Bishkek, Kyrgyz Republic, May 31, 2023—More individuals and micro-enterprises in the Kyrgyz Republic are expected to have improved access to finance following IFC's $15 million loan, denominated in local currency, to Kyrgyz Investment and Credit Bank. The funds will allow KICB to provide more local currency home microloans to low-income families and financing to women-led microenterprises, strengthening the country's economic resilience post-pandemic.
In the Kyrgyz Republic, the financing gap for smaller enterprises, including those owned by women, is estimated at $1.4 billion, equivalent to 21 percent of GDP. The financing package will provide these female entrepreneurs increased access to finance, helping them remain in business and retain employees. In parallel, increased access to housing finance, hard to obtain for many low-income households, especially in rural areas, will allow families to build or renovate homes and improve their living conditions.
To effectively address these financing gaps, KICB will directly disburse 70 percent of loan proceeds to end-clients, while the remaining 30 percent will be channeled through local microfinance institutions supporting them to get access to longer-term local currency finance.
"The signing of the agreement will contribute to the creation of an effective support system for women's entrepreneurship, improving access to more microloans to low-income families, as well as to support the women, who start their own businesses in gaining experience and successfully running their business," said Arif Ali, Chief Executive Officer of KICB CJSC.
IFC and KICB have also signed an International Swaps and Derivatives Association Master Agreement, which is a standard document that governs over-the-counter derivative transactions. The agreement will allow the bank to hedge its foreign currency-denominated funding and better manage its asset-liability mismatches.
"IFC's deepening partnership with KICB reflects our strategy to support financial inclusion, access to credit, and more broadly, private sector development in the Kyrgyz Republic. The financing package will also allow KICB to better manage its currency risk and continue lending in local currency, which is critically important at a time when businesses are suffering currency vulnerabilities due to the challenging external environment," said Momina Aijazuddin, IFC Regional Industry Head, Financial Institutions.
The financing package to KICB is being provided under IFC's Base of the Pyramid Program, an extension to the Fast-Track COVID Facility launched in 2021. The program helps financial services providers deliver funding to help smaller, informal enterprises and low-income households recover from the operational and financial impacts of the COVID-19 pandemic and provides up to $600 million to microfinance institutions, non-bank financial institutions, and MSME-focused banks. The local currency financing is being provided through currency swaps with the Local Currency Facility of the International Development Association's Private Sector Window.
About KICB
CJSC "Kyrgyz Investment and Credit Bank" was established in 2001, becoming the largest commercial bank in the Kyrgyz Republic. The bank has a network consisting of more than 55 branches throughout the country, providing a full range of banking services. The bank's shareholders are the Kyrgyz Republic (10%) and other financial institutions (90%). The structure of international shareholders includes the Aga Khan Fund for Economic Development (AKFED) - 66%, Habib Bank Limited (HBL) - 18%, Dutch Development Bank (DEG) -2%, European Bank for Reconstruction and Development (EBRD) - 2% and the International Finance Corporation (IFC) - 2%.
In 2019, KICB won the prestigious "The Best Bank of the Year" award for the second year in a row. Awarded by The Banker, a Financial Times publication, the magazine awards the best financial institutions in more than 140 countries, based on criteria such as dynamic growth, development, innovative banking technologies, and the implementation of strategic projects. Additional information: www.kicb.net.
About IFC
IFC — a member of the World Bank Group — is the largest global development institution focused on the private sector in emerging markets. We work in more than 100 countries, using our capital, expertise, and influence to create markets and opportunities in developing countries. In fiscal year 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity as economies grapple with the impacts of global compounding crises. For more information, visit www.ifc.org.
About the IDA Private Sector Window
The International Development Association's (IDA) Private Sector Window was launched in 2017 to catalyze private sector investment in the poorest and most fragile countries. Recognizing the key role of the private sector in achieving IDA's objectives and the World Bank Group's twin goals, the window provides a source of co-investment funding and guarantees to de-risk private investments supported by IFC and the Multilateral Investment Guarantee Agency (MIGA). The IDA PSW is an option when there is no commercial solution, and the World Bank Group's other tools and approaches are insufficient. For more information, visit: http://ida.worldbank.org/psw.
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