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| Bai Tushum II |
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| Summary of Proposed Investment |
| This Summary of Proposed Investment is prepared and distributed to the public in advance of the IFC Board of Directors’ consideration of the proposed transaction. Its purpose is to enhance the transparency of IFC’s activities, and this document should not be construed as presuming the outcome of the Board decision. Board dates are estimates only. |
| Project number | 27065 |
| Company name | Micro credit Agency Bai Tushum Financial Fund |
| Country | Kyrgyz Republic |
| Sector | Finance & Insurance |
| Environmental category | FI |
| Department | Global Financial Markets Group |
| Status | Active |
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| Date SPI disclosed | December 2, 2008 |
| Projected board date | February 15, 2009 |
| Previous Events | Invested: June 25, 2009
Signed: April 9, 2009
Approved: March 20, 2009 |
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| Overview |
Sponsor/Cost/Location |
Development Impact |
Contacts |
Attachments |
| Project description |
Micro Credit Company Bai Tushum (“Bai Tushum”, or “BT”) is an existing IFC client and one of Kyrgyzstan’s leading licensed micro lending institutions. Originally, Bai Tushum was created as a noncommercial, not-for-profit organization whose main goal was to contribute to the social and economic development of rural and urban areas of the Kyrgyz Republic. Since its inception, BT has become one of the leading and sound microfinance institutions in Kyrgyzstan and overcome financial dependence on grant resources and has transformed itself into a sustainable microfinance entity. It provides microlending services to develop and support agricultural, small and medium enterprises, and farmers. BT is expected to become a deposit taking financial institution by end-2009.
The purpose of the project is:
- To support Bai Tushum's loan portfolio growth (as it expands its lending activities throughout the country);
- To support Bai Tushum’s establishment of a sustainable microfinance company which will have deposit taking activities. |
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| Project sponsor and major shareholders of project company |
Microcredit company (MCC) Bai Tushum is 100% owned by Microcredit Agency (MCA) Bai Tushum which was established through the consolidation of two farmer-lending associations by ACDI/VOCA (USA) and CARITAS (Switzerland).
ACDI/VOCA - is a private, US, non- profit organization that helps to expand access to finance to small enterprises and rural households. It operates in 38 countries, has annual revenues of over $60 million, employs over 400 people and has 4,500 volunteers. ACDI/VOCA has founded or supported 12 financial institutions and all are operationally sustainable. It has significant experience in Central Asia and owns some of the best performing MFIs in the region. ACDI/VOCA is currently launching a global open ended fund to increase the support to ACDI/VOCA’s affiliates, IFC is considering investing in the fund.
CARITAS - the Swiss Organization on Collaboration and Development, a not for profit organization, established and acting within the framework of Swiss federation, organized and operating for charitable purposes and registered with General Swiss Commercial Registrar on February 18, 1929. |
| Total project cost and amount and nature of IFC's investment |
The total project cost is estimated at $7.4 million.
The proposed project includes:
- Extension of a senior loan of up to $4 million;
- Equity investment of about $3.3 million. IFC would have a right to subscribe to new shares at the time of establishment of CJSC Microfinance Company “Bai Tushum and Partners” up to 20% shareholding. |
| Location of project and description of site |
| Bai Tushum is headquartered in Bishkek and has 7 branches and 29 regional offices covering the 7 regions of the country. Investments will be made through the existing branch network and new 13 sub-offices which are going to be opened in 2009. |
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| Anticipated development impact of the project |
The developmental impact of Bai Tushum is expected to be high and far reaching in terms of its economic support for productive micro enterprises, stimulus for employment generation and confidence building for the financial sector.
Bai Tushum’s main objective is the provision of financial services to underserved rural communities for poverty alleviation and employment creation and financing of agribusiness entrepreneurs and farmers. Bai Tushum also assists entrepreneurship development and social mobilization. As a result, this project is expected to reach an estimated 10,000 new microentrepreneurs during the tenor of the credit line through Bai Tushum’s seven branch offices located all over the republic. |
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| IFC's expected development contribution |
| BT seeks IFC’s involvement in the Project to obtain long-term financing and to support its expansion in rural and m/finance area, transformation into a microfinance institution and eventually to microfinance bank which IFC views as a successful development and expansion of a microfinance institution in Kyrgyzstan. During Bai Tushum’s transformation, IFC will play a catalytic role in facilitating communication with the Kyrgyz government authorities and the National Bank. Through its advisory role, IFC will play an ongoing role in the development of the proposed commercial entity by providing its advisory services on its market-driven corporate governance and operations including improvement of asset/liability risk management, transformation into a microfinance bank, introduction of new products like deposits, etc. IFC will also play an important role in Bai Tushum’s ability to attract investors into the new capital increase of the new microfinance institution. |
| Environmental and social issues - Category FI |
This project involves IFC support for the business of microfinance and has been classified as a Category FI project according to IFC’s Environmental and Social Review Procedure.
As an existing IFC client Bai Tushum has developed a procedure relevant to its business process that ensures that all its investments are screened and processed to avoid supporting activities on the IFC Microfinance exclusion list and has appointed an officer responsible for implementation of the procedure. The client’s most recent ESRR is F2-Moderate. The most recent annual environmental performance review for the client identified supplemental actions which the client will be required to undertake prior to disbursement.
Bai Tushum will be required to:
- Continue to implement the procedure and to ensure qualified persons are appointed to manage and implement the procedure
- Continue to submit a periodic report to IFC as per a format to be provided by IFC
- Ensure that a similar procedure applies to CJSC Microfinance Company “Bai Tushum and Partners” when established including compliance with IFC’s reporting requirements. |
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| For inquiries about the project, contact: |
Mrs. Gulnara Shamshieva, General Manager
216 Toktogula Str.,
Bishkek 720001,
Kyrgyz Republic
Tel.:+996 -312- 900462
Fax: +996-312-211642 |
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| For inquiries and comments about IFC, contact: |
General IFC Inquiries
IFC Corporate Relations
2121 Pennsylvania Avenue, NW
Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384
E Mail: Webmaster |
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