DUSHANBE, March 31, Asia-Plus -- The European Bank for Reconstruction and Development (EBRD) is extending its successful program to support micro and small enterprises (SMEs) in Tajikistan by providing a $4 million loan to The First MicroFinance Bank of Tajikistan (FMFB-T).

A loan agreement for $4 million was singed by Fernand Pillonel, head of the EBRD’s Office in Tajikistan, and Jim Egan, CEO of FMFB-T, in Dushanbe on March 30.

Fernand Pillonel said that the loan to FMFB-T will enlarge the financial resources of the bank and help it to expand its lending activity further to the remotest regions of the country.  This in turn will significantly increase the outreach of the microfinance facility and assist in satisfying growing demand for access to finance.

Jim Egan noted that the confidence shown by the EBRD in lending to the bank is testimony to its successful activities in the Tajik banking sector.  The unique mandate of FMFB will be greatly facilitated by the EBRD’s loan and will be used to finance future growth and expansion in both rural mountainous regions and urban centers.

The loan comes under the Tajikistan Micro and Small Enterprise Finance Facility (TMSEFF), established in 2003 and expanded in 2006, to provide loans to micro, small and medium-sized enterprises. Since the establishment of the facility more than 18,000 loans with an average value of $3,000 have been provided by end-2006. Loans to female entrepreneurs constitute 41 per cent of the portfolio. Because of its strong rural focus, FMFB provides even smaller average loan sizes of around $1,000 and by working with this dedicated microfinance bank, the EBRD will be able to deepen its outreach. The loan will also help to broaden the impact of EBRD funds – in 2006, FMFB itself disbursed almost 10,000 loans.

A central activity under the TMSEFF program is capacity and institution building at the partner banks. The UK’s Department for International Development together with USAID and the EU has provided technical assistance funds for institution building in the banking sector. Additionally, the Swiss government through SECO and the EBRD’s Early Transition Countries (ETC) Fund have contributed to the program.  Assistance to FMFB will be tailored to meet its needs, and technical assistance will be provided by the ETC Multi Donor Fund.

Established in 2003, The First MicroFinance Bank was the first commercial bank in Tajikistan with a principal focus on the provision of microcredit lending.  The Bank has a national mandate to provide a comprehensive range of financial services to the poor throughout the country.  In addition to its Head Office in Dushanbe, the bank currently has branches in Khorog, Gharm, Khujand and in the Khatlon province.  The bank is affiliated with the Aga Khan Development Network (AKDN) and its shareholders are the Aga Khan Agency for Microfinance (AKAM), the Aga Khan Foundation (AKF), International Finance Corporation (IFC) and KfW Bankengruppe.