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| Summary of Project Information (SPI) |
| This Summary of Project Information 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. |
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| Project number | 11657 |
| Project name | SEF AKFED MICROFINANCE BANK TAJIKISTAN |
| Country | Tajikistan |
| Sector | Finance & Insurance |
| Department | Global Financial Markets Group |
| Company name | First Microfinance Bank Tajikistan |
| Environmental category | FI-1 |
| Date SPI disclosed | October 29, 2003 |
| Projected board date | December 1, 2003 |
| Status | Active |
| Previous Events | Invested: June 29, 2005
Signed: December 10, 2004
Approved: October 28, 2004 |
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| Description of company and purpose of project |
The project is to provide support to the Micro Finance Bank (FMBT, the Bank, or the company), the first microfinance bank to be licensed in Tajikistan. The Bank, which received a full banking license in September 2003, will provide credit and other financial services in rural and urban areas. It is currently expected that the capital of the Bank would be increased to $3.5 million with IFC taking up to 19% of the bank’s equity or $ 0.7 million equivalent. FMBT is expected to have a highly developmental impact in terms of:
- providing much needed funding to an underserved sector in both urban and rural areas;
- employment generation;
- skill-building and best practice in the financial sector; and
- demonstration effect for financial sustainability.
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| Project sponsor and major shareholders of project company |
| The main project sponsor is the Aga Khan Fund for Economic Development (AKFED), an international development agency which promotes economic development in specific regions of the developing world. AKFED helps build economically viable enterprises through long-term equity participation combined with professional management, technical expertise, and support. Its sustainable investments in industry, tourism, and financial services projects play an important catalytic role in mobilizing foreign institutional investors, especially in Asia. AKFED will bring to FMBT its broad expertise in commercial as well as development banking operations. AKFED is currently the lead shareholder in five banks in emerging markets, while AKDN has approximately 40 microfinance banks and programs combined in countries of Central and South Asia, the Middle East, and Africa. AKFED's microfinance projects in Pakistan and Afghanistan, in particular, will provide valuable lessons for FMBT. IFC has worked with AKFED in over 20 projects in Africa as well as Central and South Asia and values it as a strong and committed partner. Most recently, IFC invested alongside AKFED in the First MicroFinanceBank of Pakistan and the Pamir I Power Energy project in Tajikistan. IFC and AKFED have also recently signed a MOU to establish the First Micro- Finance Bank of Afghanistan. |
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| Total project cost and proposed IFC investment |
| The total project cost is estimated at $3.5 million equivalent. IFC is expected to invest up to $0.7 million equivalent for an equity stake of 19%. |
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| Location of project and description of site |
| The Bank’s headquarters and first branch will be located in Dushanbe, the economic and political capital of Tajikistan. The Bank will first deploy towards the Central and Eastern Region of Tajikistan, which offer a good economic potential, an active portfolio of loans and a strong AKDN presence. The branches will serve as regional hubs for a network of peri-urban and urban branches. Mobile banking services and linkages with village banks will be developed in remote areas. |
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| Project Development Impact and IFC's Role |
The project is expected to have significant developmental impacts, such as:
- serving the financing needs of micro and small business clients. It will improve the competitiveness of these businesses and contribute to private-sector led growth in Tajikistan;
- facilitating greater access to financing for micro and small businesses, which are the main source of employment and income-generation in Tajikistan's economy, the project will have an expected positive impact on employment generation; and
- creating a viable and sustainable microfinance oriented bank, it is expected to disseminate best practice standards early on in the development of microfinance in Tajikistan with respect to corporate governance, sustainability and outreach.
The IFC Role would be:
- Through this small, yet significant investment, IFC will participate in a pioneering effort to help develop the first private sector commercially oriented microfinance bank in Tajikistan.
- The project aims to establish a successful model bank that can be replicated in the country over time; the expected increase in the supply of credit will positively impact currently underserved micro and small businesses.
- Working alongside AKFED, IFC will emphasize FMBT’s commercial orientation, use of international best practice, full financial accountability, sound corporate governance, high quality MIS, and strong policies and procedures. IFC’s assistance has been given to AKDN to help in the identification and implementation of best practice MIS in its microfinance banks, with a first such programme currently under implementation at the proposed First MicroFinanceBank of Afghanistan.
IFC will further help AKFED by:
- helping to secure additional policy and regulatory reforms, which are felt necessary to ensure the development of a vibrant and sound financial system in Tajikistan;
- providing equity financing to FMBT;
- assisting in identifying additional bilateral and institutional shareholders; and
- helping AKFED to raise donor funding for capacity building, and mobilize additional resources to fund its lending operations, which will be critical during the early years of operation. |
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| Environmental and social issues - Category FI-1 |
This is a Financial Intermediary (FI) Type 1 microfinance project according to IFC's environmental review procedure. FMFBT will be required to ensure that its operations are consistent with host country requirements and IFC's Microfinance Exclusion List. In this respect, IFC will require that a senior staff of the Bank be appointed to oversee the implementation by the Bank of environmental guidelines satisfactory to IFC. In addition, the Bank will be required to submit an annual environmental performance report.
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| To contact the project company, please write to: |
Momina Aijazuddin ( IFC) maijazuddin@ifc.org,
Jacques Toureille ( AKFED) Jacques.toureille@aiglemont.org |
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