The FINANCIAL — IFC, a member of the World Bank Group, is providing $60 million to Burgan Bank, the subsidiary bank of Kuwait’s Burgan Bank Group in Turkey, to expand access to finance for small and medium enterprises (SMEs), the driving source of growth and job creation in the country.
IFC’s financing comprises a six-year $40 million loan on its own account and a $20 million loan through the IFC Managed Co-Lending Portfolio Program, a syndication program that allows institutional investors to passively participate in IFC’s senior loan portfolio.
Murat Dinç, Burgan Bank CEO said: “Our aim is to always understand and analyze the needs of our customers while developing our products and services. This partnership with IFC will help strengthen our position in Turkey’s financial system, and create a long-term funding source for the bank to provide finance to our customers, especially SMEs. We are continuing to work on diversifying our funding base and this transaction is another step in reaching our targets.”
SMEs make up about 90 percent of Turkey’s economic activity, but receive only 27 percent of total bank loans, despite this. Access to finance is still one of the biggest constraints on business growth for SMEs, according to IFC.
“There is broad recognition that SME growth will be a central driver of economic growth over the next decade,” said Manuel Reyes-Retana, IFC Regional Industry Head of Financial Institutions Group in Europe, Middle East, and North Africa. “SMEs form the backbone of the Turkish economy but often struggle to reach their potential. Financial institutions like Burgan Bank can play a significant role in expanding resources to these businesses so they can innovate, create jobs and tap into global markets.”
IFC has supported private sector development in Turkey for 50 years. Turkey is the third-largest country exposure for IFC globally. IFC has invested $4 billion in private sector projects in Turkey thus far, in line with the World Bank Group’s Turkey Country Partnership Strategy for fiscal years 2012 to 2016.
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