MICROCAPITAL STORY: Three Microfinance Institutions (MFIs) Account for Over Half of Azerbaijan Micro-finance Association's (AMFA) Total Loan Portfolio for the First Quarter of 2008

According to ABC.AZ, a business information portal, the Azerbaijan Micro-finance Association (AMFA), a supportive organization for a network of 22 microfinance institutions (MFIs) and downscaling commercial banks in the country, has released first quarter 2008 performance statistics for its members. Accounting for 53 percent of AMFA’s total loan portfolio of USD 424.3 million were CredAgro, the Foundation for International Community Assistance Azerbaijan (FINCA Azerbaijan), and the Micro Finance Bank of Azerbaijan (MFBA) whose combined portfolios totaled USD 228.1 million.

Baku-based CredAgro, which recently opened new branches in Barda and Mingechevir, was founded in 2000 by ACDI/VOCA, a nonprofit organization based in Washington, DC promoting civil society and economic growth in developing countries. A non-bank financial institution whose operations are comprised of 31 to 40 percent microfinance activities according to the MIX Market, the microfinance information clearinghouse, CredAgro reported nearly 8,600 active borrowers in 2007 and a gross loan portfolio of USD 38.6 million at the end of the first quarter of 2008. An independent financial audit was conducted at the end of 2007 and is available here. MicroFinanza Rating, an international rating agency headquartered in Milano, Italy and specializing in microfinance and rural finance, gave CredAgro a “BBB” rating in June 2006.

Founded in 1997 through the merger of Agricultural Cooperative Development International (ACDI) and Volunteers in Overseas Cooperative Assistance (VOCA), ACDI/VOCA has 91 active projects in 45 countries and reports USD 90 million in revenues. The organization is currently conducting projects in microfinance through its work in Financial Services, and also focuses on Enterprise Development and Agribusiness Systems, among other areas.

FINCA Azerbaijan will complete ten years of work in the country on June 28, 2008 and launched a new web site (http://www.fincaazerbaijan.com/) on May 8th. Through a press release on the same day, Country Director Jeff Flowers announced that FINCA Azerbaijan has reached 80,000 clients and a loan portfolio of over USD 55 million. Founded in 1998 with support from the United States Agency for International Development (USAID), a US government agency extending “assistance to countries recovering from disaster, trying to escape poverty, and engaging in democratic reforms,” FINCA Azerbaijan’s stated mission is to provide Azerbaijan’s lowest-income entrepreneurs with financial services including loans ranging from USD 50 to USD 50,000. According to the MIX Market, the non-bank financial institution reported return on assets (ROA) in 2007 of 5.31 percent, an operational self-sufficiency (OSS) ratio of 120.8 percent, and a debt to equity ratio of 432 percent. FINCA Azerbaijan was most recently audited in 2006 by RSM Top-Audit of Russia—the report is available here. MicroCapital recently reported on FINCA Azerbaijan here.

MFBA, opened in October 2002 and catering to micro and small enterprises with 13 branches across the country, reported a loan portfolio at the end of the first quarter of 2008 of nearly USD 140 million. Based in Baku, MFBA reached 49,600 borrowers in 2007, 23 percent of whom were women, according to the MIX Market. The MFI’s 2007 debt to equity ratio was 714 percent and in 2006 it reported ROA of negative 0.93 percent. MFBA was most recently audited in May 2007 by Deloitte & Touche—the report is available here. MicroCapital recently reported on MFBA here.

By Anthony Busch, Research Assistant

Additional Resources:

ABC.AZ: Home, About, “CredAgro Opened Branches in Mingechevir and Barda”, April 11, 2008; “Micro Finance Bank of Azerbaijan, CredAgro and FINCA Have Formed 53% of AMFA Overall Portfolio”, April 24, 2008

ACDI/VOCA: Home, Our Story, At a Glance, Financial Services, Enterprise Development, Agribusiness Systems

Azerbaijan Micro-finance Association: Home, Members

CredAgro: Home, History, MIX Market Profile

Deloitte & Touche: Home

FINCA Azerbaijan: Home, Press Release, History, Mission, Products and Services, MIX Market Profile

Foundation for International Community Assistance: Home

Micro Finance Bank of Azerbaijan: Home, About, Branch Network, MIX Market Profile

MicroCapital article, April 15, 2008: “The European Bank for Reconstruction and Development (EBRD) will Extend a $30m a Syndicated Loan to the Micro Finance Bank of Azerbaijan (MFBA) for On-lending to Micro Enterprises”

MicroCapital article, April 23, 2007: “Switzerland-based Symbiotics Intermediates a USD 3 mn Loan from Microfinance Loan Obligations to Foundation for International Community Assistance (FINCA) Azerbaijan”