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EBRD works with Kyrgyz banks to boost small businesses
Kyrgyz Investment and Credit Bank receives $3 million credit line to support micro and small enterprises
The European Bank for Reconstruction and Development is extending a $3 million
credit line to Kyrgyz Investment and Credit Bank (KICB) to support its lending
to micro and small enterprises (MSEs).
KICB will receive the funds under the EBRD’s Framework of the Kyrgyz MSE
Finance Facility II (KMSEFF II), a $30 million facility that provides funds to
commercial banks for on-lending to MSEs. The main focus of the programme is on
rural and agricultural lending.
The significance of MSE lending in the Kyrgyz republic is huge, says Daniel
Berg, head of the EBRD office in the Kyrgyz Republic. EBRD’s funding enables
small businesses to have swift access to medium-term funds which is crucial in
the development of private business in economically depressed regions of the
country
KICB was established in 2001. As one of the country’s leading corporate banks,
its initial focus was providing finance for large corporate clients. In 2004,
it became a universal bank and now plans to enter the MSE market; it has
opened a branch in Bishkek solely for MSE clients and has ambitious regional
expansion plans over the next few years.
The facility enables the EBRD to reach out to a greater number of creditworthy
local small businesses, to promote entrepreneurial activities throughout the
country and to support the development of the Kyrgyz financial services
sector.
Sub-loans between $500 and $100,000 will be on-lent by KICB to existing and
new small business clients to help them set up new businesses or expand
existing activities.
KMSEFF II is also supported by technical assistance funds from USAID, the EU
and the ETC Multi-donor fund. This financing supports institution building and
the development of efficient MSE lending procedures.
Kyrgyz Republic is one of seven countries within the EBRD’s Early Transition
Countries Initiative (ETCI). The programme was launched in 2004 and aims to
stimulate market activity in the Bank’s lowest- income countries of operations
by using a streamlined approach to financing more and smaller projects,
mobilising more investment, and encouraging economic reform. The initiative is
part of an international effort to address poverty. The Bank will accept
higher risk in the projects it finances in the ETCs, while still respecting
the principles of sound banking.
The EBRD is the largest foreign investor in Kyrgyz Republic with almost €250
million in 40 projects across the country.
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