ArmInfo.The International Finance Corporation (IFC) has signed agreements with three Armenian banks, Acba Bank, Converse Bank and Evocabank, to enhance access to finance for smaller businesses, including women-owned and rural enterprises and climate projects. It is planned to provide loans for a total amount equivalent to $40 million. In particular, Acba Bank will receive $25 million, Converse Bank - $5 million and Evocabank - $10 million, as noted in IFC's statement.
Within the framework of the agreements with Acba and Converse banks, the risk sharing mechanism (the so-called refinancing) proposed by IFC will be used for the first time. In the first agreement, IFC will provide Acba Bank with up to $25 million equivalent in a risk sharing facility that will cover 50 percent of losses on an up to $0 million-equivalent portfolio of loans to small and medium enterprises (SMES). In the next agreement, IFC will provide a risk sharing facility of up to $5million-equivalent to Converse Bank, to cover 50% of principal losses on an up to $10 million-equivalent portfolio of loans to SMEs, which also include women-owned enterprises, agribusinesses, and rural businesses.
The funds provided to Evocabank will be used to refinance loans to micro and small enterprises. The report notes that these projects are part of IFC Small Loan Guarantee Program, which is supported by a financial guarantee from the European Commission's European Fund for Sustainable Development (EFSD). This program pools together IFC risk-sharing facilities with IFC's partner financial institutions to help d-risk and scale up financing for small businesses.
IFC intends to raise an additional $10 million from other partners to support on-lending to MSMEs in Armenia. Half of the proceeds will be allocated to climate projects and 25% to women-led enterprises. The partnership will also support the development of climate finance by promoting green lending standards. The IFC statement notes: "Small businesses are key drivers of economic growth, innovation and employment in Armenia, with micro, small and medium enterprises (MSMEs) accounting for the majority of jobs (69%), but they face a $1.1 billion finance gap due to challenges including limited collateral and poor financial management. Women-owned MSMEs face even greater hurdles, with many less likely to hold collateral or have access to formal bank accounts loans."
It is to address this issue that IFC is establishing risk-sharing facilities in Armenia with three Armenian banks (Acba, Converse, Evocabank). These three agreements are all part of IFC's strategy to support Armenia's banking sector and enable small businesses to grow. In Armenia, IFC aims to help close infrastructure gaps and reduce carbon footprints through investments in renewables, and climate adaptation. IFC boosts access to finance for SMEs and supports a greener economy with financial institutions. IFC's also plans to support capital markets development, public- private partnerships, and improve connectivity, focusing on transport and information and communications technology.
