A year after launching the US$7mn Tajik Micro and Small Enterprise (MSE) Finance Facility with the help of international donors and following the successful financing of 1,500 Tajik businesses so far, the European Bank for Reconstruction and Development (EBRD) has granted its second credit line to a local bank to boost the financing of small businesses in this Central Asian country.

EBRD and Tajiksodirotbank signed the US$2mn credit line.

Tajiksodirotbank was one of the original partners of the MSE Finance Facility launched by the EBRD last year. In line with EBRD’s objectives, Tajiksodirotbank had until now mobilised its own funds to provide US$1.3mn in loans to 500 Tajik micro enterprises. The EBRD credit line will enable Tajiksodirotbank to expand its lending to MSEs.

In all, the EBRD’s three local partner banks have lent US$3.8mn to 1,500 Tajik business people under the facility since its launch. The EBRD’s first credit line, for US$1mn, was signed with Eskhata Bank in February. The third bank involved, TajPromBank, has so far also been lending its own funds.

It is donor financing from the international community which has enabled local Tajik banks to use their own funds to make micro and small business loans available to their clients. In addition, grants from the UK’s Department for International Development, USAid and the US government, and the European Commission have financed the use of EBRD consultants to train the staff of Tajik banks in the techniques of micro-lending.

The finance facility is also underpinned by the Swiss government, which, through its State Secretariat for Economic Affairs, provides a risk-sharing scheme to support EBRD loans to local commercial banks.

Almost all the clients benefiting from the EBRD programme have never had access to finance before. Micro loans are disbursed to commercially viable private enterprises both in dollars and Tajik somoni. Over time it is envisaged to widen the range of loan products as clients grow and partner banks gain confidence in this vibrant market segment.

The EBRD programme has so far been operating in Dushanbe and two cities in the northern Sogd region, but is now ready to spread to the south of Tajikistan. Kurgan Tube and TursanZade will be the first outposts of the programme in the South, and further expansion to new cities and more remote areas will continue in 2005 through both current and potential new Tajik partners.