The European Bank for Reconstruction and Development (EBRD) is lending US$1mn to Cotton Corporation Limatex (CCL), a privately-owned company based in Jalal-Abad in the south of the Kyrgyz Republic. The loan was possible due to the bank’s new Early Transition Countries (ETC) initiative.

CCL, owned by Victor Yakimenko and Tamara Evert, will use the revolving working capital financing to buy raw cotton for processing into fibre and yarn. CCL is building a yarn and gauze-manufacturing facility to use supplies from CCL’s three ginneries at which cotton seed is separated from raw cotton. The ginneries are located in Osh, Sakalduy (Djalabad Province) and Kulundu (Batken Province).

The project will indirectly benefit farmers growing cotton, the most important cash crop in Central Asia. Besides agreeing to environmental monitoring, CCL will further develop its monitoring of cotton suppliers in an effort to ensure appropriate labor standards.

The ETC initiative was launched by the EBRD in 2004 to stimulate market activity in the bank’s lowest income countries of operations: Armenia, Azerbaijan, Georgia, the Kyrgyz Republic, Moldova, Tajikistan and Uzbekistan.

The initiative aims to stimulate market activity in these countries by using a streamlined approach to financing more and smaller projects, mobilising more investment, and encouraging economic reform. The initiative is part of an international effort to address poverty in these countries. The bank will accept higher risk in the projects it finances in the ETCs, while still respecting the principles of sound banking.