national benchmarking study of azerbaijan mf sector september 2008 nigar pirmammadova, azerbaijan...
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National Benchmarking Study of Azerbaijan MF sector
September 2008
Nigar Pirmammadova, Azerbaijan Micro-finance Association Finance Manager
4th Azerbaijan Micro-finance Conference, 16-17 September, 08
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Benchmarking Azerbaijan Microfinance 2007
National Benchmarking Study of Azerbaijan MF sector( since October 2005)
Our Strategic Partners & Donors BP & its co-venturers in the Azeri-Chirag-
Guneshli, Shahdeniz, Baku-Tbilisi-Ceyhan and South Caucasus Pipeline projects (RDI)
UNDP Azerbaijan Eurasia Foundation
4th Azerbaijan Micro-finance Conference, 16-17 September, 08
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What does Benchmarking serve?
Benefits of Benchmarking
Increases Transparency Attracts Government Attention and Support Enables Access to Capital Attracts New Investors to Market Increases Scaling and Outreach of MFI Operations Facilitates Economic Growth Aids in Poverty Reduction Provides Comparative Information for Improving
Financial and Social Performance Extends Reach to Global Networks
4th Azerbaijan Micro-finance Conference, 16-17 September, 08
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Report Structure
Country Overview Introduction Macroeconomic
indicators Economic Overview Legal and Regulatory
Environment in Microfinance Sector
Comparative Measurements Outreach and Scale Financial Structure Ratio Analysis Results Information about MFIs, CU
took part in preparation Benchmarking Report
4th Azerbaijan Micro-finance Conference, 16-17 September, 08
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Macroeconomic indicators
1514
2241
2981
26,4%
34,5%
25,0%
0
500
1000
1500
2000
2500
3000
3500
2005 2006 2007
0%
10%
20%
30%
40%
50%
60%
GDP per capita
Real growth rate
Inflation rate December to December (%)
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
2001 2002 2003 2004 2005 2006 2007
GDP per capita(AZN)/ Real growth rate % Inflation rate (%) 2001-2007 years
Source: The State Statistical Committee of the Azerbaijan Republic
4th Azerbaijan Micro-finance Conference, 16-17 September, 08
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Legal and Regulatory Environment in Microfinance Sector
The working Group consisted of Azerbaijan Microfinance Association`s leading members on developing the Draft Law on Non-bank Credit Organizations was established under USAID “SME Support through Financial Sector Development Project” implemented ACDI/VOCA and with the support National Bank officials.
The main goal of developing the Draft Law is to create fruitful environment for micro-loans and to provide guarantee in serving the poor population expanding the financial service types by Non-bank Credit Organizations
If the Parliament passes the law, non-bank credit organizations will face the following requirements:
Higher capital requirements: Article 7.2 of the draft law stipulates that the minimum capital requirement for non-bank credit organization holding collateral deposits should be no less than AZN 250,000 (302,500 USD) and no less than AZN 25,000 (30,250 USD) for those not collecting collateral deposits. Currently, the capital requirement stands at AZN 6,050 (5000 USD).
More involvement and control of the NBA over microfinance operations
4th Azerbaijan Micro-finance Conference, 16-17 September, 08
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Azerbaijan Microfinance is young....
Azerbaijan Microfinance Sector is 10 years
MFIs middle age is 7,5 years
15 MFIs, 12 commercial banks and 40 Credit Unions provide microfinance service
4th Azerbaijan Micro-finance Conference, 16-17 September, 08
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Outreach and Scale Number of Active Borrowers and Total Loan Portfolio have increased during last years and continue to grow
Source: AMFA Matrix 31 December, 07 and Mix Market PEER group information
Number of Active clients and Gross Loan Portfolio 2005-2007
254 854
120 960
70 413
0
50 000
100 000
150 000
200 000
250 000
300 000
2005 2006 2007
Nu
mb
er o
f A
ctiv
e B
orr
ow
ers
0
70
140
210
280
350
420
To
tal
Lo
an P
ort
foli
o i
n m
ln o
f U
SD
Total Borrowers
Total Loan Portfolio in mlnof USD
Number of Active clients and Gross Loan Portfolio 2007 year
6 3656 882
8 964
3 939
0
2 000
4 000
6 000
8 000
10 000
Azerbaijan Armenia Georgia Central Asia
Num
ber o
f Act
ive
Borro
wers
0
2 000 000
4 000 000
6 000 000
8 000 000
Tota
l Loa
n Po
rtfol
io in
mln
of U
SD
Total Borrowers
Total Loan Portfolio in mlnof USD
4th Azerbaijan Micro-finance Conference, 16-17 September, 08
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Outreach and Scale
• Sector dominated by FINCA and MFBA.
•FINCA and MFBA captured about 75 percent of new market share.
• New development: Significant growth for CredAgro
Other, 10% Other, 6%AzerCredit, 3%
CredAgro, 8% CredAgro, 17%
FINCA - AZE, 35%FINCA - AZE, 20%
MFBA, 42%MFBA, 54%
AzerCredit, 5%
0%
20%
40%
60%
80%
100%
Borrowers Gross Loan Portfolio
Number of Active Clients and Gross Loan Portfolio %
4th Azerbaijan Micro-finance Conference, 16-17 September, 08
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Azerbaijan Microfinance is growing… Average loan balances have increased during last years
and continue to grow
Average Loan Balance per Borrower 2004-2007
Azerbaijan Armenia Georgia Central Asia
2004 335 523,5 584 518
2005 399 617,5 649,5 434
2006 561 755,5 1034 529
2007 778 957 1150 703
0
200
400
600
800
1000
1200
1400
2004 2005 2006 2007
USD
Azerbaijan
Armenia
Georgia
Central Asia
Average Loan Balance per Borrower PEER groups
4th Azerbaijan Micro-finance Conference, 16-17 September, 08
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Financial Structure• 95 percent of short and long term funding comes from foreign sources. • The terms for foreign funds increased from 47 to 55 months, while interest rates stayed around 9 percent on average. •The proportion of all borrowings from foreign funds now stands at 69 percent, up from 54 percent in 2006. •Largest increases in amounts came from foreign funds (223 percent increase) and foreign NGOs (225 percent increase).
0%
10%
20%
30%
40%
50%
60%
70%
Foreign
Commercial Bank
Foreign Fund Local
Commercial Bank
Local
Government
2006
2007
4th Azerbaijan Micro-finance Conference, 16-17 September, 08
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Ratio Analysis
0,0
0,1
0,2
0,3
0,4
0,5
0,6
0,7
0,8
0,9
Azerbaijan Armenia Georgia Central Asia
Portfolio at Risk > 30 day (%)
Portfolio at Risk > 30 days (%)
Azerbaijan Armenia Georgia Central Asia
2007 0,2% 0,2% 0,7% 0,9%
4th Azerbaijan Micro-finance Conference, 16-17 September, 08
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Long term outcomes achieved under Benchmarking Study project
13 Azerbaijani MFIs, 3 banks and 2 CU have published audited financial data at www.mixmarket.org
8 Azerbaijani MFIs have successfully passed credit ratings by Microfinanza Rating & M-Cril
Findev and Viator MFIs got 2006 International Financial Transparency Award Diploma & cash price of US$ 10,000 by CGAP at 10th MFC Annual Conference “Bridging the Market Gaps” organized by Microfinance Centre in Sophia, Bulgaria during May 29- June 2, 2007.
10 New Investors provided commercial capital to Azerbaijani MF sector in 2007.
4th Azerbaijan Micro-finance Conference, 16-17 September, 08
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THANK YOU FOR YOUR ATTENTION!
Contact : phone: 437 16 45
nigarp@amfa.azwww.amfa.az
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