OREANDA-NEWS. August 13, 2010. This week the EBRD disbursed KGS 47 million to two of the top microfinance institutions in the Kyrgyz Republic for on-lending to smaller microfinance institutions and local entrepreneurs in rural regions of the country, reported the press-centre of EBRD.

The first, in the amount of KGS 47 million (equivalent to USD 1 million) represents the first tranche under a USD 2 million senior loan to MCC Frontiers, the largest non-bank wholesale microfinance provider in Central Asia serving the lower end of the microfinance market in Kyrgyzstan, Tajikistan and Kazakhstan.

The second, in the amount of KGS 65 million (equivalent to USD 1.4 million), represents the second tranche under KGS 130 million loan to FINCA MCC, the largest microfinance institution in the Kyrgyz Republic, for on-lending to small and micro entrepreneurs and to solidarity groups.

Frontiers has a unique position in the market due to its business model, as it acts as a conduit to smaller microfinance institutions (MFIs) in Central Asia that EBRD cannot reach. The founder and sole owner of Frontiers is ACDI/VOCA, which has five affiliates in Central Asia and Caucasus: in Kazakhstan, Kyrgyzstan, Tajikistan and Azerbaijan. These companies are among the leading non-bank microfinance providers in their respective countries.

FINCA MCC is the leading non-bank micro finance provider in Kyrgyz Republic, ranking first by size of total assets, loan portfolio and equity. It also has one of the largest client outreach and geographical coverage. Having operated in the Kyrgyz Republic since 1995, FINCA has a strong focus on serving micro entrepreneurs across the country. Main loan products are group solidarity guarantee loans and individual MSE loans, with the majority of the portfolio in loans made outside of the capital, Bishkek.

In the current environment, when banks are reducing their lending activities due to liquidity constraints, the microfinance institutions remain a key source of funds for the development of Kyrgyz MSEs.

“Our disbursements to MCC Frontiers and FINCA MCC will support the companies’ plan to expand microfinance lending to sustainable MFIs and rural MSEs clients. At the same time, EBRD is providing both institutions with much needed long-term local currency funding which will help them in managing their FX risk. We hope to encourage other commercial lenders to continue funding this important sector for the Kyrgyz economy,” said Kenji Nakazawa, the Head of EBRD’s Office in Bishkek.

Both transactions are part of a USD 60 million non-bank MFI framework for Early Transition Countries* approved by EBRD in September 2008.

Since the beginning of its operations in the Kyrgyz Republic, the EBRD has invested over EUR252 million in more than 70 projects in the infrastructure, corporate, energy and financial sectors.

* Armenia, Azerbaijan, Georgia, Kyrgyz Republic, Moldova, Mongolia, Tajikistan, and Uzbekistan; Belarus was added in December 2009 and Turkmenistan in March 2010.