EBRD lends US$ 2 million for climate resilience to Humo MFI in Tajikistan

By Svitlana  Pyrkalo

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Microfinance institution to become second Tajik partner under innovative credit line for energy and water efficiency, sustainable land use

The European Bank for Reconstruction and Development (EBRD) is aiming to help households and businesses in Tajikistan cope with the effects of climate change through a loan to Humo, the third-largest non-bank microfinance institution (MFI) in Tajikistan.

The US$ 2 million-equivalent credit line will be provided by the EBRD and the Pilot Program for Climate Resilience (PPCR) in equal measure in Tajik somoni.

The loan is the second one provided under a pioneering financing facility, launched on 1 December, as world leaders gathered in Paris for the COP21 climate talks. It is the first dedicated financing mechanism in the EBRD region aimed at projects which help adapt to the effects of climate change.

The first country to benefit from this financing facility is Tajikistan, which depends on rainfall and glaciers for its water supply and electricity, and consequently is highly vulnerable to the impacts of climate change.

Humo has a strong presence outside the capital Dushanbe and in rural areas and serves micro, small and medium-sized enterprises, including small farmers and households which often have no other source of financing. The MFI will on-lend funds to help clients adopt technologies and practices to reduce soil erosion and pressure on water and energy resources.

“Humo is a longstanding EBRD client, known for its significant operations in the south of Tajikistan. I am delighted that such a partner is now joining this important new facility, providing investments for equipment that will help businesses grow irrespective of changing climate conditions,” said Richard Jones, Head of the EBRD Dushanbe Resident Office.  

Mavsuda Vaisova, General Director of Humo, said: “We are honoured to join the new EBRD initiative. With the new EBRD loan we will help our clients to adopt innovative technologies, develop alternative sources of energy, implement efficient methods of land cultivation and increase the productivity of farmlands and businesses. The loan will also help our clients to overcome the consequences of the world financial crisis; it is vitally important that this financing will be available in local currency.”

In addition to funding, the project will benefit from technical assistance funded by the UK government through the Department for International Development (DFID) and by the EBRD Early Transition Countries (ETC) Fund*.

Earlier this month, Bank Eskhata became the first recipient of an EBRD loan under the new financing facility.

The EBRD already offers successful credit lines for energy efficiency and small-scale renewable energy in most of its countries of operations. Ahead of the COP21 climate talks in Paris, the EBRD adopted new higher targets for climate financing and aims to invest 40 per cent of its annual volume into sustainable resource projects by 2020.

* Donors to the EBRD ETC Fund are: Canada, Finland, Germany, Ireland, Japan, Korea, Luxembourg, the Netherlands, Norway, Spain, Sweden, Switzerland, Taipei China and the United Kingdom.

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