisory service project is supported by the government of the Netherlands.
The project will be supervised by IFC Advisory Services – Southern Europe. Through this project, IFC aims to increase the portfolio of Rabita Bank in the area of small and medium Azeri enterprises by over 50% during the next 12 months, thereby providing an impact for the further development of the Azeri economy.
Overall, IFC’s investment and advisory package in Rabita will support the bank’s strategy in Azerbaijan by promoting the growth of MSMEs.
Shahbaz Mavaddat, IFC’s director for Southern Europe and Central Asia, notes: “We are pleased to support further our existing client in Azerbaijan. One of the main pillars of our strategy in Azerbaijan is support of sustainable and balanced growth in the non-oil sectors across the country’s many regions. Going forward, sustainable economic development will depend on the development of dynamic private entrepreneurs; strong financial intermediaries; and a more streamlined, efficient, and transparent business environment. The IFC investment and advisory services will help develop the MSME sector in Azerbaijan by increasing the availability of credit and high quality banking services.”
Jyrki Koskelo, IFC’s director for global financial markets, adds: “IFC has had a strong institution-building role in the development of Azerbaijan’s financial markets. Despite the significant increase in lending and the much improved growth prospects of MSMEs, the level of financial intermediation is still low. IFC’s investment in Rabita Bank, combined with advisory services, will strengthen and diversify the financial sector in Azerbaijan.”
Zakir Nuriyev, chairman of Rabita Bank’s supervisory board, says: “We are pleased to continue our relationship with IFC. By providing new long-term funding, IFC confirms its confidence and trust in our bank. The new investment will allow us to further strengthen our position in the market and expand lending to MSMEs, which has been the focus of our operations from the outset. We look forward to continuing and strengthening our partnership with IFC. ”