Georgia : GEO: Financial Inclusion for Micro and Small Enterprise Growth

Nonsovereign Project | 49227-001

The ADB transactions will support financial inclusion for MSMEs and farmers. The proposed ADB assistance comprises (i) a proposed loan of up to $23,000,000 or its lari equivalent to Credo Microfinance Organization (Credo); (ii) a proposed loan of up to $7,000,000 or its lari equivalent to FINCA Bank Georgia (FBG); and (iii) proposed loans to TBC Bank (TBC) consisting of (a) a subordinated loan of up to $50,000,000 or its euro equivalent or its lari equivalent, and (b) a senior loan of up to $50,000,000 or its euro equivalent or its lari equivalent, for the Financial Inclusion for Micro and Small Business Growth in Georgia.

Project Details

  • Project Officer
    Hruschka, Stefan A.
    Private Sector Operations Department
    Request for information
  • Country/Economy
    Georgia
  • Modality
  • Sector
    • Finance

Related Projects

Project Name
GEO: Financial Inclusion for Micro and Small Enterprise Growth
Project Number
49227-001
Borrower / Company
  • Credo Bank JSC
  • FINCA Bank Georgia JSC
  • TBC Bank JSC
Country / Economy
  • Georgia
Location
Nation-wide
Type or Modality of Assistance
Approval Number Facility Fund Source Amount Status
3360 Loan Ordinary capital resources USD 23.00 million Committed
Strategic Agendas
  • Inclusive economic growth
Drivers of Change
  • Knowledge solutions
  • Private sector development
Sector / Subsector

  • Finance / Inclusive finance

Gender
Some gender elements
Project Sponsor(s)
    Description
    The ADB transactions will support financial inclusion for MSMEs and farmers. The proposed ADB assistance comprises (i) a proposed loan of up to $23,000,000 or its lari equivalent to Credo Microfinance Organization (Credo); (ii) a proposed loan of up to $7,000,000 or its lari equivalent to FINCA Bank Georgia (FBG); and (iii) proposed loans to TBC Bank (TBC) consisting of (a) a subordinated loan of up to $50,000,000 or its euro equivalent or its lari equivalent, and (b) a senior loan of up to $50,000,000 or its euro equivalent or its lari equivalent, for the Financial Inclusion for Micro and Small Business Growth in Georgia.
    Objectives and Scope
    The ADB transactions will support financial inclusion for MSMEs and farmers. The proposed ADB assistance comprises (i) a senior loan for Credo of up to $23 million (or its lari equivalent) with a 4-year tenor; (ii) a subordinated loan for TBC of up to $50 million (or its euro or lari equivalent) with a 10-year bullet maturity; (iii) a senior loan for TBC of up to $50 million (or its euro or lari equivalent) with a tenor of up to 6.5 years; (iv) a senior loan for FBG of up to $7 million (or its lari equivalent) with a 4-year tenor; and (v) a TA grant of up to $1.05 million to support (a) TBC's MSME Academy services; (b) Credo's transformation into a bank; and (c) each of the three banks' efficiency improvements and the development of loan and assistance to skills improvement to MSMEs and farmers, including branchless banking and associated financial literacy programs to their customers.
    Linkage to Country/Regional Strategy

    Under the Midterm Review of Strategy 2020, ADB aims to strengthen its support for the finance sector by assisting the development of financial infrastructure, institutions, and products and services; and by promoting inclusive growth. The borrowers' emphasis on funding segments where the potential for employment and income generation is high will support inclusive growth. The ADB loans will help the borrowers provide loans to MSMEs in order to realize their investment needs. This is consistent with the government's efforts to promote growth in rural areas and ADB's country partnership strategy for Georgia, 20142018.

    ADB plays a tangible role in supporting the deepening of financial services in Georgia. Since 2007, ADB has provided nonsovereign loans of $125 million to banks, comprising two loans to Bank of Georgia and one loan to TBC, as well as TA to NBG and TBC. Bank of Georgia and TBC also benefit from ADB's Trade Finance Program, with an exposure limit of $30 million. The loans to TBC will build on the ongoing loan; the loans to FBG and Credo will be the first. ADB nonsovereign efforts align with efforts to develop the local currency bond market, as well as sovereign support for capital markets, including contractual savings under a program approved in 2014. Staff of the ADB Central and West Asia Department participated in processing the transactions.

    Safeguard Categories

    Environment
    FI
    Involuntary Resettlement
    FI-C
    Indigenous Peoples
    FI-C

    Summary of Environmental and Social Aspects

    Environmental Aspects
    The TBC environmental and social management system (ESMS) complies with ADB's Safeguard Policy Statement. Given the small average size and caps on subloans, the ESMSs of Credo and FBG are adequate. FBG and Credo will improve their ESMSs before introducing small business lending to satisfy ADB's Safeguard Policy Statement requirements.
    Involuntary Resettlement
    The borrowers' business activities have minimal or no adverse environmental impacts and are unlikely to entail impacts on involuntary resettlement and indigenous peoples.
    Indigenous Peoples
    The borrowers' business activities have minimal or no adverse environmental impacts and are unlikely to entail impacts on involuntary resettlement and indigenous peoples.
    Stakeholder Communication, Participation, and Consultation
    The main stakeholders are borrowers of the project's participating financial institutions. They participate through already extensive market research activity conducted by the institutions in determining the most appropriate lending products for individual entrepreneurs. The project's participating financial institutions have extensive national networks of branches and village councilors through which to engage and empower beneficiaries. The various lending products of the institutions that will be supported through the project are designed for specific socio-economic groups such as the poor and excluded to allow for their inclusion in productive economic activity. The project also includes technical assistance to support loan product offerings and enhance the efficiency of services through branchless banking.

    Contact

    Responsible ADB Officer
    Hruschka, Stefan A.
    Responsible ADB Division
    Portfolio Management Division, PSOD
    Responsible ADB Department
    Private Sector Operations Department

    Timetable for assistance design, processing, and implementation

    Concept Clearance
    29 Jun 2015
    Credit Committee Meeting
    -
    Approval
    10 Dec 2015
    Last PDS Update
    24 Feb 2016

    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 Access to Information Policy (AIP) 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.

    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

    None currently available.

    Related Publications

    None currently available.

    The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

    Requests for information may also be directed to the InfoUnit.

    • 13 Oct 2016 | Video

      Boosting Business in Rural Georgia

      Outside Georgia's main cities opportunities for business are limited. ADB is working with Georgian banks to train entrepreneurs and provide loans to small businesses so they can grow.