IFC Provides $20M Loan to Bank Respublika to Boost MSME Access to Climate Finance in Azerbaijan

Investment Supports Sustainable Growth, Expands Financial Access for Low-Income Households and Climate Projects.

The International Finance Corporation (IFC) has approved a $20 million loan in local currency to Bank Respublika, a leading financial institution in Azerbaijan. This investment is designed to improve access to finance for micro, small, and medium enterprises (MSMEs), low-income households, and climate-related projects across the country.

Azerbaijan has committed to reducing its greenhouse gas emissions by 40 percent by 2050, with an ambitious new target of achieving this by 2035. To meet these targets and foster long-term resilience, the country faces a substantial investment challenge, estimated at $44 billion by 2060—approximately $1.35 billion per year, according to the World Bank Group’s Country Climate and Development Report. The financial sector will play a critical role in bridging this funding gap, offering significant potential for growth in the coming years.

To this end, half of the new loan from IFC to Bank Respublika is earmarked for financing climate-related projects led by MSMEs and low-income households. By targeting these sectors, the financing will help foster sustainable growth and contribute to Azerbaijan’s climate goals, while also improving economic resilience for vulnerable communities.

“This investment aligns with the World Bank Group’s strategy for Azerbaijan, which prioritizes enhancing financial access for climate-related projects,” said a spokesperson for IFC. Azerbaijan is currently hosting COP29, underscoring its commitment to advancing climate finance and supporting sustainability-focused reforms. To guide sustainable investments, the country has also developed the first Green Taxonomy, with the support of the World Bank Group and the Central Bank of Azerbaijan Republic, which aims to provide a clear framework for aligning financial activities with the country’s environmental goals.

This new loan builds on IFC’s longstanding relationship with Azerbaijan, where it has been an active partner since 1995. Over the years, IFC has invested nearly $900 million in the country, funding close to 60 projects across diverse sectors such as financial services, infrastructure, manufacturing, and agribusiness. In addition to financing, IFC has also provided valuable advisory services to strengthen the business environment, financial sector development, corporate governance, and the growth of small and medium-sized enterprises (SMEs).

The partnership with Bank Respublika is a crucial step toward leveraging private-sector financing to achieve Azerbaijan’s climate and development targets. By demonstrating the effectiveness of this type of lending, IFC aims to enhance the role of the financial sector in supporting sustainable and inclusive growth, particularly in the face of climate change challenges.

Through this initiative, IFC is not only contributing to the growth of Azerbaijan’s economy but also helping to build a more resilient, sustainable, and climate-conscious future for the country’s people and businesses.