Less than three years after launching a Tajikistan Micro and Small Enterprise Finance Facility (TMSEFF) – which helps Tajik commercial banks lend to the smallest entrepreneurs – the EBRD is more than quadrupling the size of the popular US$7mn fund by injecting a further US$25mn.

Launched in November 2003, the US$7mn TMSEFF has been consistently in such strong demand with Tajik micro and small enterprises (MSEs) that, by the end of 2005, 9,174 sub-loans for more than US$25mn had been disbursed.

The loans have enabled the smallest entrepreneurs – more than half of them women, often traders buying goods around Central Asia or in China or Dubai for resale at home – to expand operations.

Although the maximum size of micro sub-loan to date has been US$30,000, the largest disbursed to date has been US$25,000 and the average has been US$2,687. Repayment is unusually punctual, with only 0.15% of loans in arrears by end of 2005.

Now, as Tajikistan’s business community grows, the EBRD and its partner banks will use the new funds to gradually raise the upper limit for micro-loans to US$100,000, as growing businesses require larger loans for investment purposes.

Also, the programme has significantly expanded in the rural areas and is now operating in 13 towns and secondary towns across three of the four regions. Most of the facility’s business, however, will continue to be in microlending, which stimulates job creation, poverty alleviation and grass-root economic development, the EBRD’s Chikako Kuno, director, Group for Small Business, said at the signing during the bank’s recent annual meeting in London.

This is the largest MSE initiative in Tajikistan, and as of September 2005 had created or helped to maintain an estimated 19,000 new jobs. Current participants are Tajiksodirot Bank, Eskhata, TajPromBank and AgroInvestBank and further partners are being sought.

A first loan under the expanded programme, for US$4mn, was signed with TajPromBank at the annual meeting.

TMSEFF – the fourth project of its kind in Central Asia, following J-KSBP in Kazakhstan, KMSEF in Kyrgyzstan and J-USBP in Uzbekistan – has been co-financed by the IFC and the Swiss Seco.

Technical assistance has been financed by the UK’s DFID, USAid, the EU, Japan and the Early Transition Country Multi-Donor Fund to support the partner banks in training loan officers, setting up new MSE units, building up MSE loan portfolios, streamlining lending procedures and developing necessary skills and capacity to provide creditworthy MSEs with swift and adequate access to finance.