IFC Partners with Armenian Banks to Boost Financial Inclusion, Support Climate Projects

• IFC joins forces with three Armenian banks to support smaller businesses, agribusinesses, women entrepreneurs, and climate initiatives.
• Acba and Converse banks will receive IFC's first risk sharing facilities in Armenia.
• IFC's partnership with Evocabank to increase access to finance for micro and smaller business, particularly climate projects and women-owned enterprises.

Yerevan, Armenia, December 12, 2024-IFC signed agreements with three Armenian banks to enhance access to finance for smaller businesses, including women-owned and rural enterprises and climate projects.

Smaller 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. But they face a $1.1 billion finance gap because of 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 and loans.

To address this, IFC is establishing the country's first risk sharing facilities with two Armenian banks and providing a loan to a third for on-lending to micro and smaller businesses. Risk sharing facilities enable IFC to share the risk of losses on portfolios of eligible loans or other assets. The three agreements are all part of IFC's strategy to support Armenia's banking sector and enable smaller businesses to grow.

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 $50 million-equivalent portfolio of loans to small and medium enterprises (SMEs). They include women-owned enterprises, agribusinesses, and businesses in rural areas.

In the next agreement, IFC will provide a risk sharing facility of up to $5 million-equivalent to Converse Bank to cover 50 percent 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.

Both projects are part of IFC's Small Loan Guarantee Program, which is supported by a financial guarantee from the European Commission's European Fund for Sustainable Development (EFSD). The Small Loan Guarantee Program pools together IFC risk-sharing facilities with IFC's partner financial institutions to help de-risk and scale up financing for smaller businesses.

Finally, IFC will provide a $10 million loan to Evocabank and also aims to syndicate up to $10 million from other partners to support on-lending to MSMEs. Half of the proceeds will be allocated to climate projects and 25 percent to women-led enterprises. The partnership will also support the development of climate finance by promoting green lending standards.

In Armenia, IFC aims to help close infrastructure gaps and reduce carbon footprints through investments in renewables, and climate adaptation. It boosts access to finance for MSME and supports a greener economy with financial institutions. IFC also plans to support capital markets development, public-private partnerships, and improve connectivity, focusing on transport and information and communication technology.