Kyrgyz Republic: Senior Unsecured Loan in Kyrgyz Investment and Credit Bank Small and Medium-Sized Enterprise Finance

Nonsovereign Project | 45910-014

Project Name Senior Unsecured Loan in Kyrgyz Investment and Credit Bank Small and Medium-Sized Enterprise Finance
Project Number 45910-014
Country Kyrgyz Republic
Type or Modality of Assistance
7350/2849 Loan USD 10.00 million Approved
Strategic Agendas Inclusive economic growth
Drivers of Change Private sector development
Sector / Subsector

Finance / Banking systems and nonbank financial institutions - Inclusive finance - Small and medium enterprise finance and leasing

Gender Equity and Mainstreaming
Responsible ADB Department Private Sector Operations Department
Responsible ADB Division Portfolio Management Division, PSOD
Responsible ADB Officer Hruschka, Stefan A.
Project Sponsor(s)
Description The project consists of a senior US$10 million loan to Kyrgyz Investment and Credit Bank for the purpose of funding small and medium-sized enterprises (SMEs) in the country.
Objectives and Scope The loan will provide critically needed longer-term funding to SME's in the Kyrgyz Republic whose ability to access funds has been constrained by the country's low level of financial sector development (including the absence of a well-developed capital market) where longer-term funding is constrained. Moreover, SMEs were particularly impacted by the 2010 political crisis and, while recovering, are in need of funding to support future growth. Through the CDTA, KICB will receive capacity building support which will enable the bank to better expand services to SMEs on a prudent basis and serve this important sector more efficiently and sustainably, thus supporting the SME sector's contribution to overall economic growth and employment generation in the Kyrgyz Republic.
Status of Development Objectives

Impact- Increasing the SME sector's share in the economy will help contribute to broad based GDP growth. Supporting SME development by increasing access to finance as a result of the positive demonstration effect from ADB''s loan can help raise total employment and secondly lead to inclusive economic growth.

Outcome- ADB''s loan and CDTA is expected to help KICB establish a profitable and sustainable SME program and broaden access to finance for previously unbanked SMEs.

Outputs- This loan will provide the bank with additional funds for on-lending to SMEs. Outputs include KICB having access to longer-term funds for SME on-lending, which will increase its lending activities to this sector. Additional output of this project will be product development in KICB, supported by technical assistance from ADB and reporting of sex-disaggregated data.

Linkage to Country/Regional Strategy Strategy 2020 identifies private sector development and private sector operations as one of the five drivers of change to mobilize resources to help alleviate poverty in the region. Financial sector development is noted as one of the five operating areas that will be undertaken in support of this agenda. The investment is consistent with the government's priorities and desires to encourage economic growth, broaden access to finance, address low private sector investment, and reduce unemployment. Expanding access to finance via banks and increasing private sector investments with development impact potential is one of the objectives set forth in the 2011/12 Country Operation Business Plan (COBP). The project is consistent with Strategy 2020 and the COBP, as it will support private sector development through financial sector development by increasing the capacity and ability of KICB to expand its lending activities to SMEs, which comprise an important and underserved portion of the Kyrgyz Republic's economy. Broadening access to finance through private sector interventions in the banking sector continues to be an ongoing priority for the country.
Safeguard Categories
Environment FI
Involuntary Resettlement FI
Indigenous Peoples FI
Summary of Environmental and Social Aspects
Environmental Aspects

The investment is classified as category FI (treated as C) for environment under ADB's Safeguard Policy Statement (SPS). KICB's existing environmental and social management systems (ESMS) or equivalent systems have been reviewed, areas requiring improvements are needed have been identified and effective measures to address them are laid out in the ESMS Arrangement. KICB will apply ADB's prohibited investment activities list (PIAL), screen and exclude all projects that will have adverse environment impacts, ensure that investments using ADB funds abide by applicable national laws and regulations, and comply with the SPS. KICB will be assisted by ADB to enhance their ESMS which is integrated in their Credit Department Operations Manual such that it incorporates the PIAL, the screening and reporting procedures and complies with the SPS.

Women-owned or managed SMEs constitute more than 40% of the loan applications processed and approved by KICB from 2007-2010. KICB will continue to track and target maintenance of this level of onlending to women-owned or managed SMEs until 2016. With respect to core labor standards (CLS), the Kyrgyz Republic has ratified all conventions related to CLS.

Involuntary Resettlement The investment is classified as category FI (treated as C) for involuntary resettlement.
Indigenous Peoples The investment is classified as category FI (treated as C) for indigenous peoples.
Stakeholder Communication, Participation, and Consultation
Timetable for assistance design, processing and implementation
Concept Clearance 29 Aug 2011
Credit Committee Meeting 07 Nov 2011
Approval 17 Jan 2012
PDS Creation Date 30 Sep 2011
Last PDS Update 16 Sep 2014

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Evaluation Documents See also: Independent Evaluation

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Related Publications

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