The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) Inclusive Access to Finance (P163225) EUROPE AND CENTRAL ASIA | Turkiye | Finance, Competitiveness and Innovation Global Practice | IBRD/IDA | Investment Project Financing | FY 2018 | Seq No: 8 | ARCHIVED on 12-Apr-2023 | ISR55585 | Implementing Agencies: TÜRKİYE SINAİ KALKINMA BANKASI A.Ş. (TSKB), TÜRKİYE SINAİ KALKINMA BANKASI A.Ş. (TSKB) Key Dates Key Project Dates Bank Approval Date: 22-May-2018 Effectiveness Date: 21-Dec-2018 Planned Mid Term Review Date: -- Actual Mid-Term Review Date: Original Closing Date: 30-Jun-2023 Revised Closing Date: 30-Jun-2023 pdoTable Project Development Objectives Project Development Objective (from Project Appraisal Document) The PDO is to improve access to longer-term finance for (i) women-inclusive enterprises and (ii) enterprises in less developed sub-regions affected by SuTP influx. Has the Project Development Objective been changed since Board Approval of the Project Objective? No Components Table Name Component 1:(Cost $200.00 M) Component 2:(Cost $200.00 M) Overall Ratings Name Previous Rating Current Rating Progress towards achievement of PDO Satisfactory Satisfactory Overall Implementation Progress (IP) Satisfactory Satisfactory Overall Risk Rating Low Low Implementation Status and Key Decisions The Inclusive Access to Finance Project has been implemented in a volatile environment for Türkiye’s banking sector and economy, starting with exchange rate volatility in August 2018 and followed by the exchange rate, inflation, and asset quality pressures since. Credit growth to riskier, underserved market segments, which are targeted under this project, slowed during the implementation period as especially private financial institutions approached new lending with more caution. Demand for financing under this Project, therefore, remained high throughout implementation. Despite the macroeconomic challenges, TSKB implemented the project in a satisfactory manner throughout the implementation period. The loan is fully disbursed, and the project has been consistently rated as Satisfactory for Implementation Progress and Satisfactory for Progress towards Achievement of the Project Development Objective (PDO), the latter since October 2021. Progress towards achievement of the PDO remains rated as Satisfactory for this final ISR. The results achieved under the PDO indicators show that the project was able to improve access to longer-term finance (i.e., longer than otherwise available in the market) for the target beneficiaries, an important aspect of the Project. The average maturity of the loans extended to Small and Medium-Sized Enterprises (SMEs) under the Project is 2 4/12/2023 Page 1 of 7 The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) times the average maturity of SME loans extended by PFIs under their own portfolio while the average maturity of loans extended to LEs under the Project is 1.10 times the average maturity of Large Enterprises (LE) loans extended by TSKB. This is an excellent outcome given the current operating environment and the increased demand for working capital loans. The project also generated substantial developmental impact. 475 SMEs and 29 LEs have been financed. Information provided on the employment multipliers shows that employment growth in beneficiary enterprises under the Project continues to be higher than employment growth in the respective sectors. Under the on-lending component, TSKB successfully signed Subsidiary Financing Agreements with six Participating Financial Institutions (PFIs). Out of the six PFIs, three are banks (Is Bank, Sekerbank, Denizbank) and three are leasing companies (Yapi Kredi Leasing, Is Leasing, and Garanti Leasing). The extension to leasing companies also contributed to a certain extent to financial sector diversification, moving away from bank-dominated financing. Regarding results related to improving access to finance for women-inclusive enterprises, another important aspect of the PDO, 199 of the enterprises that received funding under the project were women-inclusive enterprises, exceeding by a large margin the target of 70. In addition, female employment growth in beneficiary enterprises exceeded the average for female employment growth in the respective sectors. A total of 122 enterprises were assessed through the Project Gender Toolkit while 12 enterprises completed the implementation of a gender action plan. Lastly, a gender bias survey was conducted by TSKB with PFIs, and dedicated training sessions are currently being implemented to address the issues identified. This will lead to increased awareness of PFIs regarding identified gender bias of loan officers. Results related to improving access to finance for less developed sub-regions affected by SuTP influx, the third element to the PDO, results show that 29 percent of sub-finance benefitted beneficiaries in the least developed regions (compared to the project’s target of 7.5 percent), significantly overachieving expectations at the time of Project approval. The employment multiplier for beneficiary enterprises located in less developed regions also shows that employment growth in these firms was higher than for other firms in the respective sectors. Regarding citizen engagement, TSKB received feedback from a total of 494 firms on the extent to which these firms felt that financing obtained through the project reflected their needs. This represents 98 percent of firms that received financing through the project. The firms had received financing from YK Leasing, Is Leasing, Garanti Leasing, Is Bank, Sekerbank, Denizbank, and TSKB. The results confirm that clients overall show a high degree of satisfaction with the support received - on average, between indicators, 99.2 percent of firms rated the financing as reflecting their needs. More details are provided in the CE indicator description. Risks Systematic Operations Risk-rating Tool Risk Category Rating at Approval Previous Rating Current Rating Political and Governance Moderate Moderate Moderate Macroeconomic Substantial Substantial Substantial Sector Strategies and Policies Low Low Low Technical Design of Project or Program Low Low Low Institutional Capacity for Implementation and Low Low Low Sustainability Fiduciary Low Low Low Environment and Social Low Low Low Stakeholders Low Low Low Other Low Low Low Overall Low Low Low Results PDO Indicators by Objectives / Outcomes 4/12/2023 Page 2 of 7 The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) Improve access to longer-term finance for women-inclusive and less developed sub-regions enterprises IN01272158 ►Ratio of the average maturity of SME sub-financing under the project, over the average maturity of the PFIs SME portfolio not financed under the project. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 2.10 2.00 >1 Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 IN01272159 ►Ratio of the average maturity of LE sub-financing under the project, over the average maturity of the Borrower's LE portfolio not financed under the project. (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.55 1.10 >1 Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 IN01272160 ►Volume of Bank support (cumulative, US$ million) (Amount(USD), Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 383.00 400.00 400.00 Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 Intermediate Results Indicators by Components TSKB Direct Lending; lending to eligible beneficiary SMEs and LEs IN01272203 ►Number of LE beneficiaries financed under the project (cumulative) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 22.00 29.00 40.00 Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 IN01272205 ►Based on Core Indicator: Portfolio Quality: Portfolio at risk (%) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target n/a Value n/a 3.20 3.30 Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 IN01272207 ►Based on Core Indicator: Financial Sustainability: Return on Assets (%) (Text, Custom) 4/12/2023 Page 3 of 7 The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) Baseline Actual (Previous) Actual (Current) End Target Value n/a 1.60 3.30 n/a Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 IN01272209 ►Based on Core Indicator: Financial Sustainability: Return on Equity (%) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value n/a 16.70 40.40 n/a Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 IN01272212 ►Compliance with prudential regulation (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value n/a compliant compliant n/a Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 Wholesale Component; on-lending funds through qualified PFIs IN01272201 ►Number of PFIs under the project (cumulative) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 6.00 6.00 5.00 Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 IN01272202 ►Number of SME beneficiaries financed under the project (cumulative) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 466.00 475.00 240.00 Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 IN01272204 ►Number of women-inclusive beneficiary enterprises financed under the project (cumulative) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 193.00 199.00 70.00 Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 IN01272206 ►Percent of sub-finance financing beneficiary enterprise sub-projects in the least developed sub-regions (Cumulative) (Text, Custom) 4/12/2023 Page 4 of 7 The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 28.00 29.00 7.50 Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 IN01272208 ►Number of enterprises assessed through Project Gender Toolkit (Cumulative) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 84.00 122.00 50.00 Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 IN01272210 ►Number of beneficiary enterprises that completed implementation of a gender action plan (Cumulative) (Number, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 12.00 12.00 15.00 Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 IN01272211 ►Percentage point difference between the total employment growth in beneficiary enterprises under the Project and employment growth in the respective sectors (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.08 1.17 >0 Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 IN01272213 ►Percentage point difference between female employment growth in beneficiary enterprises and female employment growth in the respective sectors (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.03 1.03 >0 Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 IN01272214 ►Percentage point difference between employment growth in beneficiary enterprises located in less developed regions and employment growth in the respective sectors (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 1.08 1.14 >0 Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 IN01272215 ►Based on Core Indicator: Outstanding MSME finance portfolio (USD million) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target 4/12/2023 Page 5 of 7 The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) Value n/a 11,763 7,841 n/a Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 IN01272216 ►Based on Core Indicator: Number of active MSME finance accounts (not cumulative) (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value n/a 932,554 845,630 n/a Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 IN01272217 ►Citizen Engagement: SMEs and LEs that feel project sub-finance reflected their needs (Text, Custom) Baseline Actual (Previous) Actual (Current) End Target Value 0.00 99.20 99.20 n/a Date 31-May-2018 16-Sep-2022 17-Mar-2023 31-May-2022 Results on citizen engagement through a survey of beneficiary enterprises were obtained from 494 firms. The firms had received financing from YK Leasing, Is Leasing, Garanti Leasing, Is Bank, Sekerbank, Denizbank, and TSKB. The client survey assessed in nine questions the extent to which firms felt that financing obtained through the project reflected their needs. Questions revolved around whether the PFI/TSKB (i) worked well with the client during the process, (ii) was responsive, supportive, and delivered quality services, and (iii) ensured that the objective of the financing was aligned with the project. The questions also inquired Comments: whether the client would work with the PFI/ TSKB again. The extent of agreement could be rated on a scale of 1-5 with 5 being the highest scores. The results confirm that clients overall show a high degree of satisfaction with the support received. On average between indicators 99.2 percent of firms thought that the financing reflected their needs (all responses of 5 "strongly agree" and 4 "agree" were counted). If only responses of 5 were counted, a total of 66.2 percent of loans would show full satisfaction with the financing received. Performance-Based Conditions Data on Financial Performance Disbursements (by loan) Project Loan/Credit/TF Status Currency Original Revised Cancelled Disbursed Undisbursed % Disbursed P163225 IBRD-88600 Effective USD 400.00 400.00 0.00 400.00 0.00 100% Key Dates (by loan) Project Loan/Credit/TF Status Approval Date Signing Date Effectiveness Date Orig. Closing Date Rev. Closing Date P163225 IBRD-88600 Effective 22-May-2018 07-Jun-2018 21-Dec-2018 30-Jun-2023 30-Jun-2023 4/12/2023 Page 6 of 7 The World Bank Implementation Status & Results Report Inclusive Access to Finance (P163225) Cumulative Disbursements Restructuring History There has been no restructuring to date. Related Project(s) There are no related projects. 4/12/2023 Page 7 of 7