IFC Supports MSMEs, Low-income Households, and Climate Financing in Azerbaijan

• $20 million loan to expand MSME and low-income household lending and climate finance projects.
• Half the funds to be allocated for climate initiatives to support sustainable development.

Baku, Azerbaijan, November 14, 2024-IFC is providing $20 million in local currency financing to Bank Respublika, a leading financial institution in Azerbaijan, to enhance access to finance for micro, small, and medium enterprises (MSMEs), and low-income households, and support climate finance initiatives in the country.

Azerbaijan has pledged to reduce greenhouse gas emissions by 40 percent by 2050, though it now aims to reach this goal by 2035. Achieving decarbonization and resilience will require substantial investment, estimated at $44 billion by 2060, or approximately $1.35 billion per year, according to the World Bank Group Country Climate and Development Report.

There is a strong need for the financial sector to align more closely with these financing needs, presenting significant potential for growth. IFC seeks to showcase the effectiveness of this type of lending to strengthen the sector's role in driving sustainable growth. To support these efforts, half of IFC's new loan to Bank Respublika is earmarked for climate-related projects by MSMEs and low-income households.

The investment aligns with the World Bank Group's strategy for Azerbaijan, which prioritizes improving access to finance, especially for climate-related projects. The country is currently hosting COP29, highlighting its commitment to advancing climate finance and promoting sustainability-focused reforms. To guide sustainable investments and provide a clear framework for aligning financial activities with environmental goals, with support from the World Bank Group, the Central Bank of Azerbaijan Republic has recently developed the first Green Taxonomy in the country.

Azerbaijan became a member of IFC in 1995. Since then, IFC has invested around $900 million in Azerbaijan, financing nearly 60 projects in financial services, infrastructure, and manufacturing, as well as advising on improving the business environment, financial sector development, corporate governance, small and medium enterprises, and agribusiness.