The geology of the Kyrgyz Republic has much to offer to boost the country’s economic growth. Mineral source deposits notoriously include gold, which produces a fair share of its GDP. But the Kyrgyz mountains are also rich in a different type of material that feeds the construction industry: travertine marble.
Used for centuries for prestigious buildings like the Colosseum in Rome or Sacre Coeur in Paris, today this decorative stone is mainly to be seen in external and internal furnishings and can be highly profitable for Central Asia’s flourishing construction industry.
Granit Yug is a small company based in the south of the Kyrgyz Republic that almost literally ‘built’ its fortune on the quarrying and processing of travertine ore, which it exports mainly to Kazakhstan, Uzbekistan and Russia.
“When we started in 2001, our company was focusing on extracting, cutting and selling unrefined travertine blocks,” said Ababakir Turganbaev, one of the owners of Granit Yug. “Years later we decided to upgrade our obsolete stone processing equipment.”
“Thanks to the EBRD we are very proud to be one of the few in the Kyrgyz Republic to offer the market European quality travertine tiles.”
Thanks to entrepreneurial determination and the firm backing of the EBRD, Granit Yug weathered difficulties including the 2010 political and social turmoil, an earthquake and avalanches on the project site, and managed to repay the EBRD loan in 2013.
By then, Granit Yug, which employs 60 people, could count on improved technology, a well-established customer base and increasing demand for its quality product from Kazakhstan. It was time to expand and increase production.
For local banks, supporting mid-market players like Granit Yug with larger and longer-loan terms presents a challenge due to the increased risk and less familiarity with this type of credit.
To support both local banks and their potential private sector clients, the EBRD designed the Medium Sized Co-Financing Facility (MCFF), which co-finances loans extended by partner banks to selected enterprises and shares up to 50 per cent of their risk.
In the Kyrgyz Republic, the risk-sharing component of the MCFF is supported by the European Union’s Investment Framework for Central Asia . In Early Transition Countries (ETCs), MCFF is also supported by the ETC Fund through specific training programmes for credit officials of participating banks.
With an MCFF loan worth US$ 0.5 million via the Kyrgyz Investment and Credit Bank (KICB), Granit Yug invested in brand new trucks to ensure continuous reliable supply of raw material to the plant.
“We are pleased that the EBRD together with KICB supported our investment considering the loan size,” said Ms Nina Martynenko, key shareholder of the company. “The plant is located in a remote southern area, which makes attracting financing very difficult.
“We are now able to cope with the increasing demand for Kyrgyz travertine and proud to promote our stone and contribute to developing the industrial sector in the country.”
“The EBRD is a strategic partner and has been providing valuable support to KICB since its establishment,” added Mr Mairambek Bataev, Chief Credit Officer of KICB. “Our credit officers trained under the MCFF have already signed a number of MCFF sub-loans.
“We appreciate the donor funding that helps us reach and support clients like Granit Yug.”
Larisa Manstirli, head of the EBRD’s office in Bishkek, sees loans to companies such as Granit Yug as an important part of the Bank’s strategy to encourage SME development but admits that such help would be that much harder without the support of donors.
Just as Granit Yug helps to build homes and offices, the EBRD and its donors continue their work to strengthen financial institutions and develop the private sector in the Kyrgyz Republic.