The European Bank for Reconstruction and Development (EBRD), a multilateral development bank serving European and Asian ex-Communist economies, will loan USD 1.5 million to Credo, Georgia’s second-largest microfinance institution (MFI) by loan portfolio size, according to the Financial. 

The line of credit will allow Georgian micro-entrepreneurs in the agriculture and tourism industries greater access to longer term financing and will increase individual, urban, and household lending outside the Georgian capital, Tbilisi. It comes as a result of the EBRD’s Early Transition Countries (ETC) Non-Bank Micro Finance Institutions Framework, which uses a streamlined financing approach for enterprises in seven former Soviet countries.

As previously reported in MicroCapital, the EBRD made a USD 1 million loan to a Tajik MFI earlier in March under the same Framework.

The EBRD was established in London in 1991 to encourage democracy through private-sector development in former Iron Curtain countries. It is now involved in 29 countries from central Europe to central Asia and is the region’s largest investor. Owned by 61 countries and two intergovernmental institutions, the bank reported EUR 30.7 billion (USD 40.5 billion) in assets as of year-end 2006, of which EUR 493.5 million (USD 651.6 million) was allocated to microfinance investments. Calculated from financial statements, its return on assets was 7.78 percent and its debt/equity ratio was 152.14 percent. The bank had 112 active investments as of December 31, 2006. It has signed onto 81 investment projects throughout Georgia for a total commitment greater than EUR 600 million (USD 922 million).

The VF Credo Foundation is a non-bank financial institution established in 1997 as World Vision International’s Georgian Entrepreneurs Fund. Focused on rural and agricultural lending, it came into its present incarnation in 2005. It has ten branches, located in Tbilisi and southern and western Georgia, and there are plans to open four more. As of year-end 2006 (Annual Report), Credo reported assets of USD 5.2 million, with a gross loan portfolio of USD 4.7 million. Calculated from its financial statements, its return on assets was 2.04 percent and its debt/equity ratio was 202.13 percent. Active borrowers numbered 4,378. Credo’s latest rating, issued by Microfinanza Rating in June 2007, was a BBB, up from its previous rating of BB+.

By Stephen Son

Additional Resources:

The Financial: “EBRD and MFO Credo boost Georgia’s micro enterprises”

Oanda.com: FX Converter

MicroCapital.org article, March 7, 2008: “European Bank for Reconstruction and Development (EBRD) Lends $1m to Microfinance Institution (MFI) IMON of Tajikistan”

MIX Market: Profile for EBRD; Profile for CREDO

VF Credo: Annual Report 2006; Rating 2007