A targeted new investment by IFC, a member of the World Bank Group, will help address the critical financing needs of Turkey's underserved micro, small, and medium enterprises (MSMEs) in the agricultural sector, helping preserve jobs and accelerate the country's economic recovery.
IFC is investing $150 million as a part of an approximately US$435 million equivalent Diversified Payment Rights (DPR) issuance of DenizBank A.Ş. (DenizBank). Other investors include the European Bank for Reconstruction and Development, Credit Suisse, and Emirates NBD.
Photo Credit: Aksel Kirci-Bursa
MSMEs, continue to be the worst affected by the COVID-19 pandemic in Turkey. Vital to Turkey's economic growth, they account for 99 percent of its businesses, more than 73 percent of employment, and 58 percent of the country's investment. Yet, access to finance for MSMEs remains severely constrained and they are susceptible to credit-cycle fluctuations. Moreover, the pandemic has disrupted the potential growth of the agricultural sector, mainly composed of MSMEs. The sector accounts for 6.5 percent of Turkey's GDP (gross domestic product) and 15 percent of its exports.
“As DenizBank, we provide 45% of the funding to the agricultural sector among private banks. However, I believe that besides our market share, the innovative solutions we offer to the sector have a great impact on this loan that we get from IFC. For example, our mobile application specific to farmers, namely 'Deniz'den Toprağa', which has unique features all around the globe, is one of the key indicators of the responsibility we take for the digital transformation of agriculture” said Hakan Ateş, DenizBank Financial Services Group, CEO. “While sustainability of access to food becomes vital during the pandemic period, we will put all the resources secured to service our farmers so that they can continue and grow their business and make it profitable.”
IFC's funding will enable DenizBank to continue to provide financing to agricultural MSMEs in rural areas. This is in line with IFC's strategy to support the deepening and diversification of capital markets in the country by leveraging diverse instruments, including DPRs.
“With this financing, we are directly aiming to support the Turkish agribusiness MSMEs, especially in these challenging times, to keep businesses afloat and boost economic growth,” said Vittorio Di Bello, IFC's Regional Head of Industry for Financial Institutions in Europe and Central Asia. “We look forward to further strengthening our collaboration with DenizBank and will continue to seek out new projects to increase access to finance to the underserved segments in the country.”
IFC has supported private sector development in Turkey for over 50 years, with a committed exposure of over $4 billion in the country as of June 2020.
This article was originally published by IFC.