Bishkek / Washington, D.C., July 18, 2005—
The International Finance Corporation, the private sector arm of the World Bank Group, signed a $5 million loan agreement with Kazkommertsbank Kyrgyzstan, a commercial bank providing credit and other financial services to local micro and small enterprises in the Kyrgyz Republic. IFC’s share of the loan was $2 million, with the rest provided by the European Bank for Reconstruction and Development and by the International Cooperation and Development Fund of Taipei China.
The loan to Kazkommertsbank Kyrgyzstan underscores IFC’s strategy of strengthening local financial institutions in the Kyrgyz Republic and Central Asia in order to support private sector development. Providing access to capital is key to IFC’s small business development strategy, as it will help boost private sector wealth and job creation, lift confidence in the banking sector, and strengthen banking by introducing commercially oriented microfinance techniques.
IFC’s Director for Global Financial Markets, Jyrki Koskelo, said, "The IFC financing will enable Kazkommertsbank Kyrgyzstan to increase its lending activities to micro and small enterprises in the Kyrgyz Republic.” He added, “This investment underlines our continuing commitment to support private sector development in transition economies and to provide institution-building assistance to enhance sustainable lending to smaller businesses.”
Shahbaz Mavaddat, IFC’s Acting Director for Southern Europe and Central Asia, said, “IFC’s investment in Kazkommertsbank Kyrgyzstan is part of our strategy to promote micro and small enterprise development in the Kyrgyz Republic by strengthening key financial institutions and by providing support to eligible private enterprises.”
The loan agreement was signed under the Kyrgyz Micro and Small Enterprise Finance Facility II, which is co-financed by IFC, the EBRD, the International Cooperation and Development Fund of Taipei China, and the governments of Switzerland and the United States. The facility is expected to provide some $30 million in credit lines to Kyrgyz banks to expand lending to micro and small enterprises. Since the beginning of operations in 2002, it has catalyzed more than 21,452 bank loans worth around $36 million to micro and small enterprises in Bishkek and its surrounding suburbs. Most clients are small traders who have never had access to other formal finance. The average loan size is $1,638 with an outstanding repayment rate of 99.4 per cent. The facility is supported by technical assistance funds provided by the recently established multi-donor ETC Fund, the European Union, and the U.S. Agency for International Development.
The mission of IFC (
www.ifc.org
) 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, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses. From its founding in 1956 through FY04, IFC has committed more than $44 billion of its own funds and arranged $23 billion in syndications for 3,143 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY03 was $17.9 billion for its own account and $5.5 billion held for participants in loan syndications.
