DUSHANBE, Tajikistan, December 29. The European Bank for Reconstruction and Development (EBRD) has agreed to split 50 percent of the financial risks with Tajikistan's bank Eskhata concerning two loans totaling up to $5 million, Trend reports.
Volna Group, a well-known retailer of consumer electronics, home appliances, and white goods, will receive a $3 million loan. The funds will be utilized to boost the company's working capital. Furthermore, the monies will be used to grow their present chain of ten locations throughout Tajikistan.
Another $2 million loan will help Tiglat, a distributor specializing in paints, varnishes, and building products, with their investment plans. This financial assistance will help to fund the development and operation of a new paint manufacturing plant, as well as provide critical working capital. Tiglat intends to purchase energy-efficient manufacturing equipment in order to improve sustainability and reduce hazardous emissions during production.
These risk-sharing agreements are commonly used when jointly financing projects or providing loans, and risk-sharing facilities are the part of the EBRD's Small Business Initiative. In this particular scenario, if bank Eskhata encounters issues resulting in losses, the EBRD will bear half of these losses. This strategy reduces financial risks, making the project more attractive for stakeholders.
To date, the EBRD has participated in 15 risk-sharing deals in Tajikistan, totaling nearly $20 million. By sharing risks with partner banks, the EBRD enhances the capacity of local banks to lend to SMEs, which often struggle to access tailored financial support.