MICROCAPITAL BRIEF: European Bank for Reconstruction and Development (EBRD), Pilot Program for Climate Resilience (PPCR) Loan $3m in Local Currency to Tajikistan’s Eskhata Bank for Environmental Projects

The European Bank for Reconstruction and Development (EBRD), a multilateral institution headquartered in London, and the Pilot Program for Climate Resilience (PPCR), an initiative of various international development institutions that offers donations and preferential-rate loans for projects in developing countries, jointly have provided a local-currency loan equivalent to USD 3 million to Eskhata Bank, a commercial bank in Tajikistan that focuses on microfinance. EBRD and PPCR each contributed 50 percent to the loan, which contains “commercial”[1] and “concessional”[1] elements of unspecified size.

The proceeds of the loan will be on-lent to small and medium-sized enterprises (SMEs) and private households with the aim of enabling the purchase of energy efficient and renewable energy products as well as other technologies designed to protect the environment. It is anticipated that the adoption of such technologies will “reduce soil erosion and pressure on water and energy resources”[1] in Tajikistan. In addition to the funding, technical assistance will be provided to Eskhata Bank, funded by EBRD and the Department for International Development (DfID), an agency of the British government.

As of December 31, 2014, Eskhata Bank reports total assets of USD 258 million, a gross loan portfolio of USD 170 million, total deposits of USD 81 million, return on assets of 5.2 percent and return on equity of 40 percent. As of the same year, it has 55,000 active borrowers and 93,000 depositors. The majority of its operations are classified as microfinance per the US-based NGO Microfinance Information Exchange (MIX).

EBRD invested EUR 8.9 billion (USD 10.1 billion) in 377 projects in 34 countries during 2014, and as of December of that year, it reported total members’ equity of EUR 14.2 billion (USD 16.1 billion). By 2020, EBRD aims to increase its commitments to “sustainable resource projects”[1] to 40 percent of its annual budget. As of 2015, the total amount available under PPCR is USD 1.2 billion. As of 2014, DfID administered overseas development assistance of GBP 10.1 billion (USD 15 billion).

By Alíz Crowley, Research Associate

About Department for International Development (DfID)

Formed in 1997, the Department for International Development (DfID) is the department of the British government responsible for carrying out overseas development work. Its main spending areas include government and civil society, health, economic growth, education, and humanitarian assistance. As of 2014, the British government reported overseas development assistance of GBP 11.8 billion (USD 17.6 billion), out of which GBP 10.1 billion (USD 15 billion) was administered by DfID.

About Eskhata Bank

Established in 1993, Eskhata Bank is headquartered in the city of Khujand, Tajikistan. It operates as a commercial bank, providing loans, savings, cash and fund transfer services. The bank has 20 branch offices, 85 banking centers and 324 money transfer points in Tajikistan. As of December 31, 2014, Eskhata Bank reported total assets of USD 258 million, a gross loan portfolio of USD 170 million, total deposits of USD 81 million, return on assets of 5.2 percent and return on equity of 40 percent. As of the same year, it had 55,000 active borrowers and 93,000 depositors. The majority of its operations are classified as microfinance per the US-based NGO Microfinance Information Exchange (MIX).

About European Bank for Reconstruction and Development (EBRD)

The European Bank for Reconstruction and Development (EBRD) is a multilateral institution headquartered in London, England. The bank began operations in 1991 upon the agreement of 40 countries, and is owned by 64 countries as well as the European Investment Bank and the European Union as of 2015. It aims to finance operations that are both commercially viable and assist development in Eastern Europe, Central Asia and North Africa. It does this by providing loans, debt securities, equity investments, guarantees and technical assistance to micro- and small businesses via commercial banks and non-bank microfinance institutions (MFIs). EBRD invested EUR 8.9 billion (USD 10.1 billion) in 377 projects in 34 countries during 2014, and as of December of that year, it reported total members’ equity of EUR 14.2 billion (USD 16.1 billion).

About Pilot Program for Climate Resilience (PPCR)

Established in 2008, the Pilot Program for Climate Resilience (PPCR) is a funding mechanism under the Strategic Climate Fund (SCF) that belongs to the Climate Investment Funds (CIF) framework. The World Bank Group serves as the “Trustee and Administrating Unit” of PPCR, while the World Bank Group, the African Development Bank, the Asian Development Bank, the European Bank for Reconstruction and Development and the Inter-American Development Bank share in its implementation. PPCR offers developing countries donations and concessional funding for climate-resilient investment projects. These include agricultural projects, food security initiatives, water supply and sanitation infrastructure, feasibility studies for housing projects, and weather data analysis intended to support climate resilience in developing countries. The total amount available under PPCR is USD 1.2 billion as of 2015.

Sources and Additional Resources

[1] European Bank for Reconstruction and Development (EBRD), News, EBRD launches climate resilience credit line: first tranche to Bank Eskhata in Tajikistan

[2] Climate Investment Funds, Pilot Program for Climate Resilience

[3] Department for International Development (DfID), DFID Annual Report and Accounts 2014-2015

[4] Microfinance Information Exchange, Bank Eskhata

MicroCapital Universe Profile: Department for International Development (DfID)

MicroCapital Universe Profile: Eskhata Bank

MicroCapital Universe Profile: European Bank for Reconstruction and Development (EBRD)

MicroCapital Universe Profile: Pilot Program for Climate Resilience (PPCR)

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