MICROCAPITAL BRIEF: European Bank for Reconstruction and Development (EBRD) to Loan $3m in Local Currency Somoni to Microfinance Provider Imon International of Tajikistan to Support Small Businesses

The European Bank for Reconstruction and Development (EBRD), an international financial institution headquartered in London, recently announced that it has committed to loan the equivalent of USD 3 million in the local currency, somoni, to Imon International LLC, a microfinance provider in Tajikistan [1]. The loan marks the expansion of EBRD’s Local Currency Lending Programme in Early Transition Countries (ETC) to Tajikistan for the first time. The ETC Initiative aims to stimulate economic activity in the countries served by EBRD that are deemed to face the most significant economic challenges. With this 4-year loan, EBRD aims to allow the Tajik borrowers, including small enterprises, microfinance institutions and small banks, avoid taking on exchange-rate risks, which can force borrowers to repay much more than expected if exchange-rates change significantly.

Ulf Hindström, Head of EBRD Resident Office in Dushanbe, said, “With this new investment the EBRD is contributing to private business sector development in Tajikistan. Crucially, the customers of Imon will get better services and easier access to much-needed cash for further development of Tajik entrepreneurship. The local currency component of the loan is a key element in the financing, as we want Tajik borrowers without adequate foreign currency revenues to avoid facing exchange rate risk.” To date, EBRD has committed USD 309 million to various sectors of the Tajik economy. Imon has been cooperating with EBRD since 2005.

As of 2010, Imon reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 41 million, a gross loan portfolio of USD 34 million, approximately 28,900 borrowers, return on assets (ROE) of 6.5 percent and return on equity (ROE) of 24.5 percent. In April 2009, Imon received a rating of “A” from Microfinanza, a rating agency based in Italy.

About European Bank for Reconstruction and Development (EBRD): EBRD is a development finance institution headquartered in London. The bank began operations in 1991 upon the agreement of 40 countries and is now owned by 61 countries as well as the European Investment Bank and the European Union. It aims to finance operations that are both commercially viable and assist development in 29 countries in Eastern Europe and Central Asia. 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). Its operating assets for fiscal 2009 were reportedly EUR 6.1 billion (USD 8 billion).

About Imon International: Imon International LLC is a microfinance institution (MFI) in Tajikistan offering lending, leasing, consulting and advisory services to small enterprises, microfinance institutions and small banks. Imon was founded by the National Association of Business Women of Tajikistan, a public organization and US-based nonprofit Mercy Corps in 1999 as “Microloans in Tajikistan”. In 2007, the founders transformed the organization into a commercial operation, Imon International LLC. The organization has since grown to operate seven full branches and 33 field offices. As of 2010, Imon reported to the US-based nonprofit Microfinance Information Exchange (MIX) total assets of USD 41.1 million, a gross loan portfolio of USD 34.1 million, approximately 28,900 borrowers, return on assets (ROE) of 6.5 percent and return on equity (ROE) of 24.5 percent. In April 2009, Imon received a rating of “A” from Microfinanza, a rating agency based in Italy, indicating that Imon has “Very good operations and performance. Exposition to risks is minimum and risks are very well monitored and managed. Stable and unlikely to be adversely affected by foreseeable events.”

Sources and Additional Resources:

[1]Press Release by the European Bank for Reconstruction and Development (EBRD), June 2011, http://www.ebrd.com/english/pages/news/press/2011/110615.shtml

Microfinanza Rating, Ratings & Assessments, http://www.microfinanzarating.com/ratings/reports/IMON%20-%20Tajikistan.%20Final%20Rating%20Report_%20April%202009.pdf

MicroCapital Universe Profile: European Bank for Reconstruction and Development (EBRD), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=European+Bank+for+Reconstruction+and+Development+%28EBRD%29

MicroCapital Universe Profile: Imon International, https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=IMON+International

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