A major focus of IFC’s strategy in Central Asia is to support micro, small, and medium enterprises, which form the economic backbone of most of the countries and are crucial to the region’s development and economic growth. Supporting commercially viable microfinance operations is a key way that IFC is expanding its reach and having strong development impact in the region.

IFC’s microfinance clients in 2006 provided just over 833,000 loans to smaller entrepreneurs in Europe and Central Asia, totaling about US$26 billion. This has helped generate income and increase access to finance in the region, particularly for people in remote areas.

One such client in the Kyrgyz Republic is Bai Tushum. In January 2006, IFC provided a US$1.2 million loan to help Bai Tushum, originally a not-for-profit fund, establish itself as a regulated, deposit-taking microfinance company. With this support, Bai Tushum has become a leading microfinance institution and has reached about 10,000 clients, with a strong focus on rural areas. The institution now offers a wide range of agricultural loan products and has expanded its lending to farmers, private entrepreneurs, and micro and small enterprises, with the majority of its portfolio outside the capital city, Bishkek.

Kadyrov Maksyt has 10 children, three of whom had to move to Bishkek to find jobs. Kadyrov decided to set up a farm and applied for a loan from Bai Tushum to develop his business. With the funds, he was able to increase his cattle nearly fourfold. His farm is currently one of the largest in the area. He is doing his part to create jobs, helping address the country’s high unemployment in rural areas.

Agriculture represented about a third of gross domestic product in the Kyrgyz Republic in 2006. Increasing access to affordable credit in rural areas allows farmers to cope better with unpredictable risks of droughts and natural disasters. The sector employs about half of the working population; hence developing smaller enterprises is vital to increasing economic growth.

Private sector-led growth is also essential for the Kyrgyz Republic because the country’s high levels of external debt limit public investments. Through financial and advisory support, IFC is helping local financial institutions improve services and increase lending to smaller businesses, a key source of job creation and poverty reduction.

We recently invested US$4 million in the Kyrgyz Investment and Credit Bank to help expand its financial products for micro and small enterprises and support the country’s private sector.

In Tajikistan, a country where two-thirds of the people live on less than US$2 a day, IFC is making strides. The First Microfinance Bank of Tajikistan, in which IFC has a 15.7 percent stake, is another example where strengthening a financial institution is yielding positive results, such as improving business opportunities. As the first commercial microfinance bank in Tajikistan, it focuses on providing microcredits to smaller enterprises. In 2006 the bank committed over 6,700 loans amounting to US$7 million. By end of 2007 its outstanding loan portfolio increased significantly to about US$19 million, reaching more than 17,000 borrowers. This financing is expected to improve the lives of more than 110,000 people in five years.

IFC is also reaching out to smaller businesses in Uzbekistan. We are investing in Hamkorbank, the country’s largest privately owned bank, through a loan and advisory services. IFC is helping broaden the bank’s funding base and supporting the expansion of its lending to smaller enterprises. Originally founded as a regional bank in the Fergana Valley, a poor, densely populated region with significant poverty, Hamkorbank is transforming into a nationwide financial institution. It now offers SME loans, microloans, consumer loans, and leasing products.

IFC’s projects in Europe and Central Asia have had strong development impact, outperforming all other regions. Our efforts in 2006, for example, helped generate power for more than 19 million customers, provide new phone connections for 2 million people, reach about 1.8 million patients, and create more than 126,000 jobs.

Our investments in the region reached US$1.79 billion for 67 projects, and we mobilized an additional US$1.55 billion through syndications and structured finance. Excluding projects classified as regional, 20 percent were in frontier countries, which IFC defines as low income or high risk—including countries in Central Asia.

IFC’s developmental contribution from advisory services was also significant. Our programs enabled US$2.9 billion in investments by local and foreign companies, led to a US$392 million growth in the availability of lease financing, removed red tape in ways that have allowed businesses to save an estimated US$83 million since 2000, and released US$58 million in funds that were tied up in commercial disputes.