April 10, 2002—The International Finance Corporation has invested US$1 million into FINCA Kyrgyzstan, the leading microfinance provider in the Kyrgyz Republic, to help fight poverty by expanding access to micro-loans for low-income entrepreneurs, who are mostly women. This money will help them build their businesses and raise the standard of living.

The funds were approved and partially disbursed earlier this week, reports IFC, the private sector development arm of the World Bank Group.

A key goal of the IFC investment will be to help FINCA Kyrgyzstan (FK)–a highly successful donor-supported microfinance provider with a 99 percent repayment rate–transition to a regulated, commercially-based microfinance institution.
World Bank President James D. Wolfensohn, who was the Kyrgyz Republic to discuss national development goals with President Askar Akaev and other officials, visited FINCA Kyrgyzstan's operations center in Bishkek on April 9.

The investment reflects an important aspect of IFC's global microfinance strategy: support for the commercial viability of microfinance activities.

IFC believes that well-managed microfinance institutions can—and should—be commercially viable so that financial services can be provided to the underserved over the long term, resulting in a substantial and sustainable increase in the volume and range of financial services for microenterprises.

As part of its newly increased efforts in microfinance, IFC has recently approved a global partnership agreement with FINCA International that is expected to lead to additional support for commercialization of its existing affiliates in Africa and Latin America.

"We feel that FINCA Kyrgyzstan's success rate on repayment makes it a prime candidate for transition to a commercially sustainable institution. A successful transition will help expand access to the vital micro-loans that help micro-entrepreneurs build their businesses and improve their lives," said Khosrow Zamani, IFC's Director for Southern Europe and Central Asia.

Microfinance involves the provision of a broad range of financial services to low-income households that operate microenterprises. Microfinance is a proven, effective tool in the fight against poverty.

The poor have displayed a capability to repay loans, pay the real cost of loans, and generate savings that are reinvested in their business. Income earned through microenterprises enables families to increase their spending on education, health care, and improved nutrition.

More than 500 million poor people around the world run profitable microenterprises and often cite credit as the primary constraint to business growth.

In the poorest countries, these activities constitute the private sector—generating jobs and resources for services crucial to poverty reduction, especially for women.

Nearly 90 percent of FK's cumulative total of $43 million in loans since its inception in 1995 has gone to Kyrgyz women.

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