Azerbaijan, Baku, Oct. 11 / Trend , G.Dadashova /
The European Bank for Reconstruction and Development (EBRD) is boosting its support to the financial sector in the Kyrgyz Republic with a $ 2 million loan in local currency (Som) to the micro-lending company Frontiers LLC, the Bank reported.
Frontiers LLC, a non-bank microfinance institution with headquarters in Bishkek, is the largest non-bank wholesale microfinance provider in Central Asia serving the lower end of the microfinance market in Kyrgyzstan, Tajikistan and Kazakhstan. Frontiers MLC (Micro-Lending Company) has a unique position in the market due to its business model, as it acts as a conduit to smaller microfinance institutions (MFIs) in Central Asia that the EBRD cannot reach.
The new EBRD loan will support the company at a time when access to local currency has shrunk dramatically.
Kyrgyz businesses still have a low level of access to finance, especially in rural areas. According to the EBRD country strategy for the Kyrgyz republic, adopted in September 2011, strengthening the country's financial system is one of the Bank's priorities in the country.
Microfinance and lending to micro, small and medium enterprises are also a crucial part of the EBRD's activities in Tajikistan and Kazakhstan, where Frontiers also operates.
The EBRD aims to extend local currency lending in Central Asia, and specifically the Kyrgyz Republic, to build up local sources of domestic funding and reduce the use of foreign exchange in the country's financial system.
The EBRD's senior loan is an extension of an existing financing facility for microfinance institutions (MFI) in Early Transition Countries.
To date, the EBRD has committed about €326 million in various sectors of the Kyrgyz economy, mobilising additional investments from other sources of financing of about €400 million in 74 projects. 63% of these projects represent investments into the country's private sector.
*The EBRD's Early Transition Countries Initiative aims to stimulate economic activity in the Bank's countries which still face the most significant transition challenges: Azerbaijan, Armenia, Belarus, Georgia, Moldova, Mongolia, Kyrgyz Republic, Tajikistan, Turkmenistan and Uzbekistan.