MICROCAPITAL BRIEF: FMO Disburses $15m in Local Currency to FINCA Bank Kyrgyzstan for On-lending to Micro-, Small, Medium-sized Enterprises (MSMEs), Primarily in Rural Areas 

Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO), a Dutch public-private partnership that aims to promote growth in developing economies, recently announced that it will disburse a syndicated loan in local currency equivalent to USD 15 million to FINCA Bank Kyrgyzstan, a subsidiary of the US-based nonprofit microfinance network Foundation for International Community Assistance (FINCA) International.

It is anticipated that the funds will be used for on-lending to micro-, small and medium-sized enterprises (MSMEs) in Kyrgyzstan. FMO will issue USD 10 million of the loan funds while an unnamed financial institution will invest the remainder. The fact that the five-year credit facility will be denominated in local currency allocates currency risk to the wholesale lenders and away from FINCA Bank Kyrgyzstan and its customers.

Margarita Cherikbaeva, the chief executive officer of FINCA Bank Kyrgyzstan, said that “this is a substantial expansion in funding received from FMO and is our first syndicated loan facility. This key transaction will expand the financing of small businesses, especially in the agricultural sector and across the rural regions of Kyrgyzstan”[1].

As of year-end 2013, FINCA Bank Kyrgyzstan reported loans outstanding of USD 152 million and 128,000 clients. Further financial information on FINCA Bank Kyrgyzstan is not available. As of 2013, FINCA International has total assets of USD 1.1 billion and serves 1.7 million clients through subsidiaries in 22 countries. As of June 2014, FMO reported total assets of EUR 6.4 billion (USD 7.8 billion).

By Victor Mugo, Research Associate

About FINCA International

The Foundation for International Community Assistance (FINCA) International, a nonprofit microfinance network based in Washington, DC, provides financial services to poor families through a network of locally managed institutions. FINCA was founded in 1984 by Dr. John Hatch, who is known for helping develop “village banks” in which each member guarantees the loans of other members. FINCA targets its services to poor women living in the Americas, sub-Saharan Africa and Eurasia. As of 2013, FINCA International has total assets of USD 1.1 billion and serves 1.7 million clients through subsidiaries in 22 countries. In December of 2011, FINCA launched a subsidiary, FINCA Microfinance Holding LLC, with funding from the International Finance Corporation (IFC), KfW Bankengruppe, Nederlandse Financierings-Maatschappijvoor Ontwikkelingslanden NV (FMO), responsAbility, and Triple Jump.

About FINCA Bank Kyrgyzstan

A unit of US-based microfinance nonprofit FINCA International, FINCA Kyrgyzstan was established in 1995 with a USD 6.2 million grant from the United States Agency for International Development (USAID), a US government agency that supports global economic and humanitarian assistance. According to FINCA Kyrgyzstan, approximately 70 percent of the unemployed in Kyrgyzstan are women, which is why the organization mainly targets female bazaar workers as its clients. As of year-end 2013, FINCA Kyrgyzstan reported loans outstanding of USD 152 million and 128,000 clients. Further financial information on the organisation is not available.

About Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO)

Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO) is a Dutch development bank that was founded in 1970. It supports financial institutions and governments through loans, guarantees and other investment promotion activities including local-currency investments. FMO is owned by the Dutch government, which holds a 51-percent stake, alongside commercial banks, trade unions, employers’ associations and individual investors. As of June 2014, FMO reported total assets of EUR 6.4 billion (USD 7.8 billion).

Sources and additional resources

[1] FINCA News: FMO arranges USD 15 million loan syndicate to FINCA Bank Kyrgyzstan

http://www.finca.org/press-release/fmo-arranges-usd15-million-loan-syndication-to-finca-bank-kyrgyzstan/

[2] MicroCapital Universe Profile: FINCA Bank Kyrgyzstan

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=FINCA+Kyrgyzstan

 

[3] MicroCapital Universe Profile: Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden (FMO)

https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Nederlandse+Financierings-Maatschappijvoor+Ontwikkelingslanden+N.V.+%28Netherlands+Development+Finance+Company%2C+FMO%29

 

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