Summary of Proposed Investment
Project Number
10347
Company Name
ProCredit Bank JSC
Date SPI Disclosed
Oct 2, 2001
Country
Georgia
Industry
Financial Markets
Projected Board Date
Nov 5, 2001
Status
Completed
Sector
Commercial Banking - Microfinance and Small Business
Department
Global Industry, Financial Markets
Environmental Category
FI
Previous Events
Approved : Nov 16, 2001
Signed : May 10, 2002
Invested : Jun 21, 2002
Project Description
The funds of the project will be used for sub-loans to micro and small enterprises (SMEs) in Georgia.
IFC Role: By providing the proposed loan to MBG, IFC is clearly demonstrating its commitment to support the bank. IFC is also supporting MBG''s lending to small and medium enterprises (SMEs) that otherwise would not have access to the financial sector in Georgia. In addition, by placing a representative on MBG’s Board, IFC is able to (i) assist in the bank’s strategic development; (ii) gain insights into the Georgian banking sector; and (iii) develop and leverage its experience with microfinance institutions.
Development Impact:
Benefits to small and micro-enterprises: The project will help improve SMEs access to credit, enabling them to raise their productivity and employment. The inability to obtain financing for expansion, modernization, or any other business objective, is one of the most serious constraints to private sector development in Georgia.
Another serious constraint to private sector development is the lack of business know-how among current or potential entrepreneurs, particularly in assessing their own financial situation and needs, and in their general knowledge of and trust in transacting with a formal financial institution. MBG is trying to address this issues and help to build a culture of responsible lending and borrowing.
Benefits to the banking sector: The trust and experience that MBG builds with borrowers will not only benefit the bank, but spillover into the financial sector overall. In addition, MBG is starting to expand regionally, moving into areas where there is only nominal banking activity. In doing so, the bank will contribute to the regional development of Georgia. The bank would also serve as a role model to other Georgian banks by: (i) showing that the SME market can be profitable if it is targeted efficiently, and (ii) highlighting the significance of operating policies, transparent reporting, environmental screening procedures, and a clear governance structure.
IFC Role: By providing the proposed loan to MBG, IFC is clearly demonstrating its commitment to support the bank. IFC is also supporting MBG''s lending to small and medium enterprises (SMEs) that otherwise would not have access to the financial sector in Georgia. In addition, by placing a representative on MBG’s Board, IFC is able to (i) assist in the bank’s strategic development; (ii) gain insights into the Georgian banking sector; and (iii) develop and leverage its experience with microfinance institutions.
Development Impact:
Benefits to small and micro-enterprises: The project will help improve SMEs access to credit, enabling them to raise their productivity and employment. The inability to obtain financing for expansion, modernization, or any other business objective, is one of the most serious constraints to private sector development in Georgia.
Another serious constraint to private sector development is the lack of business know-how among current or potential entrepreneurs, particularly in assessing their own financial situation and needs, and in their general knowledge of and trust in transacting with a formal financial institution. MBG is trying to address this issues and help to build a culture of responsible lending and borrowing.
Benefits to the banking sector: The trust and experience that MBG builds with borrowers will not only benefit the bank, but spillover into the financial sector overall. In addition, MBG is starting to expand regionally, moving into areas where there is only nominal banking activity. In doing so, the bank will contribute to the regional development of Georgia. The bank would also serve as a role model to other Georgian banks by: (i) showing that the SME market can be profitable if it is targeted efficiently, and (ii) highlighting the significance of operating policies, transparent reporting, environmental screening procedures, and a clear governance structure.
Sponsor / Cost / Location
Development Impact
Related ESRS/ERS
Contacts
For Inquiries About the Project, Contact
Masahiro Miura, Investment Officer
Email: Mmiura@ifc.org
Email: Mmiura@ifc.org