The EBRD is stepping up its support for the financial sector in Tajikistan with a US$ 6 million equivalent multi-currency facility to Accessbank to provide more affordable loans to small businesses in the Tajik currency, the somoni.
Accessbank is the second financial institution in Tajikistan to join the EBRD’s new Local Currency Lending Programme in Early Transition Countries (ETC)*, as part of the Bank’s drive to reduce the risks – exposed by the economic crisis – of excessive dependence on foreign currency funding.
The new programme allows the EBRD to support private sector development by extending local currency-denominated loans to eligible banks, microfinance organisations and private enterprises so they can avoid taking on exchange rate risks. Tajikistan was the first country to benefit from this new Programme in Central Asia.
With this 4-year senior loan, the EBRD is increasing the availability of local currency lending to entrepreneurs in Tajikistan. The EBRD’s funds will help Accessbank in expanding its lending portfolio for micro entrepreneurs.
“The EBRD is boosting its support for private business sector development in Tajikistan. We are pleased that Accessbank’s customers will get better services and easier access to much-needed cash to carry on their businesses. Tajik borrowers without adequate foreign currency revenues will be able to avoid exchange rate risks,” said Olivier Descamps, EBRD Managing Director for Turkey, Eastern Europe, the Caucasus and Central Asia, during the signing ceremony in Dushanbe.
The new loan to Accessbank – a specialist micro-finance bank, which started operations in 2010 and was created by AccessHolding, the EBRD, International Finance Corporation (IFC) and German development bank KfW – is being disbursed in line with a Memorandum of Understanding signed in April this year between the EBRD and Tajik government.
The Tajik authorities confirmed their intention to implement reforms aimed at reducing dollarisation and strengthening the country’s capacity to intermediate savings and investments through the use of the local currency.
The Local Currency Lending Programme for Tajikistan forms part of a targeted local currency risk-sharing programme for the Early Transition Countries (ETC), supported by the EBRD and international donor countries to catalyse local currency lending.
In Tajikistan, the EBRD focuses on promoting small private businesses, developing the banking sector and improving critical infrastructure. The Bank is also supporting the development of the agricultural sector, with a special emphasis on providing loans to farmers. In 2010 the EBRD’s investments amounted to a total of €21.6 million (US$ 29 million).
To date, the EBRD has committed over €214 million (US$ 309 million) in various sectors of the Tajik economy, mobilising additional investments of about €278 million (US$ 401 million).
* The EBRD’s Early Transition Countries Initiative aims to stimulate economic activity in the Bank’s countries which still face the most significant transition challenges: Armenia, Azerbaijan, Belarus, Georgia, Moldova, Mongolia, Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan.