Selected Press Release

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Rita Jupe
Phone: +1 (202) 458-8967
E-mail: rjupe@ifc.org

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Gulnura Djuzenova
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Washington, D.C., January 26, 2006—The International Finance Corporation, the private sector arm of the World Bank Group, today signed an agreement to provide a $2.2 million financing package to Micro Credit Agency Bai Tushum Financial Foundation, one of Kyrgyzstan’s leading micro lending institutions.

Through the package, IFC will support the transformation of Bai Tushum from its present not-for-profit status to a more sustainable, commercially-oriented, deposit-taking financial institution that can serve as a model for similar microfinance organizations in the Kyrgyz Republic.

IFC’s Director for Global Financial Markets, Jyrki Koskelo, said, "The IFC financing will enable Bai-Tushum to expand its lending activities to farmers, private entrepreneurs, and micro and small enterprises and extend its reach to other remote regions of the Kyrgyz Republic.”

The IFC financing comprises a $1.2 million credit line to Bai Tushum for increasing its portfolio of micro loans, thereby scaling up operations in preparation for the transformation. Additionally, IFC will receive an option to acquire an equity stake for $1 million, or up to 20 percent shareholding, in the new commercially-oriented Bai Tushum microfinance institution.

The Bai-Tushum project reflects IFC’s strategy of strengthening local financial institutions and expanding microfinance in the Kyrgyz Republic and Central Asia in order to support private sector development.  Providing access to capital is critical to IFC’s small business development strategy, as it will help boost private sector wealth and job creation, lift confidence in the financial sector, and strengthen microfinance by introducing commercially-oriented techniques.

Shahbaz Mavaddat, IFC’s Acting Director for Southern Europe and Central Asia, said, “The creation of a new regulated microfinance company will make a significant contribution to economic development in the Kyrgyz Republic.  As a regulated microfinance company, Bai Tushum will be able to provide a fuller range of credit and savings products that were previously not available to micro-entrepreneurs.”

IFC’s development agenda in the Kyrgyz Republic complements the emphasis that the Kyrgyz authorities have placed on the development of the microfinance sector.

Gorton de Mond, IFC’s Regional Representative covering Central Asia, said, “The Bai Tushum transformation project is the first of its kind in the Kyrgyz Republic and provides an opportunity for the authorities to refine and apply the rules and regulations that have been laid out to address the transformation of suitably qualified micro credit organizations operating in the country.”

Gulnara Shamshieva, Bai Tushum’s CEO, said, “This is our first medium-term loan from an international financial institution and it will enable us to fulfill our expansion plans.  IFC’s investment strengthens Bai Tushum’s commercialization process and elevates its profile as a professional organization that has gained recognition from the international financial community.”

Bai-Tushum was established in 2000 with the support of U.S.-based ACDI/VOCA (Agricultural Cooperative Development International/Volunteers in Overseas Cooperative Assistance) and CARITAS, a Swiss relief agency.  It provides microcredit services to private entrepreneurs, traders, farmers, and micro and small agricultural enterprises using individual and group loan lending methodologies.  Employing 83 people, Bai-Tushum has 10 regional offices covering six oblasts of the Kyrgyz Republic, including Osh, Jalalabad, Chui, and Issyk-kul, with plans to expand into the Naryn and Batken regions.  As of January 1, 2006, Bai-Tushum had a credit portfolio of about $7 million issued to more than 3,700 clients.  Loans range from $500 to $30,000 and are denominated in the local currency. Recently, Bai Tushum received a Merit Award in a worldwide competition for Financial Transparency Award organized by the Consultative Group to Assist the Poor, a global resource center for microfinance standards, operational, tools, training, and advisory services.

The mission of IFC (www.ifc.org) is to promote sustainable private sector investment in developing and transition countries, helping to reduce poverty and improve people’s lives. IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, helps clients improve social and environmental sustainability, and provides technical assistance and advice to governments and businesses.  From its founding in 1956 through FY05, IFC has committed more than $49 billion of its own funds and arranged $24 billion in syndications for 3,319 companies in 140 developing countries. IFC’s worldwide committed portfolio as of FY05 was $19.3 billion for its own account and $5.3 billion held for participants in loan syndications.