Finance

A cash machine in every village

Innovative microfinance in Georgia

Microfinance company Credo serves half of all Georgian microfinance borrowers. In a fiercely competitive market, Credo has reached this leading position through creative innovation and 2,500 village counsels.

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Georgia – a mountainous country bordering on the Black Sea, Russia, Turkey, Armenia and Azerbaijan – has 4.5 million inhabitants and fertile market conditions. This has led to strong competition between its 21 banks and 15 mature microfinance institutions.

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Although around 50% of the working population is employed in agriculture, the sector accounts for only 9% of the country’s gross domestic product (GDP). Its main source of income is the service sector, which generates 68 % of GDP.

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While 36% of the population live on less than USD 2 a day, almost every Georgian can access loans. This is due to a successful expansion of the financial sector, driven by a highly developed and professional microfinance sector.

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Credo is the leading microfinance company in Georgia, in terms of growth, returns and portfolio. responsAbility funds have been providing fixed-rate financing  to Credo since 2008. responsAbility now has a seat on the Credo Board of Directors.

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Credo has 1,500 employees, 52 branches and a unique distribution network in the villages. Cash machines can be used for loans and repayments: Credo clients need to visit a branch only once.

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Credo CEO Zaza Pirtskhelava says that after the conflict with Russia in 2008, the company decided to focus on rural areas and on serving the needs of farmers. “We never had much growth capital at our disposal,” he explains, “so we had to be inventive.”

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Credo invited villagers to appoint one individual to liaise with the company. These individuals know the inhabitants and have an insight into how they manage their money. Credo can then ensure no unreasonable loan applications are submitted, while assisting entrepreneurs to expand. 

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Pikria Bandzeladze runs a taxi company in Tbilisi. She received a start-up loan from Credo. “I was turned down everywhere else,” says Pikria. “The team at Credo not only gave me a loan but also advised me on how to use the money most effectively.”

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Between 500–600 passengers a day use the company’s taxi services. Around 100 taxis drive for Pikria. Her goal is to have 400.

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Georgia is one of the world’s oldest wine-growing regions. Winemaker Otari Berdzenishvili from Tsinandali is a large client of Credo.

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Otari has a loan of USD 6,000 from Credo. It enables him to buy additional cattle and put money aside for his children.

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Rochus Mommartz, member of the Executive Management of responsAbility, says Credo is a reliable client for debt financing and an attractive equity investment. responsAbility wants to work with Credo on a long-term basis and is expanding its commitment to the company.

Case-Study-Georgien-EN

Read the complete ‘A cash machine in every village’ case study and see how microfinance is helping drive the development of Georgia’s financial sector.

Read the complete ‘A cash machine in every village’ case study and see how microfinance is helping drive the development of Georgia’s financial sector.

Read the complete ‘A cash machine in every village’ case study and see how microfinance is helping drive the development of Georgia’s financial sector.