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4-12-2014, 13:22

ADB to invest private sector in Tajikistan

Avesta.Tj | 04.12.2014 | The Asian Development Bank (ADB) approved its first private investment in Tajikistan, according to the ADB statement released Thursday.


A package of equity and loans will be invested for Access Bank Tajikistan (ABT) to support ABT’s business growth and boost financing for micro, small and medium-sized enterprises (MSMEs), and services in the regions outside Dushanbe.


The approved ADB financing of up to 11 million U.S. dollars equivalent includes an equity investment of up to 3 million U.S. dollars equivalent and loans of up to 8 million U.S. dollars. The loan comprises a 5 million U.S. dollars direct loan and a 3 million U.S. dollars B- loan with ADB acting as the lender of record.


Rainer Hartel, the Principal Investment Specialist at ADB’s Private Sector Operations Department, said: "We are pleased to acquire 10 percent of share capital in the ABT and look forward to supporting the bank’s expansion to support Tajikistan’s MSMEs especially in rural areas where many enterprises are still unbanked. We are looking for other opportunities to support financial inclusion in Tajikistan”.


Four large banks dominate Tajikistan’s financial landscape but their performance has been undermined by their targeting of state-owned enterprises and implementing government-induced credit programs - resulting in low asset quality.


Entrepreneurs and smaller businesses increasingly rely on second-tier banks and microfinance companies, whose lending ability is constrained by small market share, limited deposit mobilization, constrained and costly overseas borrowing due to Tajikistan’s perceived high country risk, a dearth of qualified staff, and governance issues.


Just 16% of households have access to formal financial services and small businesses lack financing especially in rural Tajikistan, where agriculture provides jobs for two-thirds of the labor force. Private investment is therefore critical to stimulate farm and related services investments and employment.

 

ABT was set up in 2010 as a greenfield bank to serve low-income and MSME customers. ABT’s current shareholders include Access Microfinance Holding Aktiengesellschaft, European Bank for Reconstruction and Development, International Finance Corporation, and KfW, the German development bank.

 

As well as providing long-term funds to support ABT’s growth, ADB’s investment package is expected to encourage mobilization of private financing in the finance sector and to stimulate public confidence in the banking system.

 

A related ADB technical assistance grant of 500,000 U.S. dollars will allow ABT to strengthen its outreach to rural areas and boost staff skills, including in risk management. 





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