Financed ProjectsDICA - SME Financing

Identification Code:

OP/20/0044

Total Operation Cost:

6.000.000

Maturity:

66 months

Operation Status:

Description and Purpose of the Operation:

Through DICA BSTDB will be able to finance a large number of Armenian SMEs, including many agricultural businesses, which will contribute to development of national economy. This will promote job creation, income generation (and additional taxes), improve companies’ infrastructure, and potentially increase trade turnover between BSEC countries since some of SMEs are exporters or are involved in foreign trade. This Loan will also contribute to post-pandemic SME sector recovery.

Countries of Operation:

Armenia (100,00 %)

Financial Product:

SME's

Sector:

Financial Institutions

Domain:

Private

Borrower/Client:

"Development and Investments Corporation of Armenia" Universal Credit Organisation CJSC, a company organized and existing as a universal credit organisation closed joint-stock company under the laws of Republic of Armenia.

Co-Financiers/Participants:

n/a

Guarantors/Sponsors:

n/a

Developmental and Regional Cooperation Impact:

The operation involves a new loan in an amount of up to USD 6 million and is expected to have modest but favorable economic benefits for the Armenian economy, the most relevant being additional tax revenue gains from increased economic activity under the additional amount provided. Also, the additional amount provided will help further enhance benefits such as increases in employment, increase in export capacity and competitiveness, and multiplier effects for other parts of the economy. The regional cooperation element is similarly expected to be modest. Other BSTDB countries are important trade partners for Armenia so to the extent SMEs benefiting from financing from the operation engage in export activities, there will be regional cooperation benefits.

Environmental Classification and Impact (summary):

The Borrower has developed and duly implemented an environmental and social (E&S) management system which is governed by its E&S Management Policy. According to the policy statements DICA commits to identify and assess any E&S risks and impacts which might be associated with its lending activities and take preventive measures to avoid and\or mitigate such risks and impacts and integrate these aspects into the credit approval process. The Borrower has also developed appropriate internal regulations to support the policy statements the main one being the regulation of the Environmental Impact and Social Risk Management and was approved by its Board of Directors. The regulation incorporates the basic elements necessary to ensure a good E&S risk management by a financial institution. These include the preliminary screening by the loan officers of any new request for financing against the internal exclusion list, which is compatible with the BSTDB Exclusion List, as well as national legal and regulatory requirements; assigning of the E&S risk category - A, B and C; conducting of a basic E&S analysis for category A and B projects; identification of the necessary mitigation measures and translating these into covenants of the credit contracts, which also include annual reporting requirements. Overall, DICA has a functioning E&S management system that allows to deal efficiently with risks and impacts that potentially may arise from its financing activities. The due diligence concludes that the Borrower meets the E&S requirements of BSTDB towards financial intermediaries.

Operation Leader:

Financial Institutions II

E-mail:

fi2@bstdb.org