(Press release) – The European Bank for Reconstruction and Development (EBRD) is boosting its support to the financial sector in the Kyrgyz Republic with a US $4 million loan in local currency (Som) to “Kompanion Financial Group”, one of the country’s leading non-bank microfinance institutions, to provide more Som loans to small businesses.

The country is still recovering from the turmoil of events between April and June last year, and Kyrgyz businesses still have a low level of access to finance, especially in rural areas. Kompanion Financial Group will use most of the EBRD loan for on-lending in rural areas where there is high demand for local currency loans.

The EBRD’s 3-year senior loan is an extension of an existing financing facility for microfinance institutions (MFI) in Early Transition Countries. This new loan will help Kompanion to expand its lending portfolio and to manage its currency risk in the time of shortage of local currency funding available to microfinance institutions in the Kyrgyz Republic.

“The EBRD has been promoting the development of non-bank microfinance institutions in the country to give small businessmen outside the capital access to finance. Maintaining the flow of finance to small enterprises in the Kyrgyz Republic is crucial for the further development of economy as a whole. The EBRD’s target is to extend more of its loans in local currency to financial institutions and local enterprises to decrease their currency risk,” said Christopher Clubb, Director of EBRD’s Early Transition Countries Initiative (ETCI), which supports investment primarily into less advanced countries of Central Asia and the Caucasus.

Kompanion is a non-bank financial institution, established by the US-based non-for-profit organisation Mercy Corps. It has been operating since 2004. Among non-bank financial institutions, Kompanion is the second-largest lender for micro and small enterprises in the Kyrgyz Republic, with a growing network of over 90 lending outlets in all of the country’s seven regions. Nearly 90% of the company’s clients are operating outside of the nation’s capital, Bishkek.

To date, the EBRD has committed over €324 million in various sectors of the Kyrgyz economy, mobilising additional investments from other sources of financing of about €400 million in 73 projects. 63% of these projects represent investments into the development of the country’s private sector.