AKFED acquires share in the First MicroFinanceBank, Tajikistan


AKFED acquires share in the First MicroFinanceBank, Tajikistan

DUSHANBE, November 30, 2015, Asia-Plus -- Under an agreement signed between the Aga Khan Fund for Economic Development (AKFED) and IFC, a member of the World Bank Group, AKFED will acquire IFCs entire stake in the First MicroFinanceBank (FMFB) of Tajikistan.

Since its establishment in 2003, FMFB has been able to create a nationwide banking network comprising 7 full-scale branches and 28 banking service centers, covering all regions of Tajikistan, including some of the most remote parts of the country.  The bank currently has over 60,000 customers.  FMFBs primary objective has been to assist in the alleviation of poverty of the most vulnerable populations by providing access to finance and banking products to the under-served segments of the economy, under the aegis of its two founding, anchor shareholders namely AKFED and the Aga Khan Foundation, Tajikistan (AKF-T), both agencies of the Aga Khan Development Network (AKDN).  In 2005, IFC and Kreditanstalt für Wiederaufbau (KfW) joined as shareholders as did the Aga Khan Agency for Microfinance (AKAM), also an AKDN agency.  AKAM became the lead shareholder in the bank when AKFED transferred all its shares to it in 2007.

In order to address the growing needs of the economy, the bank has now broadened its focus to also include the Small and Medium Enterprise (SME) segment.  With AKFED's lead participation and its commitment to provide additional capital, the bank will be able to reposition and establish itself as a key player in the banking space in times to come, said Mr. Salim Jiwani, the Chairman of the bank.  He added that,  with AKFED's participation, the bank will be able to leverage AKFED's experience in terms of its successful investments in Banks and Non Banking Financial Institutions in South Asia, Central Asia and Africa.  Further capital enhancements in the future will allow the bank to deploy state-of-the-art technology and enhance its capacity to serve a wider population.

AKFED has obtained approval from the National Bank of Tajikistan for the purchase of FMFB shares from IFC, and looks forward to participating in the future strengthening, capacity building and in the growth of FMFB, said Mr. Sultan Ali Allana, Head of Financial Services of AKFED.  This is an exciting time for us as we move towards developing an interesting value proposition in Central Asia, which in the future may not only contribute towards enhancing regional trade but also in the broader sense contribute towards the development of the regional economies, he added.

For the last 10 years, IFC has provided FMFB with capital and debt funding that supported the banks dynamic growth and helped it expand access to finance for micro and small entrepreneurs in Tajikistan.  IFCs advisory services introduced best practices and strengthened the banks institutional capacity.

IFCs developmental objective dictates that IFCs equity participation is for limited period and as needed by the company, said Moazzam Mekan, IFC Regional Manager for Central Asia.  The sale of IFCs shares in FMFB is consistent with IFCs business.  After the exit, IFC will continue working with FMFB to expand much-needed financing to its customers, helping them grow, create new jobs, and spur broader economic development.  

The Aga Khan Fund for Economic Development is one of the agencies of the Aga Khan Development Network (AKDN) and is dedicated to promoting entrepreneurship and to building economically sound enterprises in the developing world.  AKFED focuses on supporting enterprises in parts of the world that lack sufficient foreign direct investment.  It operates a network of affiliates with more than 90 project companies in 17 countries.  It employs over 48,000 people, with revenues of US$ 3.5 billion in 2014.

Established in 2005, Aga Khan Agency for MicroFinance (AKAM) has brought together programs and banks that were administered by sister agencies within the Aga Khan Development Network, facilitating investment of more than $2 billion directly into more than 2 million small businesses, low-income households and under-served communities in a dozen countries.  The underlying objectives of AKAM are to reduce poverty, diminish the vulnerability of poor populations and alleviate economic and social exclusion.  AKAM is a not-for-profit, non-denominational, international development agency created under Swiss law.

Established in 2003, The First MicroFinanceBank (FMFB) was the first commercial bank in Tajikistan with the principal focus on the provision of microcredit lending.  The Bank started serving Small and Medium Enterprises from 2011. The Bank has a national mandate to provide a comprehensive range of financial services to the poor throughout the country.  The vision of FMFB is to be recognized as Tajikistans most trusted bank, operating to international standards of ethics, prudence and customer service, through the reliable delivery of high quality banking services in all regions of Tajikistan to its customers.  The mission is to contribute to the improvement of the quality of life of people in Tajikistan and to the economic development of the country by providing access to finance and banking services.

IFC (International Finance Corporation), a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets.  Working with more than 2,000 businesses worldwide, IFC uses its capital, expertise, and influence, to create opportunity where its needed most.  In FY15, IFCs long-term investments in developing countries rose to nearly $18 billion, helping the private sector play an essential role in the global effort to end extreme poverty and boost shared prosperity.

Established in 1948 in Germany, KfW promotes on behalf of the German Government the improvement of social-economic conditions of people in developing countries. The aim of KfW consists of the creation and expansion of the social-economic infrastructure in the respective country, the development of reliable financial systems, and conservation of resources and protection of the environment.  KfW is a leader in supporting sustainable microfinance aiming at earmarked groups of financial institutions worldwide.  KfW is one of the largest banks in Germany, and was awarded an AAA rating by Moody's, Standard & Poor's and Fitch Ratings.

Established in 1967 in Geneva, Switzerland in 1967, the Aga Khan Foundation (AKF) is a non-denominational, international development agency with branches, affiliates and representative offices in 20 countries.  In Tajikistan, AKF has been active since 1993 when a response was mounted in Gorno-Badakhshan to address food shortages caused by the collapse of the Soviet Union. In parallel with this emergency program, AKFinitiated a rural development program with the aim of contributing to poverty alleviation in the program areas.  Programs for reform in the social sector (Health and Education) were introduced in 1994.