An innovative programme funded by the EBRD’s multi-donor ETC Fund has helped to promote saving via the formal banking system and taught potential bank customers how to plan their budgets.
Farmers, dressmakers and craftspeople are some of the local entrepreneurs enjoying access to lower-risk loans in Tajikistan, thanks to the EBRD’s support for microfinance provider IMON International.
Many people in the EBRD’s early transition countries (ETCs) rely heavily on remittances – money sent by relatives working abroad – to meet their day-to-day living costs. But few of these remittance recipients have bank accounts or save with a formal financial institution.
The EBRD completed a successful programme in several ETCs, including Azerbaijan, Georgia, Kyrgyz Republic and Tajikistan, to strengthen the financial inclusion of remittance recipients. World Bank figures show that in these four countries fewer than 20 per cent of adults have a bank account and fewer than 5 per cent save with a formal financial institution.
The programme, funded by the EBRD’s multi-donor ETC Fund, helped to promote a culture of saving via the formal banking system and taught potential bank customers how to plan their budgets. Financial advisers provided free consultations to customers, giving particular attention to women to help them manage family budgets and plan for the future.
The programme has provided 120,000 remittance receivers with a financial consultation. Of these, 18 per cent opened a bank account after receiving training and deposited in their new accounts a total equivalent to US$ 20 million (or €15 million).
Farmers, dressmakers and craftspeople are just some of the local entrepreneurs enjoying access to lower-risk and longer-term loans in Tajikistan thanks to the EBRD’s financial and technical support for microfinance provider IMON International.
In 2013, the EBRD took a 12.5 per cent equity stake in IMON, Tajikistan’s leading microfinance and deposit-taking institution. This transaction – the Bank’s first equity investment in a microfinance institution – will further strengthen IMON’s corporate governance and support the institution as it seeks to become a commercial bank.
The Bank also disbursed the second tranche of a four-year local currency loan to IMON equivalent to €4 million. IMON will use the funding to provide loans to micro and small businesses across the country, including those in remote rural regions. Because the EBRD finance is in local currency, IMON and its clients will avoid foreign exchange risks, while the lengthy term of the financing gives IMON’s borrowers more time to develop their businesses before they have to pay the money back.
With EBRD help and backing from donors, IMON seeks to address the shortage of small business financing in Tajikistan, especially in rural areas, and to encourage more entrepreneurship among women, to whom it offers specially-tailored products.
An equity fund aimed at turning Baltic companies into leaders in their region and beyond, and at making them attractive to international investors, benefited last year from an EBRD commitment of up to €20 million.
The BaltCap Private Equity Fund II has a target size of €100 million and focuses on equity and equity-related investments in small and medium-sized enterprises and small mid-cap companies, such as Air Maintenance Estonia, in these countries.
Boosting the provision and use of venture capital and private equity is one of the EBRD’s main priorities in the Baltic states, especially at a time when other sources of long-term finance remain scarce. Small companies, in particular, need equity financing. Extending this outreach is part of the EBRD’s new integrated approach for the further development of the venture capital and private equity ecosystem in the three countries.
Under this approach, the Bank will combine project investments with policy dialogue and technical assistance to help innovative companies with far-reaching potential obtain the financing they need to grow.
EBRD annual Bank investment by sector, 2013
Financial institutions: annual Bank investment by subsector
Key facts about our work in this sector[table class=””] [attr colspan=”1″] “2013 saw new business in the financial sector covering 29 countries.”
“The EBRD made commitments to 157 financial sector projects. 39 per cent of these projects targeted central and south-eastern Europe.”
“During the year the Bank signed the equivalent of almost €1.5 billion in local currency loan and bond transactions – 26 per cent of all debt extended by the EBRD in that period.”
“Since 1994, the EBRD has advanced local currency loans worth a total equivalent to €8 billion in 21 currencies.”
The EBRD’s Annual Report 2013 provides a comprehensive overview of our activities and achievements in the countries where we invest.
The report demonstrates that, amid economic turbulence and the deterioration of economies, the EBRD remains a strong, resilient and trusted partner.
It describes the transition impact of the Bank’s investments, projects and policy work, highlights its innovation in key sectors and geographical initiatives, and shows how the EBRD continues to promote sustainable growth and recovery.
The EBRD is investing in changing people’s lives and environments across a region that stretches from central Europe to Central Asia, the Western Balkans and the southern and eastern Mediterranean.
Working together with the private sector, we invest in projects, engage in policy dialogue and provide technical advice that fosters innovation and builds sustainable and open-market economies.
We provide funds for well-structured, financially robust projects of all sizes (including many small businesses), both directly and through financial intermediaries such as local banks and investment funds. The Bank works mainly with private sector clients, but also finances municipal entities and publicly owned companies.
Our principal financing instruments are loans, equity investments and guarantees. We maintain close policy dialogue with governments, authorities, international financial institutions, and representatives of civil society, and provide targeted technical assistance using funds donated by member governments and institutions.
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