94829 IFC Advisory Services in Europe and Central Asia Azerbaijan & Central Asia Microfinance Transformation Support Project Creating Opportunity for Micro Businesses in Central Asia Microfinance in Central Asia: Financial Inclusion In cooperation with The Ministry of Foreign Affairs of the Netherlands Ministry of Foreign Affairs Creating Opportunity for Micro Businesses in Central Asia Rolf Behrndt, Microfinance in Central Asia: Financial Inclusion Message from Regional Business Line Leader Financial Markets, IFC Advisory Services Contents in Eastern Europe and Central Asia Featured micro entrepreneurs Tajikistan Reducing poverty is the greatest social challenge of our time. Yet over three billion people Khakifa Sobirova – The Blessing of Bread......................................................................................................... 5 in developing countries have little or no access to financial services. IFC works to improve the livelihoods of people living in emerging markets by expanding financial inclusion and Sairan Komilova – Rising from the Ashes.......................................................................................................... 6 increasing access to finance for the poor. This is in keeping with IFC’s strategy to support Nazokat Khafizova – The Gift of Beauty............................................................................................................ 7 private sector competitiveness in areas where social development impact can be achieved. Kamila Ismatova – She “Baked” her Success................................................................................................... 8 IFC helps microfinance institutions reach a greater number of people in a more cost- effective way, through Advisory Services and investments in the microfinance sector. To date IFC has effectively supported the financing and capacity building of more than 100 Kyrgyz Republic microfinance institutions in over 60 countries. Esen Alamanov – Fish Farming in the Kyrgyz Republic......................................................................... 10 IFC’s Access to Finance business line helps increase the availability and affordability of Kanybek Kachkynbaev – Opportunity for an Optimist ........................................................................11 financial services, focusing particularly on micro, small, and medium enterprises. It is estimated that IFC-supported microfinance advisory projects have facilitated access to Baiysh Kurmanov – A Healthier Generation................................................................................................. 13 finance for some five million micro entrepreneurs around the world, some of whom are Kanybek Myrzamatov – Noble Animals......................................................................................................... 14 in Central Asia. Alisher Nuritdinhodjaev and Marat Galiev – From Livestock to Livelihood............................ 15 In this region we are increasing our activities in sustainable alleviation of poverty, particularly by focusing on capacity building in areas such as savings mobilization and Abdimitalip Jeenbekov – A Retired Policeman’s New Business...................................................... 16 diversification. In this publication we highlight just a few examples of the impact of access Gulkaiyr Baicherikova – Graduating to a New Life.................................................................................. 17 to microfinance. The stories featured here were collected through a contest initiated by the IFC Azerbaijan Featured microfinance institutions & Central Asia Microfinance Transformation Support Project involving four microfinance institutions in the region. Loan Officers and Marketing Specialists from ARVAND ARVAND................................................................................................................................................................................ 20 Microcredit Deposit-taking Organization (Tajikistan), Bai-Tushum & Partners Microfinance Bai-Tushum & Partners................................................................................................................................................ 20 Company (Kyrgyz Republic), CREDAGRO Non Bank Credit Organization (Azerbaijan), and IMON INTERNATIONAL Microlending Organization (Tajikistan) submitted stories. CREDAGRO.......................................................................................................................................................................... 21 These are 11 best stories about real people in Central Asia for whom microfinance has IMON International ...................................................................................................................................................... 21 created opportunities to improve their lives. Microfinance: How IFC Helps............................................................................................................................................... 23 IFC Azerbaijan & Central Asia Microfinance Transformation Support Project........................ 24 This publication is an initiative of the IFC Azerbaijan & Central Asia Microfinance Transformation Support Project. 2010 In this publication we highlight just a few examples of the impact of access to microfinance. These are stories of real people in Central Asia for whom microfinance has created opportunities to improve their lives. For more information please visit www.ifc.org/acamfi. Dushanbe, Tajikistan The Blessing of Bread Every morning at 6am, a line of women make IMON grew out of the Micro Loans in Tajikistan their way through the small lanes of Dushanbe’s program started in 1999 by the National Makhalya District to the home of Khakifa Association of Business Women of Tajikistan in Sobirova. Khakifa, her 17-year-old daughter and partnership with Mercy Corps. IMON is now the 19-year-old son are already up and waiting to largest microfinance organization in Tajikistan sell freshly-baked kulcha, a flat round bread. with seven branches and 28 field offices covering 33 regions of the country. “Every evening we knead dough that is ready In November 2007, the founders decided for baking at 4am. By 6am, 1,000 kulchas are to transform IMON from a not–for-profit ready to go to the bazaars,” says Khakifa. organization into a commercial institution. IFC Khakifa’s small business has been on the provided a $2.5 million loan to support IMON’s rise since she took a $100 loan from IMON lending operations and increase its outreach. INTERNATIONAL Microlending Organization The IFC Azerbaijan & Central Asia Microfinance (IMON), which helped her buy flour. Her tenth Transformation Support Project supported and most recent loan of $15,000 was used to IMON’s transformation plans by mentoring buy a warehouse in which to store reserves of senior management in strategic areas and flour and coal in the early fall to hedge against developing targeted modules designed to build the commodity price increases that typically and strengthen institutional capacity. IFC’s happen in winter. support to IMON has contributed to the sound The 47-year-old mother of five is proud that her development of an institution that has proven to business has helped her family buy new furniture be a high performer with a strong emphasis on and modern appliances for their home. She was gender empowerment in an extremely difficult also able to buy two used cars which her husband environment. and oldest son put to profitable use by starting a Financing and supporting the growth of women’s private taxi business. businesses has been a main objective of IMON since its inception. It also specializes in lending to micro and small businesses in rural areas “It’s not without reason that they of Tajikistan where there is significant unmet demand for financial services. Approximately 42 say bread is everything - it even percent of IMON’s 26,600 clients are women and 65 percent are from rural areas. Since July helps us to access cash,” says 2005, IMON has disbursed over 98,000 loans worth more than $72 million. Khakifa, who has never missed a loan repayment and values her 10-year relationship with IMON. “If not for IMON, I would struggle to find cash for my business and family needs.” 4 Creating Opportunity for Micro Businesses in Central Asia IFC Azerbaijan & Central Asia Microfinance Transformation Support Project 5 Microfinance in Central Asia: Financial Inclusion Dushanbe, Tajikistan Dushanbe, Tajikistan The Gift of Beauty Rising from the Ashes Nazokat Khafizova is working when we enter her beauty salon in Dushanbe. It is a tiny space, but She has a cosmetologist’s certificate and 15 years of experience in the beauty industry, but the few small rooms are prettily decorated and her path to entrepreneurship was not easy. For filled with new equipment. 12 years, she worked at someone else’s salon, saving money, learning the business and building “I know it’s not big, but the fact a client base. She went to China several times to learn the latest cosmetology techniques. Finally, that my sister and I bought it Nazokat decided, with her family, to launch her own business. She took out a $10,000 loan from ourselves makes me proud,” IMON International, traveled to China to buy equipment, and then rented a shop space. Early The fire at Dushanbe’s Shokhmansur bazaar blazed for most of the night. Everything burned says Nazokat. success encouraged her to buy her own space. She was still short of money, however, and again - floor boards, counters, and the rolls of fabric. applied to IMON International. With a $20,000 In just a few hours the stock of fabric which loan and family savings, Nazokat bought an represented the investment of five families went apartment on the first floor of an old residential up in flames. building, moved in and continued her business. For the families who sold this fabric at the Business grew steadily and Nazokat hired staff. bazaar, the fire destroyed not only their monthly Sairan and the four other women who lost stock in the fire formed an investment group and Today Nazokat’s salon provides a living for eight stock but their source of everyday income. Each people. morning the five women would go to the bazaar applied for loans. Each received a $250 loan and sell fabric until the last customer was gone. from IMON International which enabled them In the evening they used their profits from the to buy new stock from the wholesale bazaar and day to buy food and other essentials for their re-start their businesses. families. The fire happened five years ago but the women After the fire, the women knew they would have remember it well. Since then they have all re- to work hard to re-establish their businesses established their businesses, and speak of their – and they were ready to start again. The only achievements with pride. One has used her problem was finding the money to buy new earnings to send her daughter to university, stock. another to buy a new television, while another to pay for her son’s wedding. “I knew that there were banks that could give us loans,” said Sairan Komilova, one of the traders. “I know for certain that you need “But I felt so awkward even entering a bank. I also knew that banks demand collateral.” to work hard to keep yourself Sairan’s only collateral was the house in which she continued to live with her five children after her from hardship and poverty,” says husband had died. She was reluctant to risk their home by pledging it to a bank. Then she started Sairan. “But a lack of cash to start to hear about IMON International from traders at the bazaar. Rather than demanding collateral, up your own business can often this microfinance institution would give loans to groups of borrowers. If any member of the group ruin your hopes for a better life.” failed to repay their loan, the group would jointly take responsibility for the debt. 6 Creating Opportunity for Micro Businesses in Central Asia IFC Azerbaijan & Central Asia Microfinance Transformation Support Project 7 Microfinance in Central Asia: Financial Inclusion Sugd Province, Tajikistan She “Baked” her Success The Blessing of Bread In 2006, Kamila Ismatova received some bad “I have ambitious plans for news. Her husband was seriously ill and she would have to provide for her two children. She 2010 to have an outlet in decided to start her own flatbread business. Using her rainy day savings, Kamila bought Panchshanbe central market to ten kilos of flour and baked 30 flatbreads, her first investment into household production. sell my products,” says Kamila. “We were saving on everything. My son and “Now I am no longer scared of daughter used to get up with me very early in the morning to chop wood and fire the tandyr the future, and look far ahead by (oven),” recalls Kamila. “My son carried the flat- bread by bicycle and sold it at a hospital.” baking bread.” Her business started growing and needed additional financing. Kamila took $500, her first ARVAND Organization was divested from microloan, from ARVAND Microcredit Deposit- MicroInvest Microloan Fund in October 2008 to taking Organization, to purchase flour and provide credit services in Tajikistan. ARVAND is renovate a room in her house into a bakery. working to improve the standards of living and create new opportunities for social and economic The business raised output to 120 flatbreads development by providing financial services to per day and revenues rose. Kamila leased two entrepreneurs in Tajikistan. hectares of land and together with her children she reaps a harvest from fruit trees and sells Since 2008 ARVAND has disbursed 17,000 dried apricots. loans totaling $9.8 million to more than 11,000 businesses and attracted more than 500 deposits During two years of work with ARVAND, worth $15,000. Kamila has taken four loans and production has increased to 300-400 flatbreads per day. IFC is helping ARVAND become a robust Her assets increased seven-fold and revenues and reliable microcredit and deposit-taking quadrupled. organization. Thanks to microfinance, Kamila has managed to renovate her house, lease a plot of land for farming and buy a taxi. While taking care of her sick father, her daughter decided to enter medical college and become a nurse. 8 Creating Opportunity for Micro Businesses in Central Asia IFC Azerbaijan & Central Asia Microfinance Transformation Support Project 9 Microfinance in Central Asia: Financial Inclusion Karakol, Kyrgyz Republic Chui Oblast, Kyrgyz Republic Fish Farming Opportunity for an Optimist in the Kyrgyz Republic Kanybek Kachkynbaev was born into a family of In the summer Kanybek raises cattle on the 12 children in the Kyrgyz town of Talas. His father picturesque pastures of the Suusamyr valley. In was a shepherd on a collective farm and from an winter he keeps all the cattle on the farm and early age, Kanybek helped him look after the his wife and four children take turns caring for The Kyrgyz Republic’s economy depends heavily cattle. From the money they earned, Kanybek them: one person prepares concentrate, another on agriculture including the fishing industry. Issyk decided to start a business selling sheep. gives water to the cattle, and a third cleans the Kul, the second largest alpine lake in the world, is premises. famous for its natural beauty and azure waters, Kanybek bought several sheep, raised them in an but not its productivity. Years of overfishing have unfinished room of his house and sold them at a Today Kanybek is proud to show off his farm: decimated Issyk Kul’s fisheries and much of the profit. He decided to grow the business, but this the house is finished, the rooms for holding the smoked fish sold in the surrounding cities comes required a larger investment. sheep are spacious and there are separate sheds from other alpine lakes. for fattening cattle. Kanybek took an initial loan of $7,500 from a Following the collapse of the Soviet Union, many commercial bank, but the bank refused another local fish farms and factories were closed down request for a larger amount. In June 2007 he “I am confidently looking because of their outdated equipment and lack of applied for and received a $9,000 microloan financing. While some were privatized, few fish from the Bai-Tushum & Partners microfinance forward to the next family factories could adjust to the new market conditions. company. Esen Alamanov, the founder of a fish farm in the vacation, sending my children to After taking a third loan of $18,000, Kanybek city of Karakol at the Southern end of Issyk Kul, rented 75 hectares of lake area and reservoirs in increased his number of sheep to 150. He earned a prestigious school, and a good a good profit not only from the sale of livestock, which to install cages for the cultivation of fish. Alamanov is just one of many promising Since 2000, the farm has cultivated and reared small business owners in the Kyrgyz Republic but also from sheep’s wool and milk. Today he is prosperous life in general,” says one of Bai-Tushum & Partners’ most successful whitefish, trout, pellets, Amur carp, and carp. But benefiting from the work of the IFC Microfinance for truly sustainable development, Karakol Fish Transformation Support Program. In 2005 IFC clients. the optimistic Kanybek. Farm needed additional equipment. At this point provided Bai-Tushum a $1.2 million loan and Bai-Tushum & Partners Microfinance Company then provided another loan of $4 million in 2009. (Bai-Tushum), a long term IFC investment The funds were used to finance micro and small client and partner of the IFC Microfinance entrepreneurs in urban and rural areas through Transformation Support Project got involved with individual and group lending products. The the business. Through a $3500 long-term leasing program also helped Bai-Tushum to transform contract on favorable terms, Alamanov was able from a limited liability microcredit company to a to buy 10 pools for young fish and five incubation joint stock microfinance company with foreign units. The additional work at the farm created 16 equity participation. jobs and helped increase profits considerably. The company is now one of the leaders in the “Over time, the numbers turned country’s microfinance market with an estimated 25 percent market share. It has 7 branches positive,” recalls Alamanov. “The two and 41 sub-branches nationwide providing largest seafood retailers in the region financial products to micro-entrepreneurs just like Alamanov. Since 2000, Bai-Tushum has found that the quality of our products disbursed over 66,000 loans for more than satisfied all the environmental standards $120 million with 43 percent of loans supporting businesses related to agriculture. and one of them signed a contract to buy 2-3 tons of fish a year. I am very grateful to Bai-Tushum & Partners for supporting domestic fish producers.” 10 Creating Opportunity for Micro Businesses in Central Asia IFC Azerbaijan & Central Asia Microfinance Transformation Support Project 11 Microfinance in Central Asia: Financial Inclusion Kant, Kyrgyz Republic A Healthier Generation Baiysh Kurmanov is head of the AyKamDan Two years have passed since the launch. cooperative in a village near Kant, in the Kyrgyz Today the plant buys its milk from a handful of Republic. The cooperative was created in 2006 surrounding villages; in high season, more than by nine entrepreneurs looking to cultivate 100 people sell milk to AyKamDan. agricultural products and breed cows. The cooperative supplies its wide range of Many farmers from the surrounding villages sold certified products – milk, kefir, sour cream, milk to the state dairy farm at extremely low cottage cheese, butter and four kinds of yogurt prices. Baiysh noticed the lack of competition – to seven kindergartens and a sanatorium. and decided to open a small dairy plant. “Once I realized the demand for a dairy “Our products are consumed by plant, I began to look for partners,” children and by those who come says Baiysh. “Raiffeisen Foundation to improve their health in the helped me draw up a business plan and estimate costs and profitability. sanatorium. We are glad to The Foundation advised me to apply contribute to having a healthier to two lending institutions that offered generation,” says the leader of leasing – one of which was Bai- Tushum & Partners. Approval came the cooperative. quickly from Bai-Tushum.” The cooperative has managed to find its niche in the market and create nine new jobs. Baiysh’s In April 2007, the AyKamDan agricultural wife, who has a medical background, helps him cooperative received financing from Bai-Tushum track the quality of the milk supplied, manage & Partners (Bai-Tushum) to purchase equipment staff, and monitor product packaging. The plant and renovate their building into a small milk has enabled Baiysh to educate his four children processing plant. Six months later the plant at schools and universities, no mean feat in a started full operations with a daily processing developing country. capacity of one ton of milk, 800 liters of which were purchased from regular suppliers. Now he is planning to set up kiosks around the city of Bishkek, expanding their market. Down the line, Baiysh hopes to increase processing to two tons of milk per day, which will require additional equipment and further microfinancing. 12 Creating Opportunity for Micro Businesses in Central Asia IFC Azerbaijan & Central Asia Microfinance Transformation Support Project 13 Microfinance in Central Asia: Financial Inclusion Osh, Kyrgyz Republic Karakol, Kyrgyz Republic Noble Animals From Livestock to Livelihood The snowy Josholu mountains are home to the Animal husbandry is one of the main agricultural In 2000, they applied for a loan from the Bai- legendary Kyrgyz heroes Alymbek Datka and industries in the Kyrgyz Republic, and comprises Tushum & Partners Microfinance Company to Alay empress Kurmanjan. Kanybek Myrzamatov nearly half of the country’s total agricultural buy livestock and renovate buildings. The funds was born and grew up in Josholu village, where output. The development of animal husbandry, enabled them to increase capacity from 30 to people have lived off livestock and the land for increase in livestock numbers, and improvements 100 cattle and acquire a farm. Thanks to another centuries. in the productivity of all types of livestock are loan in 2003, Alisher bought a second farm and In 2008, Kanybek’s horse breeding business very important for the industry. The climatic increased capacity to 200 cattle. required additional funds, and he used his first conditions of the country, where 83 percent In 2007 they opened a shop called The Golden loan from Bai-Tushum & Partners Microfinance of agricultural land is mountain pasture, have Calf to sell meat products at the central market. Company to purchase two pedigree mares. He contributed to the successful development of It is now one of the largest butcher’s shops in the started selling mares’ milk (kumys), which is animal husbandry. Most people living in remote area, with a huge number of both wholesale and healthy for adults and children alike. regions of the country work in animal husbandry, retail customers as well as a grocery department. but often struggle to build a stable business. “I always tell my wife that the horses Two entrepreneurs, Alisher Nuritdinhodjaev and Marat Galiev, started a business raising and “The business is now profitable belong to Bai-Tushum & Partners, selling bulls in the fields surrounding Issyk-Kul because they give a lot of milk, and Lake, the fertile heartland of Central Asia. and sustainable,” says Alisher. the word Bai-Tushum means ‘rich “At the moment we have 200 harvest’,” says Kanybek. cattle, two horses, and two grain Kanybek took a second loan to purchase a New Kyrgyz breed pedigree stallion. And if a storage facilities with a capacity pedigreed horse shows good qualities, such as extraordinary speed or strength, it fetches a of up to 500 tons. I am proud to much higher price. say that we have created jobs for “I myself train and take care of 14 people.” them every day,” recalls Kanybek Due to the financing, Alisher has vastly increased his livestock, opened a successful grocery, proudly. “In some cases I sold a purchased property and renovated his house. The partners have improved their living standards horse for a very good price, and and the well-being of their family and created opportunities for their employees. I used the money I received to They plan to enter new markets and build on expand my house. Such is their success. life - nothing comes easily.” In the future, Kanybek wants to breed a whole farm of noble animals of which the Kyrgyz Republic can be proud. 14 Creating Opportunity for Micro Businesses in Central Asia IFC Azerbaijan & Central Asia Microfinance Transformation Support Project 15 Microfinance in Central Asia: Financial Inclusion Osh, Kyrgyz Republic Naryn, Kyrgyz Republic A Retired Policeman’s New Business Graduating to a New Life After retiring from years of service with the Abdimitalip’s wife, who worked for 20 years as police, where he rose from junior lieutenant to a midwife, has now retired and farms with her captain, Abdimitalip Jeenbekov founded the husband. Their four children have university Gulkaiyr Baicherikova, a farmer from a village “Our children have grown up, Ernis Bektur farm in 2001. degrees and their own families, yet still work in near the Kyrgyz city of Naryn, believes her the fields. children make her strong. and it’s time for them to start Following the example of his ancestors, he started cattle breeding and field husbandry on The collapse of the Soviet Union kicked off a higher education,” says Gulkaiyr. a farm that contains a shepherd’s house, 30 “Since my retirement from crisis in Kyrgyzstan - currency depreciation, the hectares of non-irrigated land and hayfields rise of the coupon system, and huge deficits. “Thanks to microloans I will that are leased for the cultivation of wheat and service in 1997, I have worked Needing to feed her children, Gulkaiyr began fodder. growing potatoes in her garden. Her husband, continue to work hard and help in various areas of agriculture,” Kochkunbek Jumabekov, provided services my children become educated. Abdimitalip received his first loan from the Bai- to locals on his tractor during sowing and Tushum & Partners Microfinance Company says Abdimitalip. “I am thankful harvesting. Saving some money, they purchased This will open an opportunity for in 2002 to finance water irrigation from the three horses, 10 sheep, and two cows. mountain gorge to his farm. He bought more to Bai-Tushum & Partners But the family needed additional financing to a new life for them.” cattle and used the profits to repair the shepherds’ increase their livestock. After consulting with houses. In 2003, he increased livestock to 720 Microfinance Company for her husband, Gulkaiyr analyzed all the lending goats and 76 sheep. They in turn bred, enabling institutions and opted for Bai-Tushum & Partners the Ernis Bektur farm to grow each year. helping me develop my own Microfinance Company. The main reasons were Abdimitalip’s second loan was used to cultivate the affordable and low interest rates, flexible cotton on the five irrigated hectares, which business. I am proud of what repayment schedule, and suitable loan size. contributed to a good harvest of 270 hundreds kilograms per hectare. The Ernis Bektur farm also I am doing.” In February 2008, Gulkaiyr received her first operates a churn and a wheat processing mini- loan of $3,400, enabling them to increase their mill. In addition, the farm’s DT-75 tractor provides livestock to 100 sheep, 10 cows, and eight plowing services to the local population. horses. With his third loan in 2004, Abdimitalip planted Having seen how the proper use of the loan led corn, sunflower, and cotton on the irrigated land. to an increase in their income, in January 2010 An eight year collaboration with Bai-Tushum Gulkaiyr’s family obtained a $6,800 loan for without any default or delays, has helped build animal husbandry. Today they no longer live in up his assets. As a result, he has completed the a tiny hut, but have built and furnished a large construction of a second house, opened a mill, house. and expanded the farm. In summer 2009 he opened a recreational area and clinic to treat patients with various ailments, including diabetes, gastritis, and bronchial asthma. Medical research has shown that mares’ milk strengthens the human immune system. People who visit this area are grateful to Abdimitalip and often promise to return with their families. In the future, he is planning to build cottages. 16 Creating Opportunity for Micro Businesses in Central Asia IFC Azerbaijan & Central Asia Microfinance Transformation Support Project 17 Microfinance in Central Asia: Financial Inclusion Microfinance Institutions: IFC Clients in Central Asia 18 Creating Opportunity for Micro Businesses in Central Asia IFC Azerbaijan & Central Asia Microfinance Transformation Support Project 19 Microfinance in Central Asia: Financial Inclusion Arvand Microcredit Bai-Tushum & Partners CREDAGRO IMON INTERNATIONAL Deposit-taking Organization Microfinance Company Non-Bank Credit Organization Microlending Organization (Khujand, Tajikistan) (Bishkek, Kyrgyz Republic) (Baku, Azerbaijan) (Khujand, Tajikistan) ARVAND Organization was divested from MicroInvest Microloan Bai-Tushum & Partners has operated in the microfinance market CREDAGRO is an IFC investment client in Azerbaijan, having IMON grew out of the Tajikistan Micro Loan Program, launched in Fund in October 2008 to provide credit services in Tajikistan. since 2000. Over ten years of work and development, the signed a $6 million senior loan and a $4 million subordinated 1999 by the National Association of Business Women of Tajikistan ARVAND is working to improve standards of living and create new company has transformed from a Limited Liability Microcredit convertible loan in 2008 to finance micro, small, and medium in partnership with Mercy Corps. IMON is now the largest opportunities for social and economic development by providing Company into a Joint Stock Microfinance Company. enterprises throughout the country. microfinance organization in Tajikistan, with seven branches and financial services to entrepreneurs in Tajikistan. 28 field offices covering 33 regions of the country. Bai-Tushum and its subsidiary Bai-Tushum & Partners became an CREDAGRO is in the process of transforming from a Non-bank Since 2008 ARVAND has disbursed about 17,000 loans totaling IFC investment client after signing a $1.2 million loan in 2005 and credit organization to a joint stock company. IFC has worked with In November 2007, the founders decided to transform $9,8 million to more than 11,000 businesses and attracted over a subsequent $4 million deal in 2009 to finance micro and small the company on strengthening several of its key areas, including IMON from a not–for-profit microfinance organization into 500 deposits worth $15,000. entrepreneurs through individual and group lending products. risk management. a commercial institution. IFC provided a $2.5 million loan to support IMON’s lending operations and increase its outreach. IFC is assisting ARVAND in its microlending and deposit-taking Now one of the leaders in the country’s microfinance market, Bai- As of June 2010, CREADAGRO has disbursed over 50,000 loans business. Tusum holds an estimated 25 percent market share. There are 7 totaling $180 million, and served 21,550 clients. The IFC Azerbaijan & Central Asia Microfinance Transformation branches and 41 sub-branches nationwide that provide financial Support Project supported IMON’s transformation plans by Contacts: products to micro-entrepreneurs in various sectors. Since 2000, Contacts: mentoring senior management in strategic areas and developing ARVAND Microcredit Deposit-taking Organization Bai-Tushum and its subsidiary have disbursed more than $120 CREDAGRO targeted modules designed to build and strengthen institutional 27/6 Shark Str., million and 66,000 loans, 43 percent of which have been for 63, Hasan Aliyev Str., AZ 1110, capacity. IFC’s continued support to IMON has contributed to the Khujand, Tajikistan agriculture and agriculture-related businesses. Baku, Azerbaijan development of the institution, which has proven to be a strong Tel.: +992 (3422) 4-00-79, 6-64-07 Tel.: + 99412 564 27 90 performer with an emphasis on gender empowerment in an IFC has helped the institution transform from a Limited Liability extremely difficult environment. e-mail: office@microinvest.tj Microcredit company to a Joint Stock Microfinance Company with Fax: + 994 12 564 27 91 www.microinvest.tj/arvand foreign equity participation. e-mail: office@kredaqro.com Financing and supporting the growth of women’s businesses has been a key objective of IMON since its inception. It also Contacts: specializes in lending to micro and small entrepreneurs in rural Bai-Tushum & Partners areas, where there is significant unmet demand for financial 216, Toktogul Str., services. Approximately 42 percent of IMON’s 26,600 clients are Bishkek, Kyrgyz Republic women, and 65 percent are from rural areas. Since July 2005, Tel.: + 996 (312) 31-03-70 IMON has disbursed over 98,000 loans totaling more than $72 Fax: + 996 (312) 90-04-64 million. e-mail: baitushum@baitushum.kg www.baitushum.kg Contacts: IMON INTERNATIONAL MLO Head Office 96, Orjonikidze Str., Khujand, Tajikistan Tel.: +992 (3422) 42353, 42589 Call Center: +992 92 77 111 22 www.imon.tj 20 Creating Opportunity for Micro Businesses in Central Asia IFC Azerbaijan & Central Asia Microfinance Transformation Support Project 21 Microfinance in Central Asia: Financial Inclusion Microfinance: How IFC Helps IFC has achieved industry leadership in microfinance since its first investment in 1995. It has effectively supported the financing and capacity building of several dozen microfinance institutions (MFIs), including small business banks, non-bank financial institutions, and non-governmental organizations. IFC has also played a catalytic role in developing specialized microfinance banks, fostering the creation of international microfinance network banks and developing collective investment vehicles, leading to the effective mobilization of private capital in the domestic and international capital markets. IFC is a leading global investor in microfinance working with more than 100 institutions in over 60 countries. As of June 30, 2010 IFC has committed more than $1.2 billion with an outstanding portfolio of $750 million. In addition, IFC Microfinance Advisory Services comprise $61 million in grant-funding representing 72 microfinance projects (of which about 50 are MFI investee clients.) As of December 31, 2009 IFC’s investee clients had an outstanding portfolio of nearly 8.5 million micro loans, worth nearly $11 billion. Through the Advisory Services IFC provides management, training, and technical support to microfinance institutions, and supports the implementation of innovative solutions that expand access to finance for underserved communities, for example, mobile banking and small deposit mobilization. IFC is also partnering with organizations such as CGAP and the World Bank to develop policy and financial infrastructure. IFC Advisory Services initiatives for microfinance for the next year aim to: significantly expand deposit mobilization in the microfinance industry; enhance risk management frameworks for portfolio clients; support technological innovations in microfinance; and develop microfinance credit reporting. 22 Creating Opportunity for Micro Businesses in Central Asia IFC Azerbaijan & Central Asia Microfinance Transformation Support Project 23 Microfinance in Central Asia: Financial Inclusion IFC Advisory Services IFC Azerbaijan & Central Asia The IFC Approach Donor Partner: The Project is supported with funds from the Microfinance Transformation Support Project IFC helps microfinance institutions based in Azerbaijan, Kazakhstan, the Kyrgyz Republic and Ministry of Foreign Affairs of the Netherlands Tajikistan: For more information please visit www.minbuza.nl To develop from credit-based institutions to IFC, a member of the World Bank Group, launched providing their customers with a broader range of its Azerbaijan & Central Asia Microfinance In line with IFC’s strategy in Central financial services. Normally these services would Transformation Support Project in 2008. The include taking deposits and could also require Asia to support competitiveness the profiling of institutions before they are able to Project is being implemented over three years with financial support from IFC and the Ministry of the private sector in areas with obtain a full banking license. of Foreign Affairs of the Netherlands. social development, IFC brings To introduce new financial products such as Impact to Date Project Objective additionality through the project microsavings, microinsurance, microleasing, As of February 1, 2010 mobile banking, and currency transfer by by aiming to combine advisory Four microfinance institutions in Azerbaijan The goal of the project is to support microfinance microfinance institutions. institutions in Azerbaijan, Tajikistan, the Kyrgyz services with investment funds. To improve the regulatory framework for the and Central Asia have launched microfinance transformation processes. Republic, and Kazakhstan in their corporate This leverages the effectiveness microfinance sector, helping to provide a range of transformation processes and to improve the of both components in enabling financial services and increase access to finance IFC has provided advisory services to clients regulatory framework for microfinance in the for micro entrepreneurs and general population in various areas: region. The project helps to develop a broader MFIs to expand their outreach across the region. (1) Financial Crisis Response by helping range of financial services and increase access and services and thereby CREDAGRO in Azerbaijan build up its risk to finance for micro entrepreneurs and general To increase awareness about the microfinance help their clients to raise their sector in Azerbaijan and Central Asia in the local and management capabilities. population across the region. standards of living and improve international communities, convince policy makers (2) Assisted IMON International in Tajikistan Why Microfinance Institutions in Azerbaijan & their livelihoods. of the benefits of microfinance by highlighting the in improving its credit process and upgrade Central Asia Are Transforming? development impact and social performance, and credit procedures, launch new credit products Micro enterprises comprise a large share of promote new financial products. and strengthen work with non-performing businesses in Azerbaijan & Central Asia. Improving loans. credit flows from microfinance institutions to IFC provides solution by developing a modular package covering two broad areas: (3) Supported Bai-Tushum & Partners in their clients will therefore help sustain economic the Kyrgyz Republic in raising equity and development in these countries. The first is in line with institution of capacity improving investor relations and negotiations. Despite the downturn in economic activity, Transformation is a complex and time-consuming building (e.g. financial management, assets and microfinance institutions have grown rapidly In 2009, the Project’s clients disbursed over process that requires expertise and skills in liabilities management, development of new over the past few years. In many cases they are 91,000 loans, totaling $243.3 million. As of numerous areas, including organizational and products and deposits, risk management, internal competing with banks for clients. December 31, 2009 the cumulative number financial management, risk management, audit and control, and HR). of outstanding clients was 82,300, while human resources, and internal auditing. In The second is more focused on corporate strategy outstanding loans reached $116 million. To grow further and in a sustainable manner addition, as deposit-taking institutions are subject and mentoring (e.g. advice on structuring equity microfinance institutions in Azerbaijan & Central to strict supervision and monitoring from banking transactions, corporate planning, investor The joint IFC/WB/CGAP efforts in Asia need to expand their reach to attract more regulatory authorities, preparing a license presentations, investor relations, and funding supporting a legislative framework for the clients with a diverse product and service range application becomes a major challenge requiring strategies). microfinance sector in the Kyrgyz Republic supported by a stronger funding base. professional consultants. led to a constructive discussion and This process is not appropriate for every MFI, but successful collaboration with the National it is aimed at those that have reached a point in Bank of the Kyrgyz Republic and resulted in To build a stronger funding base, microfinance As change involves risks around undertaking their development where such a transformation the abolition of interest rate caps previously institutions can transform into deposit-taking activities that an institution has not previously makes strategic sense. imposed by the government. institutions. experienced, IFC’s support and guidance during such projects is particular, valuable. 24 Creating Opportunity for Micro Businesses in Central Asia IFC Azerbaijan & Central Asia Microfinance Transformation Support Project 25 Microfinance in Central Asia: Financial Inclusion IFC in Microfinance: Central Asia For more information on microfinance transformation processes and IFC investment services, please contact: Credits Сholpon Kokumova ckokumova@ifc.org 41 A, Kazybek Str., 1 floor Almaty, Kazakhstan, 050010 T: + 7 727 2980 586 F: + 7 727 2980 584 ifc.org/acamfi Creating Opportunity for Micro Businesses in Central Asia Microfinance in Central Asia: Financial Inclusion IFC Advisory Services Azerbaijan & Central Asia Microfinance IFC Investment Services Transformation Support Project Tomasz Telma Assel Choibekova, IFC Cholpon Kokumova Senior Manager Lotte Pang, IFC Project Manager for Central Asia Cholpon Kokumova, IFC (p.4-7) CKokumova@ifc.org Aziza Ohunova, ARVAND, Tajikistan (p.8-9) TTelma@ifc.org Ermek Djeembaev, Bai-Tushum & Partners, Kyrgyz Republic (p.10) Christopher Bloomfield Tamabaeva Aksaamai, Bai-Tushum & Partners, Kyrgyz Republic (p.11) Olim Khomidov Senior Financial Ekaterina Shmodina, Bai-Tushum & Partners, Kyrgyz Republic (p.12-13) Senior Investment Officer Management Expert Sagyn Arinov, Bai-Tushum & Partners, Kyrgyz Republic (p.14) OKhomidov@ifc.org Rano Yuldasheva, Bai-Tushum & Partners, Kyrgyz Republic (p.15) CBloomfield@ifc.org Aigul Tilekeeva, Bai-Tushum & Partners, Kyrgyz Republic (p.16) Manas Sagynov, Bai-Tushum & Partners, Kyrgyz Republic (p.17) Assel Choibekova Marie-Paule Claes Communications Specialist Senior Investment Officer AChoibekova@ifc.org MClaes@ifc.org Medina Aldabergenova Umedjan Umarov Operations Analyst Investment Officer MAldabergenova@ifc.org UUmarov@ifc.org About IFC IFC, a member of the World Bank Group, is the largest global development Kristina Ladonina Erina Kadyralieva institution focused on the private sector in developing countries. We create Team Assistant Investment Analyst opportunity for people to escape poverty and improve their lives. We do so KLadonina@ifc.org EKadyralieva@ifc.org by providing financing to help businesses employ more people and supply essential services, by mobilizing capital from others, and by delivering advisory services to ensure sustainable development. In a time of global economic uncertainty, our new investments climbed to a record $18 billion in fiscal 2010. For more information, visit www.ifc.org. 26 Creating Opportunity for Micro Businesses in Central Asia Microfinance in Central Asia: Financial Inclusion Contact Information 41 A, Kazybek Str., 1 floor Almaty, Kazakhstan, 050010 T: + 7 727 2980 586 F: + 7 727 2980 584 ifc.org/acamfi 2010