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Azerbaijani MFI, Azercredit Gains New Stakeholders

Wednesday, 25 Jan 2012

By Dianne Lowther, VisionFund International, Director of Communications

Incofin IM’s Rural Impulse Fund II and Triple Jump’s ASN-Novib Microkredietfonds take an equity stake in Azercredit. This Azerbaijani MFI with strong rural focus was founded and solely owned by World Vision /VisionFund. Incofin IM and Triple Jump will be actively involved in the institution’s future development by taking up a seat in Azercredit’s board of directors. 

The investment in Azercredit by international investors not only shows its excellent relationship with the international community, but also illustrates the soundness of its operations. The three shareholders of Azercredit will support the growth plans of the institution and guide it in improving its financial and social performance, without losing sight of its main target group of rural clients.

Founded in 1996, Azercredit (http://azercredit.az/) is one of the leading MFI’s of Azerbaijan. It serves more than 43,000 clients, many of who live in remote rural areas that are being targeted by few other financial institutions. In addition, more than half of the USD 38 million portfolio goes to agricultural activities. With an average loan size of USD 860, Azercredit is serving a niche of low- income entrepreneurs. Both the strong rural portfolio and the small average loan size underline the deep outreach of the institution. The Azercredit branch network consists of 21 offices that cover the economically most active regions of the country, and is planned to expand towards more rural areas. 

The product offering of Azercredit comprises a variety of group and individual products as well as loans adapted to the agribusiness. The existing products and services are well-designed and accessible and subject to regular revision in view of the clients’ needs. Thanks to this customer orientation, Azercredit built strong client relationships and can count on high customer fidelity. The MFI’s strong procedures and internal controls result in an excellent portfolio. 

Azercredit is a non-bank credit organization (NBCO). The Central Bank of Azerbaijan acts as regulator and supervisor in the non-bank sector. As such it sets the standards with regard to transparency, client relations and confidentiality. Its Central Credit Registry Service centralizes all information on outstanding loans and requires NBCO’s to report. Hence over-indebtedness in the country is being reduced while minimizing the potential risk for investors. 

VisionFund International has recently announced a new strategy to focus its future work increasingly on Africa, Asia and Latin America, so as to achieve an even greater impact on the lives of children trapped in poverty. As part of this strategy, its MFIs in Eastern Europe will begin to take on a more independent existence from VisionFund and the investment in Azercredit by Incofin IM and Triple Jump fits with this approach. Nonetheless, VisionFund remains a significant investor in Azercredit and will continue to support its future development as a highly successful MFI in both financial and social performance.