ADB to allocate about $20M to Azerbaijani bank to support women entrepreneurs

The Asian Development Bank (ADB) is going to allocate a senior loan of up to 34 million manats (approximately $20,000,000) to Azerbaijan’s Bank Respublika OJSC for on-lending to women business owners and borrowers operating in agricultural production, processing, and trade in Azerbaijan, Report informs, citing the ADB.

The project is consistent with the country partnership strategy for Azerbaijan, 2019-2023, which promotes inclusive growth by enhancing the financial inclusion of micro, small, and medium-sized enterprises (MSMEs), especially those owned and led by women and those involved in the agriculture, processing, and other underserved sectors.

The ADB notes that accounting for 36.3.% of the country’s total workforce, the agriculture sector has strong potential to contribute to poverty alleviation: “Poverty in Azerbaijan was recorded at 5.9% in 2021, with over 60% of the poor population residing in rural areas.

Micro, small, and medium enterprises (MSMEs) are also critical to poverty reduction efforts, especially in rural areas. In 2020, MSMEs comprised 99.7% of the total number of enterprises, with a considerable proportion (43% of total MSMEs) operating in rural areas.

However, despite their economic and social significance, access to financial resources for MSMEs remains limited as they are less able to obtain bank loans compared to large firms. Women-owned or -led MSMEs (WMSMEs) face a greater barrier to access to MSME financing because of lower property ownership amongst women, where property is often secured as collateral against loans. Financial access in rural areas is also constrained due to agricultural loans being treated as high-risk by banks and lending institutions.”

The ADB expects that the loan will improve the financial inclusion of underserved sectors by providing much-needed capital to WMSMEs in the agricultural sector. The project is expected to contribute to sustaining and/or expanding the economic activities of WMSMEs which, in turn, can lead to additional employment and income-generating opportunities for poor and vulnerable people in rural areas.

“The project has strong potential to enhance gender equality results in company operations by expanding access to finance for women business borrowers and providing quality working conditions for female staff and in support of women’s overall participation and growth in the financial sector,” the ADB says.

“With its extensive network of 32 branches, of which 19 are in rural regions, Bank Respublika is an ideal conduit to expand financial access to underserved sectors and areas.”

Bank Respublika was established in 1992 and is one of the top-5 leading banks in Azerbaijan. Among the shareholders of the bank are the largest financial institutions in Germany DEG Investment Corporation, a member of the KfW banking group, and SIDT, a member of the Sparkassen-Finanzgruppe. Entrepreneur Natig Guliyev and his family members own 90.23% of the bank's shares.