OREANDA-NEWS. Micro, small and medium-sized enterprises (MSEs) in Azerbaijan will benefit from a $3 million loan to Bank of Baku for on-lending to local businesses. The EBRD will provide $2 million, while $1 million comes from the International Cooperation and Development Fund Taipei China (TaiwanICDF), reported the press-centre of EBRD.

In addition, Bank of Baku will receive a $6,25 co-financing facility under the EBRD’s Medium-Sized Co-Financing Facility Framework (MCFF).

The financing will help expand Bank of Baku’s medium-term lending capacity to MSEs in a market where banks’ and companies’ access to longer-term financing is still limited. The size of the sub-loans will be between $10,000 and $100,000.

Aygen Yayikoglu, head of the EBRD’s office in Baku, said that sustainable growth of small businesses is key for diversification of Azerbaijan’s economy into non-oil and gas sectors, which is why it is important to strengthen the lending capacity of local banks and channel funds to local entrepreneurs.

Established in 2005 as a result of the merger between two local private banks, Bank of Baku is one of the top ten banks in Azerbaijan. It offers a wide range of products and services in areas such as consumer, commercial and international trade finance. The EBRD became a shareholder in 2005. Bank of Baku has also participated in the EBRD’s Trade Facilitation Programme.

The $3 million loan is part of an overall $20 million multi-bank framework through which the EBRD is providing credits for MSME lending to banks in Azerbaijan. As a participant, Bank of Baku is also benefiting from technical assistance funded by the European Union's Tacis programme and the ETC Multi-Donor Fund.

Azerbaijan is one of the countries included in the EBRD’s Early Transition Countries Initiative, launched in 2004, to stimulate market activity in the Bank’s lowest- income countries of operations by using a streamlined approach to financing more and smaller projects, mobilising more investment, and encouraging economic reform.

Through its micro and small enterprises programmes, the EBRD has supported over one million small enterprises throughout Eastern Europe, Russia, Central Asia and the Caucasus. Across its countries of operations, the EBRD has committed over $1 billion to 105 financial institutions to facilitate $15 billion in loans to micro and small businesses in the region.

The contribution of the International Cooperation and Development Fund Taipei China (TaiwanICDF) comes under the Financial Intermediary Investment Special Fund, set up in 1996. The fund focuses on private sector operations in early and intermediate countries, where such finance is highly additional. TaiwanICDF's contribution totals $12,5 million, out of which $10 million has been committed.