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Facilitating microfinance in the Kyrgyz Republic
EBRD guarantees $1 million for on-lending to small business
The EBRD is providing Bai Tushum, one of the leading microfinance institutions
in the Kyrgyz Republic, with a $1 million guarantee in order to receive local
currency loans from Kyrgyz banks. Bai Tushum will use the loans for on-lending
to local micro and small enterprises, thus significantly facilitating their
access to finance.
The EBRD’s guarantee is the first of its kind under the Non-bank Microfinance
Institutions Framework II for Early Transition Countries (ETC). The new
product is expected to be in great demand and two or three leading banks in
the Kyrgyz Republic will participate in the facility.
In many of the Bank’s countries of operations local currency funding is still
in short supply. This represents a serious impediment to the expansion of
micro and small enterprises which are the backbone of local economies. Easing
the sector’s access to local currency finance is therefore a key challenge to
achieve sustainable growth.
Established in 1997, Bai Tushum has become a leading microfinance institution
in the Kyrgyz Republic and has a strong rural focus. The institution offers a
range of different agricultural loans for crop production, livestock and
agri-processing. The majority of the portfolio is outside the capital Bishkek
and Bai Tushum currently has around 5,000 clients. 40 per cent of all
outstanding loans are for less than $1,000.
Bai Thusum has won international recognition for its activities. In 2005, the
microfinance institution received a A+ grade in an international rating
process conducted by the Italian Microfinanza Company certified by the World
Bank – Consultative Group to Assist the Poor. A+ means high reliability and
high level of operation and stability of Bai Thusum even under unfavourable
conditions.
Daniel Berg, Head of the EBRD’s office in the Kyrgyz Republic, said the
project confirmed the Bank’s commitment to supporting the micro and small
enterprise sector. It is expected that it will serve as an example to the
sector and encourage local banks to finance microfinance institutions.
The EBRD’s Non-bank Microfinance Institutions Framework for Early Transition
Countries aims at strengthening microfinance institutions in the Bank’s eight
poorest countries of operations. Loans are provided for on-lending to the
smallest borrowers across the ETC countries Armenia, Azerbaijan, Georgia, the
Kyrgyz Republic, Moldova, Mongolia, Tajikistan and Uzbekistan. The facility is
accompanied by a technical cooperation framework funded by donor governments.
Through its micro and small enterprises programmes, the EBRD has supported
over one million small enterprises throughout eastern Europe, Russia, Central
Asia and the Caucasus. The EBRD has worked with 84 commercial banks and
non-bank microfinance institutions to establish or expand specialised micro
and small business finance units and has lent 637 million to facilitate close
to €9.5 billion in loans to micro and small businesses in the region.
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