IFC, BP and MFBA launch Supplier Finance Facility in Azerbaijan

Baku, May 10, 2007. IFC and The Micro Finance Bank of Azerbaijan (MFBA) today announced the launch of the Supplier Finance Facility (SFF) in Azerbaijan. This project is an innovative initiative which will improve access to finance for local suppliers to the oil and gas industry in the country. This project is the result in large part of the joint IFC-BP SME Linkages Project which has been providing technical assistance to local suppliers and SMEs. In mid-2006, as part of the Linkages activities, IFC, MFBA and BP implemented a pilot project to develop and test the SFF model. The pilot was a success and led to the launch of this $15 million investment project.
The SFF is a joint credit facility with funding provided by BP, IFC, and MFBA. Loans to local suppliers are backed in part by the local companies’ contracts with BP and its co-venturers (mainly shareholders in a number of oil and gas projects in Azerbaijan).
The SFF project is in line with BP and its partners’ target to double their total spending with locally-owned companies by 2010, raising it to over $500 million a year.
Local companies eligible to receive SFF loans will be pre-qualified by the BP Enterprise Centre. The Enterprise Centre was launched in May 2002 by BP and its co-venturers as a one-stop shop to help SMEs develop their business in support of major oil and gas developments in Azerbaijan.
“Insufficient collateral is one of the main factors that limit access to finance for SMEs and slows their development. The Supplier Finance Facility is specially designed to overcome this problem and will help MFBA provide an extra boost to SME development in Azerbaijan. MFBA is already working with over 18,000 businesses in Azerbaijan and is the leading financing partner of SMEs in the country. We are thus delighted to have another investment tool to offer Azeri SMEs.” Said MFBA General Manager Andrew Pospielovsky.
“This project is a great example of how IFC can bring together production companies and financial institutions to improve access to finance for local SMEs. Supplier finance is an exciting new initiative and IFC will seek to develop more such projects in the future.” said Jyrki Koskelo, Director of IFC’s Global Financial Markets Department.

“Through the implementation of this project, IFC recognizes the importance of the development of the oil and gas service sector for Azerbaijan’s long-term development,” said Shahbaz Mavaddat, Director of IFC’s Southern Europe and Central Asia Department. “This project also highlights the very positive role SMEs can play in this development,” he added.

About IFC
The International Finance Corporation, the private sector arm of the World Bank Group, promotes sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. Its 178 member countries provide its share capital and collectively determine its policies. From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications.

About MFBA
Micro Finance Bank of Azerbaijan (MFBA), is full service bank owned by six shareholders: the European Bank for Reconstruction and Development, the International Finance Corporation, the Black Sea Trade and Development Bank, KfW Development Bank - the development agency of the German Government,
Access Microfinance Holding and LFS Financial Systems GmbH - a German consulting company that is also responsible for the management of the Bank.
The corporate mission of MFBA is to be the leading provider of financial services to privately owned Micro, Small and Medium-sized Enterprises (MSME) in Azerbaijan, and one of the leading Banks in the country. It served over 25,000 clients, including over 18,000 businesses, through 13 branches across