The Asian Development Bank (ADB) is providing $6 million in loans and $200,000 in technical assistance grants to FINCA, one of the leading credit organizations in Armenia, to support micro, small, and medium-sized enterprises (MSMEs) and farmers, helping them to raise income levels and employment.
“Armenia’s economic prospects depend on a thriving private sector that can provide financial solutions for businesses and individuals to expand their economic opportunities,” said Christopher Thieme, Deputy Director General in ADB’s Private Sector Operations Department. “ADB is proud to be working with FINCA to expand banking services in Armenia for small businesses and farming households and improve delivery of financial services to underserved regions.”
“FINCA and ADB share the same values of poverty reduction and the improvement of the quality of life in the country,” said FINCA General Director Hrachya Tokhmakhyan. “The partnership with ADB will be a wonderful opportunity for FINCA to fulfil the ambition of providing the low-income entrepreneurs outside of Yerevan with high-quality financial services. The main part of the funds will be targeted at extending the portfolio of agribusiness loans.”
Low access to finance is a significant problem in Armenia. Only 18% of adults aged 15 and above have a bank account and out of the 130,000 small and medium-sized enterprises, only 50% have access to finance, and this figure increases to 60%-70% in rural areas.
ADB’s financing package will allow FINCA to provide long-term funds to clients. ADB’s funding will be used to support underserved populations, with up to 75% of ADB’s funding destined for MSMEs outside of Yerevan, and up to 70% used to on-lend to agricultural borrowers.
ADB will also provide technical assistance to FINCA to support the development of a credit scoring system and help the institution become certified under the global “Smart” campaign, which aims to embed client protection practices in financial institutions.
ADB’s nonsovereign support for private finance in Armenia has focused on funding banks that support MSME activities. In addition to the Trade Finance Program, since 2011, ADB has approved loans totalling $71 million to Armenian banks for on-lending to MSMEs.
ADB has been working with the Government of Armenia since 2005 and has approved 26 loans totalling $1.27 billion and 26 technical assistance grants totalling $16.5 million.
Original source: ADB
Published on 14 November 2017
