MICROCAPITAL STORY: IFC and BP to Fund Expansion of Services by the Micro Finance Bank of Azerbaijan

The International Finance Corporation (IFC), a member of the World Bank Group, and BP, a British-based multinational oil supplier have agreed to provide additional funding to the Micro Finance Bank of Azerbaijan (MFBA), so it can improve access to finance for micro and small enterprises in western Azerbaijan by expanding its branch network to the towns of Mingechevir and Gazakh and enhancing services in the Ganja branch. The funding will consist of a USD 1 million grant from BP and USD 2.3 million of the IFC and the MFBA’s own investments. BP’s contribution will be used to support international credit experts and develop local loan officers and branch managers.

The Micro Finance Bank of Azerbaijan (MFBA) was established in October 2002. It is a closed type, joint-stock bank, owned by six shareholders: the European Bank for Reconstruction and Development (EBRD), the IFC, the Black Sea Trade and Development Bank, the German government’s development agency KfW Development Bank, German consulting company LFS Financial Systems GmbH, which is also responsible for the management of the Bank, and microfinance consultants Access Holding.

Since its foundation the MFBA has disbursed over 75,000 loans worth over USD 200 million (with an average loan size of USD 3,000). According to its website, in the first 8 months of 2007 the bank has already attracted more than USD 45 million from international investors for the development of Azeri business. Earlier this week MicroCapital reported that MFBA had just received its first loan from the SNS institutional Microfinance Fund denominated in Azerbaijan’s local currency, the Manat.

BP is supporting the country as it is involved in a number of oil exploration and production projects in Azerbaijan, and is leading the Baku-Tbilisi-Ceyhan (BTC) pipeline project, in which it is the largest shareholder, with 30.1 per cent. The BTC pipeline transports crude petroleum 1,768 kilometres from the Azeri-Chirag-Guneshli (ACG) oil field in the Caspian Sea to the Mediterranean Sea. It is the second longest oil pipeline in the world.

The IFC has also invested in the ACG oil field and the BTC pipeline. It has also committed more than USD 198 million of its own funds in investment opportunities to support the non-oil sector in Azerbaijan.

Amy Rennison, MicroCapital writer

Additional Sources:

Webwire.com
http://www.webwire.com/ViewPressRel.asp?aId=54431

IFC Press Release:
http://www.ifc.org/ifcext/eca.nsf/Content/SelectedPRAzerbaijan?OpenDocument&UNID=1A73ACB73ACAEFE4852573A700503DAE

IFC in Azerbaijan
http://www.ifc.org/ifcext/eca.nsf/Content/Azerbaijan_Home

Wikipedia:
http://en.wikipedia.org/wiki/Baku-Tbilisi-Ceyhan_pipeline

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