Washington D.C, August 5, 2002
—In an ambitious initiative that will support micro and small enterprises (MSE’s) in four countries of Central Asia, the International Finance Corporation – the private sector development arm of the World Bank – will provide up to US$45 million for lending (in the form of credit lines) to local banks for onlending to MSE’s in Kazakhstan, the Kyrgyz Republic, Uzbekistan, and Tajikistan. The European Bank for Reconstruction and Development will provide $107 million for this same program, with the Swiss Secretariat for Economic Affairs (SECO) contributing $3 million, providing a substantial boost to the local banking sector.
This new EBRD-IFC program will help bridge the gap between local banks and MSE’s, which are currently underserved by existing financial institutions.
Khosrow Zamani, IFC’s Director for Southern Europe and Central Asia, said: “This new program will enable local banks to offer reliable, affordable sources of credit and other banking services that are essential to MSE growth. Small business growth is critical to Central Asia’s economic development.”
Recent economic reforms and privatizations in Central Asia have led to significant numbers of public sector lay-offs, adding urgency to the need to create a strong private sector. Currently, MSEs play a prominent role in Central Asia’s private sector.
Selected banks that employ the credit facility will benefit from a comprehensive Technical Assistance program that will strengthen their lending and operational capacity.
The investment reflects an important aspect of IFC’s global microfinance strategy: providing support for commercially viable microfinance activities. IFC believes that well-managed microfinance institutions can—and should—be commercially viable so that financial services can be provided to the underserved over the long term, resulting in a substantial and sustainable increase in the volume and range of financial services for microenterprises.
More than 500 million poor people around the world run profitable microenterprises and often cite credit as the primary constraint to business growth. In the poorest countries, these activities constitute the private sector—generating jobs and resources for services crucial to poverty reduction, especially for women.
IFC’s mission is to promote sustainable private sector investment in developing countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses. Since its founding in 1956, IFC has committed more than $31 billion of its own funds and arranged $20 billion in syndications for 2,636 companies in 140 developing countries. IFC’s committed portfolio at the end of FY01 was $14.3 billion.
