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Third credit line for Tajik small business finance
Just over a year after the launch of a $7 million Tajik Micro and Small
Enterprise (MSE) Finance Facility with international donors’ help, the
European Bank for Reconstruction and Development has granted its third credit
line for $2 million to a local bank. The facility has already financed more
than 2,000 local entrepreneurs. The transaction with Tajprombank means over
half the EBRD-approved funds have been committed to local commercial banks.
Tajprombank, which has 11 branches and outlets around the country, was one of
the original partners of the Tajik Micro and Small Enterprise Finance
Facility. Until now, it has mobilised its own funds to provide $500,000 in
loans to more than 200 Tajik micro enterprises. The EBRD credit line will
enable it to significantly expand lending to MSEs across more of Tajikistan.
In all, the EBRD’s three local partners have lent $5.4 million to 2,049 Tajik
entrepreneurs under the facility. The EBRD’s first credit line, for $1
million, was signed with Eskhata Bank in February. A second line, for $2
million, was signed with Tajiksodirotbank in August.
Almost all the clients benefiting from the EBRD programme have never had
access to finance before. Micro loans are disbursed to commercially viable
private enterprises in dollars and Tajik somoni. In Tajikistan, the poorest
country in which the Bank works, more than 65 per cent of people earn less
than $2.15 a day. The loans available under this facility, typically for under
$3,000 and under a year, enable the smallest entrepreneurs – more than half of
them women, often traders buying goods around Central Asia or in China or
Dubai for resale at home – to expand operations. The programme’s success can
be measured by the fact that clients who have repaid one loan are taking out
repeat credits. In 2005 loans above $10,000 will become available as client
numbers grow and partner banks gain confidence in this vibrant market segment.
It is donor financing from the international community which has enabled local
Tajik banks to use their own funds to make micro and small business loans
available to their clients. Grants from the UK Department for International
Development, USAID and the European Commission have financed the use of EBRD
consultants to train the staff of Tajik banks in the techniques of
micro-lending. The facility is also underpinned by the Swiss government,
which, through its State Secretariat for Economic Affairs, provides a
risk-sharing scheme to support EBRD loans to local commercial banks. The
International Finance Corporation (IFC) will also support the growth of the
MSE Facility via additional co-financing of the MSE portfolio for some of the
partner banks.
The programme initially operated in Tajikistan’s two largest cities, Dushanbe
and Khujand. It has recently been extended to Isfara and Chkalovsk in the
north and Kurgan-Tyube in the south. Expansion to remoter areas will continue
in 2005 through current and potential new partners.
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