Agrilending in Armenia

The agricultural sector plays a key role in the Armenian economy, generating about one fifth of the country’s GDP and employing 46% of the working population. However, the sector accounts for only about 6% of the Armenian banks’ overall loan portfolio. The low level of agricultural bank lending can be explained, at least partly, by the specific characteristics of the sector and by the main factors determining the demand for agricultural finance in Armenia. Whereas access to basic banking and agricultural financing products exists in most areas, the importance of the agricultural sector is not yet reflected in the banks’ lending figures. The objective of the Agricultural Sector Programme is to contribute to the expansion of sustainable lending to agricultural MSMEs in Armenia, thus contributing to the broadening and deepening of the financial sector as well as to creating and securing employment and income in rural areas. As for previous financial sector projects in the MSME and housing sector in Armenia, the programme will be implemented in cooperation with Participating Financial Institutions (PFIs) via the German Armenian Fund (GAF) located at the Central Bank of Armenia (CBA). The financing will be channelled in form of local currency loans via 5 PFIs to agricultural MSMEs. The Project Management Unit (PMU) of GAF will manage the project (e.g. selection of PFIs, on-lending of funds to PFIs, auditing, monitoring and reporting as well as overseeing of the consulting services).