|
EBRD boosts micro-lending in Kyrgyz Republic
$5 million loan to KKB-K starts new on-lending programme with rural focus
A $5 million loan to Kazkommertsbank Kyrgyzstan (KKB-K) marks the start of a
new international programme helping to finance banks in the Central Asian
republic to lend money on to the very smallest businesses. The EBRD’s share of
the loan was $2.25 million, with the rest provided by the International
Finance Corporation (IFC) and the International Cooperation and Development
Fund of Taipei China (Taiwan ICDF) through the Financial Intermediary
Investment Special Fund.
KKB-K, a privately owned Kyrgyz subsidiary of Kazakhstan’s Kazkommertsbank,
will use the funding to facilitate the development of micro and small
enterprises (MSEs) by making formal finance available to them either in local
currency or dollars.
This loan is the first to be made under a new $30 million Kyrgyz Micro and
Small Enterprise Financing Facility, known as KMSEFF II, of which $20 million
is provided by the EBRD as part of its Early Transition Countries (ETC)
Initiative which aims to provide increasing support to smaller private sector
projects in the Bank’s seven lowest-income countries of operations. It builds
on the success of an earlier micro- and small enterprise facility of $12.6
million which was set up in April 2002 and is now fully committed. KMSEFF II
is bigger in cash terms than its predecessor and plans to expand the number of
participating banks with credit lines from two to a targeted five. The
programme has a new emphasis, too, on expanding into economically depressed
regions and to agricultural regions.
MSE lending has proved a vibrant sector of the Kyrgyz economy. By May 2005,
the first programme had provided 21,452 loans worth a total of $36 million.
Most clients are small traders who have never had access to formal finance,
and the average loan size is just $1,638. A majority of clients – 59 per cent
– are women. The repayment rate is outstanding: 99.4 per cent. The Kyrgyz
participating banks have opened 40 MSE lending departments in 12 cities and
trained 217 loans officers to assess and administer loan requests.
KMSEF II is supported by co-financing from Taiwan ICDF, IFC and Switzerland’s
State Secretariat for Economic Affairs (SECO). It also has technical
cooperation funding from the recently established multi-donor ETC Fund, the EU
and the US Agency for International Development (USAID).
|
