MICROCAPITAL STORY: International Finance Corporation Helps ACDI/VOCA’s CredAgro in Azerbaijan Improve Corporate Governance

The International Finance Corporation (IFC), a member of the World Bank Group, announced on its website that Azerbaijani microfinance institution CredAgro, will join the IFC’s Azerbaijani Corporate Governance Project. As part of the program IFC will advise and train directors, managers, and key shareholders of the institution. IFC will also help revise corporate documents, improve financial reporting and information disclosure, internal control, and internal audit functions.

Tania Lozansky, Head of Advisory Services for Europe and Central Asia at the IFC said, “We believe that better corporate governance at microfinance institutions will further benefit the ultimate customers and small and micro entrepreneurs, in particular, in the rural areas.”

The Azerbaijani Corporate Governance Project is funded by the Swiss Government’s State Secretariat for Economic Affairs (SECO). The project is ultimately intended to help local companies and banks enhance their operations and attract financing and investment by providing consultation on a wide range of corporate governance topics. To view a list of corporate governance topics the project advises on, or to request free model corporate governance documents, click here. For more information on the project call 497 7698 or email: lhuseynova@ifc.org

A report entitled Benchmarking Azerbaijan Microfinance 2006 by Nigar Pirmamedova and summarized by a MicroCapital paper wrap-up, notes that microfinance growth in Azerbaijan is concentrated in just a few institutions. As recently reported by MicroCapital, CredAgro and two other MFIs account for over half of Azerbaijan’s microfinance portfolio. The Benchmarking report highlights several restrictive government regulations hindering the development of the Azerbaijani microfinance sector, including lack of legislation addressing MFIs, a 22 percent tax on MFI profits, and the prohibition on MFIs offering savings accounts.

CredAgro is a non-governmental, non-profit lending organization based in Baku that provides access to working capital and investment loans to the agricultural sector. The organization was originally owned by ACDI/VOCA but became independent in 2005. A start-up grant was provided by USAID under the Azerbaijan Rural Credit Project. According to the MIX Market, the microfinance information clearinghouse, as of December 31, 2008, CredAgro had 13,773 active borrowers, a gross loan portfolio of USD 50.3 million, and total assets of USD 58.9 million. As of the same date debt-to-equity was 421.28 percent, ROE was 42.66 percent, and ROA was 8.01 percent. The MIX has awarded CredAgro a five-diamond rating from for disclosure, the highest rating available.

By Laura Anderson, Research Associate

Additional Resources:

The International Finance Corporation: Home, IFC Helps Azerbaijani Microfinance Institution Enhance Services for Entrepreneurs

IFC Azerbaijani Corporate Governance Project

The World Bank: Home

CredAgro: Home

USAID: Home

Swiss State Secretariat for Economic Affairs (SECO): Home

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

Agricultural Cooperative Development International/Volunteers in Overseas Cooperative Assistance (ACDI/VOCA): Home

The MIX Market: CredAgro Profile, ACDI/VOCA Profile

MicroCapital Paper Wrap-Up: Benchmarking Azerbaijan Microfinance 2006, by Nigar Pirmamedova