Summary of Proposed Investment
Project Number
11403
Company Name
ACBA Leasing Credit Organization CJSC
Date SPI Disclosed
Mar 29, 2002
Country
Armenia
Industry
Financial Markets
Projected Board Date
May 15, 2002
Status
Completed
Sector
Leasing Services
Department
Global Industry, Financial Markets
Environmental Category
FI
Previous Events
Approved : Jun 21, 2002
Signed : Mar 20, 2003
Invested : Apr 23, 2003
Project Description
The Armenian financial system is very small, with the banking system (by far the largest component) accounting for assets equivalent to only 20 percent of GDP. Unless the financial infrastructure is strengthened, the financial system is unlikely to be able to deliver the growth-generating financial services that Armenia urgently needs.
· Conducted initial assessments and studies of the legal, regulatory and market environments for leasing and advised the government on the necessary regulatory changes to enable the establishment of the leasing industry
· Brought together the essential foreign and local partners
· Helped develop the innovative project concept with a successful mix of equity investors, technical assistance provider and a very strong local sponsor.
The project will have crucial developmental benefits for Armenia:
Development of financial infrastructure. Establishment of the first commercial leasing institution is an essential systemic development for the emerging financial sector in Armenia. The AL by virtue of its successful launch of operations will demonstrate how efficient use of modern financial instruments enable adaptation of the financial intermediaries to the growing needs of the private sector.
Private sector development. Access to leasing will enable small and medium-sized enterprises, the most dynamic segment of the Armenian economy, to expand their production facilities. Leasing will introduce a viable alternative to loans for the smaller enterprises without the need for compliance with extensive collateral requirements. Many of the new investments in assets will simply not occur in the absence of leasing. Thus, the project will expand the overall amount of credit to the Armenian industry as well as facilitate the transfer of efficiency-enhancing technologies and business management techniques to potential lessees.
Poverty Alleviation. Indirect developmental effects of the project are significant since investment in small and medium scale enterprises will have a significant multiplier effect on several vast groups of their downstream suppliers, such as farmers. Small and medium enterprises are the major source of new employment and growth in Armenia.
Foreign exchange earnings: The project is expected to expand domestic production, and thereby reduce the need to import; and will help over time to lower the demand for foreign exchange. Moreover, due to the limited size of the Armenian market, a substantial part of AL’s clients would be potential exporters, who will acquire new technology and equipment to become more competitive for exports of their products and services.
· Conducted initial assessments and studies of the legal, regulatory and market environments for leasing and advised the government on the necessary regulatory changes to enable the establishment of the leasing industry
· Brought together the essential foreign and local partners
· Helped develop the innovative project concept with a successful mix of equity investors, technical assistance provider and a very strong local sponsor.
The project will have crucial developmental benefits for Armenia:
Development of financial infrastructure. Establishment of the first commercial leasing institution is an essential systemic development for the emerging financial sector in Armenia. The AL by virtue of its successful launch of operations will demonstrate how efficient use of modern financial instruments enable adaptation of the financial intermediaries to the growing needs of the private sector.
Private sector development. Access to leasing will enable small and medium-sized enterprises, the most dynamic segment of the Armenian economy, to expand their production facilities. Leasing will introduce a viable alternative to loans for the smaller enterprises without the need for compliance with extensive collateral requirements. Many of the new investments in assets will simply not occur in the absence of leasing. Thus, the project will expand the overall amount of credit to the Armenian industry as well as facilitate the transfer of efficiency-enhancing technologies and business management techniques to potential lessees.
Poverty Alleviation. Indirect developmental effects of the project are significant since investment in small and medium scale enterprises will have a significant multiplier effect on several vast groups of their downstream suppliers, such as farmers. Small and medium enterprises are the major source of new employment and growth in Armenia.
Foreign exchange earnings: The project is expected to expand domestic production, and thereby reduce the need to import; and will help over time to lower the demand for foreign exchange. Moreover, due to the limited size of the Armenian market, a substantial part of AL’s clients would be potential exporters, who will acquire new technology and equipment to become more competitive for exports of their products and services.
Sponsor / Cost / Location
Development Impact
Related ESRS/ERS
Contacts
For Inquiries About the Project, Contact
Mr. Stepan Gishyan, General Manager
ACBA
Tel: (3741) 56 58 58
Fax (3741) 15 17 55
Email: acba@arminco.com
ACBA
Tel: (3741) 56 58 58
Fax (3741) 15 17 55
Email: acba@arminco.com