Azernews.Az

BAKU – IFC, a member of the World Bank Group, will provide local currency loans to microfinance institutions in Kyrgyz Republic and Azerbaijan to increase access to finance for micro and small business owners in remote rural areas, helping some of the region’s most poor and vulnerable people, IFC head office said on Monday.

IFC will provide $7 million to FINCA Azerbaijan and $6 million to FINCA MicroCredit Company Kyrgyzstan. Each of the microfinance institutions reach more than 100,000 entrepreneurs, the majority of whom are women or living in rural areas. The deals strengthen the partnership between IFC and FINCA International, one of the largest microfinance networks in the world, and support the shared aim of creating and scaling up sustainable, deposit-taking microfinance institutions.

"The long-term local currency loans provided by IFC to FINCA Azerbaijan and FINCA Kyrgyzstan will support sustainable lending to low-income entrepreneurs in urban and rural areas without exposing them to foreign currency risk," said Steve McGuire, Chief Financial Officer of FINCA International. "IFC’s regional presence bolsters FINCA’s outreach to those who have little access to formal finance."

"Microfinance has proved to be an important tool in tackling poverty and creating opportunity for people to improve their lives," said Snezana Stoiljkovic, IFC Director, Europe and Central Asia. "These two deals will expand access to finance in underserved areas, boosting the economies and helping create jobs."

The loans are being provided in local currency at a time when local currency financing is scarce. This will help the microfinance institutions reduce their foreign currency risks and offer much-needed financing to their customers.

The investments support IFC’s goal in Eastern Europe and Central Asia to reach more of the region’s poor and vulnerable people. Access to finance remains challenging in Kyrgyz Republic, which is conflict-affected and one of the region’s poorest countries, and in Azerbaijan, where IFC’s focus is on helping diversify the economy.

Since pioneering commercial microfinance in the early 1990s, IFC has continued to lead innovation in microfinance, using developments in technology, financial products, and policy to help financial institutions reach a greater number of people in a more cost-effective way. The rapid growth of the industry over the past 15 years has helped reach approximately 130 million clients.

IFC’s focus is on creating and supporting commercially viable microfinance institutions that can attract the private capital needed to scale up and respond to unmet demand. Yet microfinance still reaches less than 20 per cent of its potential market among the world’s three billion or more poor, making this deal particularly important for the impact it will have.