Azerbaijan, Baku, April 2 / Trend V. Zhavoronkova/
The International Financial Corporation (IFC), a member of the World Bank Group, is providing a local currency loan equivalent to about $5 million to IMON, the leading microfinance institution in Tajikistan, to increase access to finance for the country's poorest and most vulnerable people, many of them women living in rural areas, the organization reports.
IFC's loan linked to Tajik Somoni will help IMON increase its reach to micro and small entrepreneurs, including women, in rural Tajikistan. This deal is IFC's first local currency financing project in Tajikistan.
Combined with IFC's advisory work, the investment will also support IMON during its transformation into a full-fledged bank.
"Since local currency financing of long-term maturity is scarce in Tajikistan, domestic microfinance institutions are exposed to a foreign currency risk, which negatively affects private-sector development and the economic growth of the country," said Sanavbar Sharipova, IMON's CEO.
"IFC's local currency funds will help IMON increase and diversify lending activities and expand the microfinance network."
Limited access to finance, with low penetration of the microfinance and banking sectors, hinders economic development in Tajikistan. IFC advisors are helping microfinance institutions develop their management capacity, and IFC investments are helping the lenders stabilize and diversify their funding base by extending long-term financing, thus fulfilling demand for financial services.
"IFC wants to expand microfinance in Tajikistan to stimulate entrepreneurship and attract private capital to the financial sector," said K. Aftab Ahmed, IFC Director for Financial Markets and Private Equity Funds for Europe, Central Asia, the Middle East and North Africa. "IFC's work with IMON will help improve access to finance for micro and small entrepreneurs in Tajikistan, many of whom are accessing the formal financial sector for the first time. It will also support IMON in its transformation into a full-fledged commercial bank."