EBRD, under its newly launched initiative, the Georgian Agricultural Finance Facility (GAFF), will be providing up to EUR 40 million to its local partner banks in Georgia for on-lending to farmers and other agricultural entities. Bank of Georgia, TBC Bank, VTB Bank Georgia and ProCredit Bank will be recipients of the framework financing.

According to EBRD, the facility aims to improve access to funding for primary and secondary agri-businesses, supporting the much needed regeneration of the country’s agricultural sector, one of the key drivers of the economy.

“This project reinforces the EBRD’s commitment to invest in the development of the agribusiness sector,” said Paul-Henri Forestier, EBRD Director for Caucasus, Moldova and Belarus. “It will have a significant impact on the food value chain, with benefits for both domestic suppliers and farmers.”

The facility will include up to EUR 5 million in technical cooperation support from the EU Neighborhood Investment Facility (NIF). It will help with the introduction of risk management policies and assist in rebuilding value chains by increasing the quality and profitability at the farm level.

As EBRD explained in a press statement, under its Local Currency Initiative, the partner banks have an option to borrow in Georgian Lari, so that sub-borrowers need not assume the foreign exchange risk. With this move, Georgia has become the first country in the Caucasus to benefit from the newly launched agricultural financing initiative.

“This support package to agriculture, which combines a substantial loan facility, a first recovery fund and technical assistance to the banks to help them in lending to the sector, is addressing one of the main constraints in promoting agriculture in Georgia: the current difficulty of the farmers to obtain capital to invest in improving their production,” said Juan Echanove, agriculture attachй for the EU delegation to Georgia.

GAFF is part of a joint initiative with KfW, German development bank which will provide additional funds for onlending.

Since the beginning of its operations in Georgia, the EBRD has invested approximately 1.6 billion EUR in over 136 projects, of which 94 million EUR was invested in the country’s agribusiness sector.

Source: www.georgiatoday.ge