The Asian Development Bank to Finance Project for Rural Population in Georgia

The Asian Development Bank (ADB) will allocate 60 million Georgian lari ($22.3 million) loan and a $500,000 technical assistance grant to Georgia’s Credo Bank (Credo) to launch new products including home improvement and mortgage loans to lower-income households in rural areas and on the outskirts of Georgia’s capital, Tbilisi.

The bank reports that the loan is provided in Georgian lari (GEL) supporting Georgia’s strategy to increase the use of local currency and reduce foreign currency-induced credit risks of the beneficiaries and banks.

“This is ADB’s second project with Credo and it allows the bank to expand its services to small business and rural household customers, most of whom are women,” said ADB Lead Investment Specialist for Private Sector Operations Rainer Hartel said, adding the bank is proud to work with Credo Bank to reach underserved regions, boosting economic activity and affordable housing to enhance Georgia’s sustainable and inclusive growth.

As explained by the bank, Credo’s long-term loans will particularly benefit women-headed households, who represent the majority of the bank’s clients, not only by improving living conditions but also by broadening rural income generation through the construction of homestays.

“The technical assistance aims to improve Credo’s outreach to 1,300 remote village communities through fintech solutions covering payment, savings, and loan services, as well as financial literacy and entrepreneurship training through Credo’s academy services,” the information reads.

ADB expects that the assistance will support the wellbeing of the rural population and help address poverty in the regions as around 43% of Georgians live in rural areas and 27% in regional towns, with a vast number working in small enterprises or in subsistence farming.

In early April, in its Outlook 2019 – Strengthening Disaster Resilience - ADP predicted a 5% economic growth in Georgia this year, and a 4.9% increase in 2020.

The outlook reads that the development of workforce skills will help Georgia strengthen the business environment and infrastructure building and this will, in turn, contribute to the attraction of investments in high-revenue sectors.

Also, the ADB reported that export and consumption will contribute to economic growth. The outlook says that in 2019, growth will be detected in the financial sector with respect to the retail and wholesale trade while high investments will speed up the growth of agriculture to 2.8%

Since 2007, ADB has provided non-sovereign loans totaling $255 million to banks in Georgia.

In total, over $2.8 billion has been approved for Georgia’s development from the ADB since the mentioned period, which includes $1.4 billion from regular ordinary capital resources (OCR), $902 million from concessional OCR, $455 million in non-sovereign lending, $17 million in technical assistance, and trade finance.