US$ 4 million for local currency micro loans in Tajikistan

By Svitlana  Pyrkalo
@pyrkalo

The European Bank for Reconstruction and Development (EBRD) is continuing to support small and medium-sized businesses in Tajikistan with a multi-currency lending facility of up to US$ 4 million (equivalent) to First MicroFinance Bank Tajikistan. The facility will allow for diversification of the bank’s funding base and provide more somoni loans to small businesses.

First MicroFinance Bank (FMFB) is the first dedicated microfinance bank in Tajikistan. Its mission is to assist rural communities to develop small businesses. It has one of the broadest outreaches in rural areas and operates in the Rasht Valley and Gorno-Badakhshan Autonomous Oblast regions, parts of the country where the presence of other financial intermediaries is limited.

First MicroFinance Bank is the fourth financial institution in Tajikistan to have joined the EBRD’s new Local Currency Lending Programme in Early Transition Countries (ETC), as part of its drive to reduce the risks – exposed by the economic crisis – of depending excessively on foreign currency funding.

The programme, launched in 2011 with the support of the US and Swiss governments, the multi-donor ETC Fund and the EBRD Shareholder Special Fund, allows the EBRD to support private sector development by extending local currency-denominated loans to eligible banks, microfinance organisations and private enterprises, to help them avoid taking on exchange rate risks. Tajikistan was the first country to benefit from this new programme in Central Asia.

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.

To date, the EBRD has committed over US$ 319 million in various sectors of the Tajik economy.