The transaction provides $50 million to AccessBank Azerbaijan (ABA). The proceeds will be used exclusively to support ABA's plan to increase lending to MSMEs in the underserved regions outside Baku, including secondary towns and rural districts. The assistance for the MSME segment is critical to support income and employment.
|Project Name||AZE: ACCESS BANK PROMOTING RURAL FINANCIAL INCLUSION|
|Location||Rural regions outside the capital, Baku.|
|Type or Modality of Assistance||
|Strategic Agendas||Inclusive economic growth
|Drivers of Change||Gender Equity and Mainstreaming
Private sector development
|Sector / Subsector||
Finance - Banking systems and nonbank financial institutions - Finance sector development - Inclusive finance - Small and medium enterprise finance and leasing
|Gender Equity and Mainstreaming||Some gender elements|
|Responsible ADB Department||Private Sector Operations Department|
|Responsible ADB Division||Portfolio Management Division, PSOD|
|Responsible ADB Officer||Hruschka, Stefan A.|
|Description||The transaction provides $50 million to AccessBank Azerbaijan (ABA). The proceeds will be used exclusively to support ABA's plan to increase lending to MSMEs in the underserved regions outside Baku, including secondary towns and rural districts. The assistance for the MSME segment is critical to support income and employment.|
|Objectives and Scope||
(i) ADB provides stable long-term financing that currently cannot be raised from the local market. Azerbaijan''s capital markets are nascent, and public confidence in the finance sector is only gradually being restored. More broadly, the loan may contribute to increasing public confidence in the banking system, through the support of this strong and growing bank with significant outreach in underserved areas;
(ii) The loan supportsfinancial inclusion, specifically by targeting MSMEs in regions, including rural areas. Secondary towns play an important role as trade and service hubs linking agriculture to national and regional markets. MSMEs have not been well served by the traditional banking system, and ABA has developed specialized lending practices to reach these underserved customers. The ADB loan will support diversification in the regions outside Baku and to nonoil subsectors; and
(iii) Through close on-site monitoring and dialogue with ABA management, ADB will support ABA''s adherence to high corporate governance, social, environmental, and fiduciary standards; and enhance risk management.
|Linkage to Country/Regional Strategy||
Financial sector development is a key focus of ADB assistance as set out in ADB''s Private Sector Development Strategy and Enhanced Poverty Reduction Strategy, which note economic growth, stimulated by private sector investment, as a key contributing factor in reducing poverty. These strategies also note the importance of generating jobs, with private sector employment being the major source of income for workers and their families. The Private Sector Development Strategy emphasizes ADB''s role in strengthening finance sectors in its developing member countries. It provides that SME beneficiaries of financial intermediation are important employers and providers of income to contribute to poverty reduction. Support of financial intermediaries is important to instill confidence and rehabilitate the finance sector in countries affected by macroeconomic shocks and financial crises. The loan is consistent with ADB''s financial sector operational plan and the 2007 report of the Working Group on Rural Poverty, which underscores the importance of rural finance and promotes financial inclusion of underserved poor households, farmers, and SMEs.
ADB plays an important role in supporting deepening of services in Azerbaijan's finance sector. The proposed loan would be ADB's second loan to ABA, building on the success of the previous loan, and specifically targeting MSMEs in the regions where access to finance is most limited.
|Status of Development Objectives||
The number of MSME clients served increased by >20,000 (31%) reaching more than 125,000 MSMEs almost reaching the target of 130,000 clients for 2017. The number of MSME borrowers with up to 100 employees increased by 8% to 17,200. The amount of MSME business loans outstanding increased by >$160 million (30%), reaching $689 million (nearly the $700 million target aimed for 2017).
Two thirds of ABA clients are repeat borrowers contributing to an excellent portfolio quality (portfolio at risk >30 days of 0.36%) based on graduation of borrowers through a number of loan cycles. ABA has a very strong profitability with return on average assets of 4.3% and a return on equity of 28.9% during 2013. Since ADB's due diligence in April 2012, ABA demonstrated a strong push towards regionalization of its portfolio in terms of loan numbers and portfolio size as illustrated in the figures above. The average increase in loan size is a good indication that the business model that is based on, repeat borrowing with gradually increasing amounts, works well.
Summary of Environmental and Social Aspects
|Environmental Aspects||Access Bank Azerbaijan has an Environmental and Social Management System in place that complies with ADB's Safeguard Policy Statement (SPS, 2009). Any investment classified Environment 'high risk' will not be financed under the loan. High risk is equivalent to category A and Medium risk equivalent to category B in ADB's SPS.|
|Involuntary Resettlement||Any investment classified Involuntary Resettlement 'high risk' or 'medium risk' will not be financed under the loan. High risk is equivalent to category A and Medium risk equivalent to category B in ADB's SPS.|
|Indigenous Peoples||Any investment classified Indigenous Peoples 'high risk' or 'medium risk' will not be financed under the loan. High risk is equivalent to category A and Medium risk equivalent to category B in ADB's SPS.|
|Stakeholder Communication, Participation, and Consultation||regular on-site visits of ABA|
Timetable for assistance design, processing and implementation
|Concept Clearance||15 Apr 2013|
|Due Diligence||02 May 2013|
|Credit Committee Meeting||03 Jun 2013|
|Approval||19 Jul 2013|
|PDS Creation Date||27 Jun 2013|
|Last PDS Update||30 Sep 2014|
Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.
The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.
The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.
In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.
|Title||Document Type||Document Date|
|Senior Loan to AccessBank Azerbaijan for Promoting Rural Financial Inclusion||Initial Poverty and Social Analysis||Sep 2013|
|Senior Loan to AccessBank Azerbaijan Promoting Rural Financial Inclusion||Reports and Recommendations of the President||Jun 2013|
Safeguard Documents See also: Safeguards
Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.
None currently available.
Evaluation Documents See also: Independent Evaluation
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