Khujand, Tajikistan, September 25, 2019— IFC, a member of the World Bank Group, is providing a $2.5 million loan in local currency to LLC MDO Arvand, one of Tajikistan's leading microfinance institutions, as part of an effort to support home ownership and drive economic growth in the Central Asian country.
The financing will be provided through cross-currency swaps with the International Development Association’s (IDA) Private Sector Window Local Currency Facility. This long-term financing will allow Arvand to significantly increase microloans to low-income families across rural Tajikistan, helping them to build new homes and renovate their existing dwellings. The loan will also help Arvand ramp up its lending to individual entrepreneurs, and micro and small enterprises (MSEs), groups that often have trouble accessing the finance they need to expand their businesses.
"The availability of housing in Tajikistan’s rural areas is extremely important as many families live in overcrowded homes,” said Shoira Sodiqova, CEO of Arvand. “In addition, there is a lack of access to affordable housing finance. Our partnership with IFC aims to help change that. Also, micro enterprises are a key part of Tajikistan's economy. This financing from IFC will make it possible for more of them to access credit, and, over the long run, help them to expand and create jobs.”
Along with financing, IFC will advise Arvand, the third-largest microfinance institution in Tajikistan, on how to develop new lending products, including home loans tailored to women and loans designed to finance disaster resilience.
"In Tajikistan, private companies still play a relatively minor role in the economy," said Cassandra Colbert, IFC’s Regional Manager for Central Asia. "But with the right support, they can be an engine of economic growth and job creation. IFC’s financing is expected to support those companies and will also help many homeowners in rural areas, where houses are in poor condition, given people’s low incomes and lack of access to affordable finance.”
In Tajikistan, a low-income country, over 70 percent of the population lives in rural areas. There is pressing need to improve living conditions as housing space per capita is the lowest in Europe and Central Asia. Only about a third of houses are built with bricks, and the poor condition of homes leaves people exposed to hazards and natural disasters. Access to financial services and mortgage financing is also extremely limited. To help address the challenges, IFC has partnered by Arvand, that has a large client base, strong regional presence, and expertise in housing microfinance and MSE lending.
The loan to Arvand marks the first use of the IDA Private Sector Window in Tajikistan and without its use, the local currency loan would not have been viable on commercial terms due to high costs. IFC has worked with the National Bank of Tajikistan to secure local currency for this transaction.
About IFC
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities where they are needed most. In fiscal year 2019, we delivered more than $19 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit www.ifc.org .
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About the IDA Private Sector Window
As part of the record $75 billion IDA18 replenishment, the World Bank Group created the $2.5 billion IDA Private Sector Window to catalyze private sector investment in the poorest and most fragile countries. Recognizing the key role of the private sector in achieving IDA18 objectives and the Sustainable Development Goals, the window provides concessional funds for co-investment alongside IFC and Multilateral Investment Guarantee Agency (MIGA) private investments. Concessional funds help to mitigate risk and reduce barriers, which unlocks and crowds in private investment in emerging markets. For more information, visit: http://ida.worldbank.org/psw
About LLC MDO Arvand
LLC MDO Arvand is microcredit deposit-taking organization. Since 2002 it has provided financial services to entrepreneurs and vulnerable people in Tajikistan. Arvand’s product offerings include loans, deposits, current accounts, remittances, currency exchange, and a number of non-financial services.
By the end second quarter of 2019, Arvand had 42,000 active loan clients, of which 72 percent are from rural areas. For more information, visit: www.arvand.tj
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