Armenia Leasing Company The Armenian financial system is very small, with the banking system (by far the largest component) accounting for assets equivalent to only 20 percent of GDP. Unless the financial infrastructure is strengthened, the financial system is unlikely to be able to deliver the growth-generating financial services that Armenia urgently needs.      The project involves the creation of AL the first joint venture leasing company in Armenia.  AL will provide much needed access to medium and long term financing for viable small and medium companies in Armenia. The strategic alliance of ACBA, one of the leading Armenian banks, with a reputable and experienced technical partner such as CAG/Ucabail, will ensure that the AL becomes an operationally professional and commercially viable leasing company that will pioneer the leasing industry in Armenia.    IFC has played a pivotal role in this project, most importantly :   ·   Conducted initial assessments and studies of the legal, regulatory and market environments for leasing and advised the government on the necessary regulatory changes to enable the establishment of the leasing industry   ·   Brought together the essential foreign and local partners    ·   Helped develop the innovative project concept with a successful mix of equity investors, technical assistance provider and a very strong local sponsor.    The project will have crucial developmental benefits for Armenia:    Development of financial infrastructure.    Establishment of the first commercial leasing institution is an essential systemic development for the emerging financial sector in Armenia. The AL by virtue of its successful launch of operations will demonstrate how efficient use of modern financial instruments enable adaptation of the financial intermediaries to the growing needs of the private sector.     Private sector development   .  Access to leasing will enable small and medium-sized enterprises, the most dynamic segment of the Armenian economy, to expand their production facilities. Leasing will introduce a viable alternative to loans for the smaller enterprises without the need for compliance with extensive collateral requirements. Many of the new investments in assets will simply not occur in the absence of leasing. Thus, the project will expand the overall amount of credit to the Armenian industry as well as facilitate the transfer of efficiency-enhancing technologies and business management techniques to potential lessees.      Poverty Alleviation.    Indirect developmental effects of the project are significant since investment in small and medium scale enterprises will have a significant multiplier effect on several vast groups of their downstream suppliers, such as farmers. Small and medium enterprises are the major source of new employment and growth in Armenia.     Foreign exchange earnings   :  The project is expected to expand domestic production, and thereby reduce the need to import; and will help over time to lower the demand for foreign exchange. Moreover, due to the limited size of the Armenian market, a substantial part of ALs clients would be potential exporters, who will acquire new technology and equipment to become more competitive for exports of their products and services.