Dr. Arman Vardanyan, fund manager of APM´s two micofinance funds, recently visited Armenia to observe the microfinance sector and to meet with investee Microfinance Institution SEF International and their micro-clients. Shortly before, the „Dual Return Fund – Vision Microfinance Local Currency“ invested in SEF International for the first time after a thorough due diligence. SEF was founded by World Vision International with the aim of improving the Armenian labour market for poor communities. 75 % of SEF´s clients are from poor, rural communities.
Dr. Vardanyan summarises his impressions: “Armenia has a successful record of transition by creating a favourable macro-economic environment based on a market economy. The global financial crisis had a major impact on Armenia. Despite this, the country could provide a 4.6% GDP growth in 2011. According to the World Bank, the effect of the financial crisis on rural and urban poverty has been dramatic—the poverty rate increased from 27.6% in 2008 to 35.8% in 2010. The poor have been supported through targeted social expenditures and pension increases, and as growth is picking up the number of people living in poverty is expected to fall. One of the most important conditions for sustaining economic growth is further improvement of the business and investment environment. Currently, Armenia is undertaking some institutional reforms and is committed to fully integrating itself into the world economy. Armenia strives to build closer economic ties with the EU. At present, the EU is Armenia's first trading partner and supports the country in strengthening its political and economic reforms.
In the Armenian microfinance sector competition is high. MFIs are working to improve their products and services to adapt to the increasing demands of many micro-clients. During my country visit to Armenia I met with executives and staff of SEF International. I was told that SEF shows sound financial performance and at the same time adhers strongly to its social mission. SEF plans to extend its network of branches and to offer new loan products to satisfy the needs of micro-borrowers, particularly in the agricultural sector. I also had the opportunity to visit several MFI branches and to meet micro-entrepreneurs face to face“.
Gegham Grigoryan is 48. He lives in Yerevan with his wife, a nurse, and 2 school-age children. Gegham operates a sewing workshop, where he produces medical uniforms. Gegham’s workshop is located at a rented premise in one of the hospitals in Yerevan. Prior to starting his business, Gegham worked as a tailor in a sewing company. At the beginning of the 90s, when Armenia underwent an economic crisis, it was very difficult to earn a sufficient income for the family. Gegham decided to found his own business to gain financial stability and ensure his family’s livelihood.
Gegham started up his business in 1993, when running a private business had just been legalised in Armenia. He was one of the pioneers of private production of medical uniforms in Yerevan. When almost all production in Armenia collapsed due to an energy crisis, Gegham continued running his business using generators. Due to his sense of purpose, Gegham developed his business further and gained a loyal and continually growing customer base. Gegham delivers his products not only to clients in Yerevan, but to all areas of Armenia. Gegham currently employs 4 tailors. When demand is high, he hires 2 additional tailors.
The expansion of his business required an increase in production and more material. To meet this challenge, Gegham applied to SEF International for a loan of USD 3,000, which he invested in purchasing textiles in bulk at a lower price. This allowed Gegham to complete all orders in time to and keep the development of his business stable.
Aram Begijanyan is 32 years old. He lives in Dimitrov village in the Ararat region with his wife and 2 children, a 4 year old daughter and a 6 year old son. Aram runs a farm where he breeds hens and ducks and keeps 2 green houses, where he grows peppers. He also keeps an orchard, where he grows apricot-, peach- and cherry trees. Aram’s wife, Serine, 26 years old, manages the household and helps her husband in running the farm. As the breadwinner in the family, Aram also sometimes repairs electrical equipment to improve his income.
After borrowing USD 1,500 from SEF International, Aram was able to improve his farm and to expand it. In particular, he increased the number of hens by purchasing 50 more. Aram also purchased a special incubator to hatch the eggs in just a few days. This allows Aram to gain income not only by selling eggs but also chickens.
Besides this, the microcredit helped Aram to improve his farm. He purchased fertilizer to cultivate the land and trees. Aram also renovated the green houses and bought polyethylene covers for them. These improvements had a positive impact on the harvest of the green houses and the orchard. Aram’s income from his farm increased by USD 30 and he now earns approx. USD 200 a month. This allows Aram not only to cover his family’s living costs but also to save for a future renovation of his house, which will further improve the quality of life for this young family.
About SEF International
SEF International Universal Credit Organization was founded in 1997 by World Vision International. Since 2009 SEF is governed and owned by Vision Fund International, a microfinance subsidiary of World Vision.
SEF provides loans for farmers, sole proprietors and small enterprises as well as renovation and consumer loans. The majority of their microcredits is used for retail businesses and agriculture. SEF´s free financial consultancy, quick loan application processing and flexible loan conditions are aimed to guide the client towards responsible borrowing, developing the business, improving household economy, creating healthy and sustainable lives for families and children.
SEF has a team of 129 employees (which doubled since 2009) and serves over 13.000 clients in 8 regions of Armenia: two branches in Yerevan, branches in Armavir, Gyumri, Sisian, Talin, Kapan, Artashat, and representative offices in Stepanavan, Yeghegnadzor, Goris and Meghri.
SEF finances their lending through equity capital, loans from different Microfinance Investment Vehicles such as the „Dual Return –Vision Microfinance Funds“, and through a partnership with kiva.org. They are planning to open another 2 branches this year and to cover the whole country by 2015. SEF will also launch new products in the near future such as educationa loan packages.
In order to measure the social impact, SEF uses three major indicators: number of jobs created, number of children`s lives impacted and number of female borrowers. The data for these three indicators is collected through the management information system, and available on a monthly basis.
SEF has been delivering visible results throughout its history. In total, SEF has extended over 49 million USD in loans to more than 47 clients, created and sustained more than 40,000 jobs and affected around 78,000 children.
Further success stories you can find in the category Field Reports.