Adedapo Adesanya
By Adedapo Adesanya
The International Finance Corporation (IFC) has invested $125 million to help address the critical financing needs of Turkey’s micro, small, and medium enterprises (MSMEs) in the agricultural sector.
IFC is investing the $125 million as part of a larger $610 million equivalent Diversified Payment Rights (DPR) issuance by DenizBank A.Ş., alongside other investors, including the European Bank for Reconstruction and Development and Proparco.
The financing is designed to address the funding gap faced by smaller businesses and smallholder farmers, a segment which bears a disproportionately higher burden in accessing credit. It will also help to preserve jobs and aid economic recovery, with a particular focus on earthquake-impacted areas.
Insufficient credit availability continues to hinder economic growth in Turkey. Smaller enterprises face a substantial financing gap of $62.5 billion – around 7 per cent of GDP. According to The World Bank 2019 Enterprise Survey for Turkey, 29 per cent of businesses identified access to finance as their major hurdle.
In a statement seen by Business Post, it was revealed that 15 per cent of the funds would be channelled to smaller enterprises in areas affected by the devastating earthquake which struck Turkey in February 2023.
“We find it very valuable to secure long-term and cost-effective funding from abroad,” said DenizBank’s CEO Mr Hakan Ateş. “While this funding will be extended to the financing of agriculture, in addition, we will continue to increase our efforts, which we initiated to heal the wounds of our citizens and businesses affected by the earthquake, in order to restore the region after the greatest natural disaster in the history of Türkiye, together with this funding.”
IFC’s funding will support DenizBank’s efforts to further grow its lending to small agricultural enterprises during a challenging economic period. DenizBank, which possesses substantial expertise in farmer-oriented lending, is the second-largest agricultural lender in the country and the largest among privately owned banks.
The bank is a long-standing client of IFC and continues to be a partner in addressing the financial needs of small farmers in the country. In 2021, IFC invested $150 million in a similar DPR issuance.
“With this financing, we are directly aiming to support Turkish agribusiness MSMEs and smallholder farmers, to keep businesses afloat and boost economic growth,” said Mr Wiebke Schloemer, IFC Director for Turkey 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 economy.”
