OREANDA-NEWS. The 4th Azerbaijan Microfinance Conference, held in Baku on 16th and 17th September, will provide participants such as the EBRD with an opportunity to highlight the activities, achievements but also the remaining challenges in the sector. Under the theme “Microfinance – 10 Years of Best Practice” the conference will assemble business, state and donors representatives together with other stakeholders to discuss the future of the microfinance industry in Azerbaijan, reported the press-centre of EBRD.

Microfinance is a key priority for the EBRD as the development of a flourishing micro, small and medium-sized enterprises sector is essential for the establishment of a prospering economy. Based on the hard work of its private owners and employees these companies represent the backbone of a successful economy and contribute to the diversification of the Azeri economy and development of the non-oil and gas sectors. The EBRD has been active in supporting these enterprises for many years and seeks to utilise all suitable vehicles for lending to micro and small enterprises (MSE).

In Azerbaijan the EBRD’s first initiative in the sector was to establish the Microfinance Bank of Azerbaijan in October 2002 together with the International Finance Corporation, the Black Sea Trade and Development Bank, the KfW Bankengruppe and AccessHolding of Germany. In late 2005 the EBRD extended its Azeri Multi-Bank Framework Financing Facility to include MSE lending to enable eligible participating banks to finance micro and small loans. The framework has been implemented successfully and to-date eight local commercial banks are extending loans to local MSEs as participants.

Since 2005, 262,570 sub-loans have been extended worth USD693.1 million. Some 33 per cent of the aggregate sub-loans amount was committed to borrowers outside of the capital Baku. In addition to Microfinance Bank of Azerbaijan and local commercial banks the EBRD is co-operating with non-bank microfinance institutions in Azerbaijan under a specific framework and has already signed loans with CredAgro, Finca Azerbaijan, SOA Kredit, Normicro and AzerCredit with additional projects in the pipeline.

Over the years the EBRD’s outreach in the MSE sector has increased significantly and relevant loans are now offered in Baku, Sumgait, Ganja, the Northern region (Khachmaz and Guba), the Southern region (Lenkoran), the Western region (Goranboy and Shemkir) as well as in Shirvan and Aran through the regional network of partner banks.

The EBRD’s credit lines are complemented by technical cooperation sponsored by donor funds. Under the programmes resident consultants assist partner banks to establish and develop MSE lending departments in new branches and Azerbaijan’s regions through measures such as staff training, lending methodology and operations monitoring. Furthermore 106 new loan officers have been trained in MSE lending methodology since the beginning of 2006.

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 EUR1 billion to leverage just under EUR15 billion in loans to micro and small businesses in the region.