Armenia

Present in Armenia since 2013, the AFD group finances projects that contribute to the fight against climate change and work for just and inclusive transitions. We support the sustainable management and preservation of natural resources, energy transition, public finance management and urban services.

Context

A small country of three million people in South Caucasus, Armenia has faced many economic, climatic and social challenges since its independence in 1991.

The Armenian government is committed to implementing a reform plan that addresses the country’s structural weaknesses. With the support of international donors, it is meeting major challenges: support energy independence, strengthen the country’s resilience and connectivity, fight poverty, improve agricultural productivity, modernize infrastructure, optimize the business climate and fight climate change.

The AFD group has been operating in Armenia since 2013 under a “green and inclusive growth” mandate. AFD finances development projects through loans and grants, including grants delegated by the European Union. It is mainly active in the sectors of irrigation, rural development and energy efficiency, and supports public policy reforms, particularly in the area of public finance management. Proparco, a subsidiary dedicated to the private sector, supports the Armenian financial sector targeting SMEs and farmers as well as manufacturing and agri-food companies through lines of credit and loans. Expertise France, the Group’s technical cooperation agency, works with Armenia for a better governance framework.

AFD's South Caucasus Regional Office is attached to the Eurasia Regional Directorate.

Our approach

"AFD and Armenia: promoting green and inclusive growth"

In line with its regional strategy for Eurasia, AFD aims to support urban resilience and adaptation projects in the country through the financing of urban infrastructures (transport, water and sanitation, waste management, pollution control etc.), sustainable land management and natural resource preservation (irrigation, forest, etc.), support for the energy transition (renewable energies, energy efficiency and energy sector reform) and connectivity.

In this respect, it is working on the identification of other projects in the energy sector and water resource management sector in Armenia.

Lack of thermal insulation standards, the intensity of winter and extreme poverty make lower-income Armenian households spend a significant budget on energy. The most vulnerable ones do not have access to credit facilities for the needed renovation.

AFD finances the National Mortgage Company through two credit lines (10 million euros in 2013 and 20 million euros in 2021) with the aim of encouraging Armenian financial institutions to grant smaller loans for the renovation of the habitat and introducing awareness and good practices in energy efficiency housing and finance.

Agriculture is a strategic economic sector for Armenia. Irrigation schemes, on which 80 % of the agricultural production depends, are now deteriorating. AFD supports the Government of Armenia with a 75 million euros loan to improve the sustainability of water resources in the fertile plain of Ararat and the performance of the agricultural sector. The construction of the Vedi reservoir will help secure additional sustainable water reserves, reduce the consumption of electricity, while the network modernisation will improve irrigation efficiency. This loan is backed by a 10 million euros grant from the European Union to reinforce the capacities of the sector’s stakeholders.

In 2022, AFD signed a 1 million euros grant with the Ile-de-France Region for expertise sharing and transfer of know-how to the city of Yerevan in the fields of waste, urban mobility and urban planning.

This project will contribute to the development of methodological planning tools to improve the quality of urban services in the Armenian capital city, provide more clarity to private investors on the urban development strategy of Yerevan and strengthen the institutional and economic ties between Île-de-France and Yerevan.

Proparco primarily supports the financial sector in Armenia mainly through leading banks in the country (Ameriabank, ACBA Bank, Araratbank and Armeconombank) as well as micro institutions, who provide financing to farmers and rural SMEs.

Proparco supported Farmcredit, a credit union for farmers in the country, with a subordinated debt of an amount of 1.5 million euros.

Proparco also provides direct financing to support the manufacturing, agribusiness, and service sectors through a senior loan facility to Spayka, one of Armenia’s leading fruit and vegetable exporting companies, in 2018.