The International Finance Corporation (IFC), a member of the World Bank Group, announced a pair of microfinance and mortgage initiatives in the Krygyz Republic. On the microfinance side, IFC is extending a USD 5 million loan to the Kyrgyz Investment and Credit Bank (KICB), a full-service commercial bank in the Krygyz Republic. The proceeds will be directed toward expanding lending to micro, small and medium businesses in remote areas of the Krygyz Republic, as well as supporting agricultural projects.
Lars Thunell, the CEO of IFC, emphasized the IFC’s strategy of partnering with local institutions: “IFC is partnering with Kyrgyz banks to develop the country’s microfinance industry…This will help the bank diversify its loan portfolio and grow stronger, while at the same time creating opportunities for people to grow their businesses.” IFC also holds 17% equity ownership in the KICB, and was one of the founding shareholders of KICB in 2001. Other shareholders include the Aga Khan Fund for Economic Development, Habib Bank Limited, DEG and KfW, the European Bank for Reconstruction and Development, and the Kyrgyz government. KICB does not report information to the MIX Market, the microfinance information clearinghouse.
In addition, IFC also announced it will provide mortgage lending advisory services to Krygyz microfinance institution Bai Tushum. The scope of IFC’s advisory services include analyzing Bai Tushum’s practice, which began in 2004, and assisting with the establishment of an environmental management system in order to improve sustainability and expand its mortgage portfolio. Mr. Thunell emphasized the role of Bai Tushum as a national champion in the Krygyz mortgage industry: “IFC wants to help Bai Tushum make housing more affordable for people in the Kyrgyz Republic. We are optimistic that our support will strengthen Bai Tushum’s mortgage business, making it a model for other Kyrgyz financial institutions”.
Bai Tushum was created in 2000 with the mission of contributing to sustainable development of the Kyrgyz economy by granting financial services to farmers and micro, small and medium size entrepreneurs. As of July 2008 Bai Tushum had total assets of USD 56.5 million and a total loan portfolio of USD 37.5 million with 17,431 active borrowers and a debt to equity ratio of 608.34 percent. In 2007 it earned a return on equity of 23.31 percent. MicroCapital has reported on Bai Tushum’s recent rounds of financing, including a USD 1.5 million loan from responsAbility in June 2008, a USD 1 million loan from Dexia Microcredit in May 2008 and a USD 2 million guarantee from the European Bank for Reconstruction and Development in November 2007.
By Jocelyn Cheng, Research Assistant
IFC Press Release: IFC Invests in Kyrgyz Investment and Credit Bank to Expand Lending in Remote Regions of Kyrgyz Republic.
IFC Press Release: IFC Supports Mortgage Lending in the Kyrgyz Republic.
IFC Summary of Project Information. Kyrgyz Republic – SEF KICB.
MicroCapital.org article, June 3 2008: Swiss responsAbility Loans $6.4m to Eastern European and Central Asian Microfinance Institutions
MicroCapital.org article, May 23 2008: Dexia Microcredit Fund of Luxembourg Lends $2m to Asian Microfinance Institutions Bai Tushum Financial Foundation (BTFF), Finance for Development LLC (FinDev) and Angkor Microfinance Kampuchea (AMK)
MicroCapital.org article, November 13 2007: European Bank for Reconstruction and Development (EBRD) Provides $2m Guarantee to Kyrgyz Microfinance Institution Bai Tushum
The MIX Market profile for Bai Tushum: http://www.mixmarket.org/en/demand/demand.show.profile.asp?token=&ett=859
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