The European Bank of Reconstruction and Development (EBRD), a multilateral development institution that fosters private sector investment, will provide a USD 4 million line of credit to the Demir Kyrgyz International Bank (DKIB). DKIB will use the line of credit to extend loans to micro, small and medium enterprises (MSME) in the Kyrgyz Republic. In addition to the line of credit, the EBRD will offer training in credit appraisal to DKIB staff and technical assistance. The loans made by DKIB to MSME’s will range from USD 10,000 to USD 400,000.
The Head of the EBRD office in the Kyrgyz Republic, Kenji Nakazawa, commented that “development of the private sector through support to micro, small and medium companies is one of the EBRD’s key objectives in the Kyrgyz Republic. In the current tight credit market, the EBRD is helping DKIB provide much needed long-term finance to local enterprises. The credit-line will help the Kyrgyz financial sector and will strengthen the real economy by stepping up the flow of credits”.
The Kyrgyz Republic has a national microfinance policy, the Medium-Term Microfinance Development Strategy 2006-2010, which according to a Consultative Group to Assist the Poor (CGAP) paper includes good practice principles such as no cap on interest rates. Currently the non bank financial sector of Kyrgyzstan has one of the deepest outreaches in the East and Central Asia region, reaching over 8 percent of the population below the poverty line. According to the MIX Market, the microfinance information clearinghouse, 35 microfinance institutions (MFIs) currently operate in the Kyrgyz Republic.
DKIB, the first international commercial bank in the Kyrgyz Republic, was established in 1997. For the year ended 31 December 2008 DKIB’s audited financial statements showed Total Assets of KGS 2.5 billion (USD 59 million) and Loans to Customers totaled KGS 1 billion (USD 24.4 million). Mr. Halit Cingillioglu, chairman, owns 70 percent of DKIB with the remaining 30 percent split equally between the International Finance Corporation (IFC) and EBRD. Since inception the EBRD has provided DKIB with over USD 1.5 million in equity investment and trade facilitation funds.
The EBRD supports projects in 30 countries in Central Europe and Asia. It was established in 1990 and is headquartered in London. The bank’s mission is to finance commercially viable projects and assist in development. It promotes microfinance through its MSME Program where it conducts programs through financial intermediaries. The EBRD has provided more than EUR 14.8 billion (USD 20.69 billion) through this program including over 3.1 million MSME loans in 19 countries. See this MicroCapital story for an overview of EBRD´s USD 1 billion in microfinance investments in the past two years.
By Sally Levy, Research Assistant
Additional Resources:
Loans.Cbonds: EBRD opens $4m credit line for Demir Kyrgyz International Bank
Demir Kyrgyz International Bank (DKIB): Home
European Bank of Reconstruction and Development (EBRD): Home
MicroCapital Story: European Development Finance Institutions Part 1: European Bank for Reconstruction and Development (EBRD) Invests Over USD 1 Billion in Microfinance Initiatives Since 2007
Consultative Group to Assist the Poor (CGAP): Government’s Role in Microfinance: What is the Optimal Policy Mix?
MIX Market: Kyrgyzstan
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