MICROCAPITAL BRIEF: European Fund for Southeast Europe (EFSE) Loans $5m to Muganbank of Azerbaijan for On-lending to Rural Micro-, Small, Medium-sized Enterprises (MSMEs)

The European Fund for Southeast Europe (EFSE), a Luxembourg-based microfinance investment vehicle (MIV), recently announced that it has established a partnership with Muganbank Open Joint Stock Company (OJSC) (Muganbank), a retail and corporate bank in Azerbaijan. This partnership will commence with the disbursement of a senior loan facility of USD 5 million to Muganbank by EFSE. The loan proceeds are expected to be on-lent to micro-, small and medium-sized enterprises (MSMEs) in rural regions of Azerbaijan.

Ms Monika Beck, the chairperson of the board of EFSE, said that “with its continuous commitment to the EFSE’s target group of micro- and small enterprises, MuganBank consistently proves a strong ally in our mission to contribute to income generation and employment creation by supporting MSMEs”[1].

Mr Elmir Hasanov, the chairman of the board of Muganbank, explained that “Muganbank has a strong expertise in financing micro-, small and medium enterprises in Azerbaijan. The USD 5 million senior loan facility issued by the EFSE adds value to our existing MSME portfolio. It provides us with the financial resources to effectively reach out to rural businesses in Azerbaijan and service country’s more remote areas”[1].

As of June 2013, EFSE has an investment portfolio of EUR 774 million (USD 1 billion). Muganbank reported total assets of AZN 334 million (USD 425 million), loans to customers of AZN 218 million (USD 278 million) and liabilities to customers of AZN 152 million (USD 194 million) as of December 31, 2013.

By Alíz Crowley, Research Associate

About Muganbank Open Joint Stock Company (OJSC)

Headquartered in the city of Baku, Muganbank Open Joint Stock Company (OJSC) was established in 1992 and offers a range of retail and corporate banking services in Azerbaijan. As of December 31, 2013, Muganbank reported total assets of AZN 334 million (USD 425 million), loans to customers of AZN 218 million (USD 278 million) and liabilities to customers of AZN 152 million (USD 194 million).

About European Fund for Southeast Europe (EFSE)

The European Fund for Southeast Europe (EFSE) was established in 2005 by Kreditanstalt für Wiederaufbau Entwicklungsbank (KfW), a German development bank, with financial support from the German Federal Ministry for Economic Cooperation and Development (Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung) and the European Commission of the EU. EFSE seeks to aid economic development in southeastern Europe and parts of central Asia by supporting the provision of financial services to low-income households and micro- and small enterprises via local financial institutions. EFSE is privately managed, with Oppenheim Asset Management Services of Luxembourg acting as fund manager and Finance in Motion GmbH of Germany acting as fund advisor. As of June 2013, EFSE has an investment portfolio of EUR 774 million (USD 1 billion). As of 2014, EFSE holds a microfinance label from Luxembourg Fund Labeling Agency (LuxFLAG), an NGO that certifies that social investment vehicles actually invest as advertised.

Sources and Additional Resources

[1] Press release sent to MicroCapital by European Fund for Southeast Europe (EFSE)

[2] Muganbank, About Us, Annual Reports

MicroCapital, November 13, 2014, European Fund for Southeast Europe (EFSE) Provides $12.5m to Fibabanka of Turkey to Support Small, Medium-Sized Enterprises (SMEs)

MicroCapital, November 8, 2014, Green for Growth Fund, Southeast Europe (GGF) Lends $5m to Muganbank of Azerbaijan for On-Lending to Micro-, Small and Medium-Sized Enterprises (MSMEs) for Energy Efficiency Projects

MicroCapital, October 14, 2014, European Bank for Reconstruction and Development (EBRD) Loans $3m to Muganbank of Azerbaijan for On-Lending to Corporates, Individuals for Energy Efficiency, Renewable Energy Projects

MicroCapital Universe Profile: European Fund for Southeast Europe (EFSE)

MicroCapital Universe Profile: Muganbank Open Joint Stock Company (OJSC)

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