MICROCAPITAL BRIEF: The International Finance Corporation (IFC) and the Government of Switzerland Launch Three-Year Program to Improve Financial Infrastructure for Small and Medium Enterprises (SMEs) in Azerbaijan, the Kyrgyz Republic, Tajikistan, and Uzbekistan

The International Finance Corporation (IFC), the investment arm of the World Bank, and the Government of Switzerland have launched a three-year program to improve the financial infrastructure and increase financial access for small and medium enterprises (SMEs) in four Central Asian countries: Azerbaijan, the Kyrgyz Republic, Tajikistan, and Uzbekistan [1,2,3].The program is part of the IFC’s “Azerbaijan-Central Asia Financial Markets Infrastructure Advisory Services Project” [1]. The IFC and the Swiss government will work with governments and financial institutions in the Central Asian countries to create and improve credit information sharing systems and provide education in risk management to financial institution employees [1]. In addition to this direct approach, the organizations will also increase public awareness about the benefits of both credit information sharing systems and risk management [1]. Thus far, the IFC has held discussions and training sessions regarding credit bureau operations, inviting “high-level decision-makers” as well as potential investors for private credit bureaus [1]. The Government of Switzerland has provided an undisclosed amount of funding for the project through its State Secretariat for Economic Affairs [1].

By Christopher Maggio, Research Assistant

About: International Finance Corporation (IFC)
A member of the World Bank Group, IFC uses loan and debt securities, equity investments and guarantees as instruments of poverty alleviation. It “invests in companies and financial institutions in emerging markets” as well as providing technical assistance. The IFC has 182 member countries that “collectively determine its policies, and approve investments.” In fiscal year 2009, its new investments totaled USD 14.5 billion.

MicroCapital’s Microfinance Universe profile: IFC

Bibliography:
[1] IFC press release entitled ‘IFC and Swiss Government Expand Access to Finance in Azerbaijan, Central Asia’: http://www.ifc.org/ifcext/media.nsf/content/SelectedPressRelease?OpenDoc…
[2] IFC: http://www.ifc.org/
[3] Government of Switzerland: http://www.admin.ch/index.html?lang=en

Source Article:
IFC and Swiss Government Expand Access to Finance in Azerbaijan, Central Asia

Bishkek, Kyrgyz Republic, December 25, 2009—IFC, a member of the World Bank Group, is partnering with the government of Switzerland in launching a three-year project to strengthen financial market infrastructure and improve access to finance for small and medium enterprises in Azerbaijan, Kyrgyz Republic, Tajikistan, and Uzbekistan.

IFC will work with the respective governments and financial institutions to establish and strengthen credit information sharing systems and introduce formal education in risk management and certification for financial institution employees. It also will help increase public awareness of the benefits of credit information sharing systems and risk management. This initiative is part of the Azerbaijan-Central Asia Financial Markets Infrastructure Advisory Services Project.

IFC held roundtables and training sessions on credit bureau basics and practices over last two months in each country. The roundtables brought together high- level decision-makers and potential shareholders in private credit bureaus, and stressed the importance and benefits of credit information sharing. The two-day seminars that followed the roundtables provided middle management from financial intermediaries and credit information sharing institutions with a review of key issues related to private credit bureau operations.

“We are very interested in developing credit information exchange mechanisms in the country and believe that with IFC’s help we’ll be able to establish a successful credit bureau with a wide scope of activity serving creditors and borrowers at the highest level,” said Elchin Habibov, Head of the Central Bank’s Centralized Credit Registry Services in Azerbaijan.

“Supporting development of small enterprises by providing long-term and sustainable access to finance is a Swiss government priority in Tajikistan,” said Rudolf Schoch, Country Director, Swiss Cooperation Office in the Tajikistan. “The project will help financial institutions make faster and accurate credit decisions, increasing the availability and affordability of financial services for individual consumers and SMEs.”

Effective credit information sharing systems are critical to expanding access to credit for both individuals and small businesses. Credit bureaus allow financial institutions to get timely, credible, and objective information on borrowers, reducing loan processing time and credit defaults.

IFC is the only international financial institution focused exclusively on the private sector, the engine of sustainable development in emerging markets. Along with the IBRD, it is currently seeking a capital increase to strengthen its ability to create opportunity for the poor in developing countries—including by developing financial infrastructure to expand access to finance for people and smaller businesses in the region.

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