OREANDA-NEWS. The EBRD is providing Bai Tushum, one of the leading microfinance institutions in the Kyrgyz Republic, with a $2 million guarantee for local currency loans from local banks. Bai Tushum will use the financing for on-lending to local micro and small enterprises, thus significantly facilitating their access to finance, the EBRD press service reports.

The EBRD's guarantee is the second to Bai Tushum, after a first one was issued last year, and it is one of the products available under the Non-bank Microfinance Institutions Framework II for Early Transition Countries (ETC). In many of these countries local currency funding is still in short supply which represents a serious impediment for the expansion of micro and small enterprises. Easing access to finance is therefore a key challenge to achieve sustainable growth.

Established in 1997, Bai Tushum has become a leading microfinance institution in the Kyrgyz Republic with a strong rural focus. The institution offers a range of agricultural loan products for crop production, livestock and food-processing. Bai Tushum currently has around 10,000 clients, with the majority of the portfolio outside the capital Bishkek.

Fernand Pillonel, Head of the EBRD's office in the Kyrgyz Republic, said the project confirmed the Bank's commitment to supporting the micro and small enterprise sector. It is expected that it will serve as an example to the sector and encourage more local banks to finance microfinance institutions. The EBRD expects to be able to offer more local currency loans in future, he added.

The EBRD's Non-bank Microfinance Institutions Framework for Early Transition Countries aims at strengthening microfinance institutions in Armenia, Azerbaijan, Georgia, the Kyrgyz Republic, Moldova, Mongolia, Tajikistan and Uzbekistan. Loans are provided for on-lending to the smallest borrowers across these countries. The facility is accompanied by a technical cooperation framework funded by donor governments.Through its micro and small enterprises programmes the EBRD has supported over one million small enterprises throughout eastern Europe, Russia, central Asia and the Caucasus.