* Investment marks first IFC funding in Tajikistan financial sector
Washington D.C., November 14, 2001
—The International Finance Corporation, the private sector arm of the World Bank Group, will invest US$500,000 in a Tajik bank in support of private sector development in Tajikistan. The investment in Tajik Sodirotbank (TSB) will strengthen the bank’s capital base and increase available funding to support the anticipated growth in private sector lending.
The investment is in line with IFC’s global policy of supporting financial institutions in developing countries as a way to boost the local private sector. A vibrant private sector is a key element of economic growth and job-creation.
The investment in Tajik Sodirotbank marks the first IFC investment in a financial intermediary in Tajikistan. “We believe our investment in Tajik Sodirotbank could be an important catalyst for new foreign investment in the country,” said Khosrow Zamani, IFC Director for Southern Europe and Central Asia. “We are committed to supporting the Tajik private sector in an important growth phase. We also encourage other private financial institutions to consider Tajikistan as an investment option,” he added.
The IFC investment of $500,000 is part of a larger recapitalization and restructuring program that will increase the Bank’s capital from $1.4 million to $3.0 million. The IFC investment is in conjunction with a similar investment of the European Bank for Reconstruction and Development (EBRD). The IFC Board approved the TSB investment early this year.
Additionally, a Technical Assistance (TA) program of $330,000, financed by the Swiss Government, has been initiated by the IFC to help the Bank implement an institution-building program. The aim of the program is to help TSB operate in accordance with sound banking principles, grow into a fully competitive institution, and foster greater regional banking relationships. Wolfsberg Executive Development Center, a subsidiary of UBS AG, is the selected contractor to carry on the TA program.
The revamped Bank will be positioned in the Tajik market as a universal bank focusing on consumers, in addition to serving the corporate market. It is expected that IFC will use TSB as a financing vehicle to channel funds from IFC and other international financial institutions to the growing private sector in Tajikistan.
TSB was established in 1992 as a separate and independent entity. Prior to 1992, TSB operated as a branch of the Soviet Vnesh Econom Bank (SVEB), specializing in transactions involving foreign trade. Upon Tajikistan's independence, TSB was reorganized and became the legal successor of the SVEB. It retains the authority to handle foreign exchange transactions on behalf of the country. Currently, the bank has 168 employees and 5 branches.
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.
