OREANDA-NEWS. The EBRD is providing a 5-year loan to Bank Caspian to support the expansion and further development of micro, small and medium-sized enterprises (MSMEs) in Kazakhstan, reported the press-centre of EBRD.

The $59 million credit will be on-lent to local companies outside the major cities of Almaty and Astana. Access to finance in the remote regions of Kazakhstan remains difficult.

The MSME sector is an important provider of employment and is increasingly critical for the wider Kazakh economy. It is estimated that about 20 per cent of Kazakhstan’s economic output can be attributed to the sector. The government sees the growth of small businesses as key to sustainable development of an economy which is otherwise dominated by natural resources. The demand from local micro and small businesses for loans has increased strongly and local banks are increasingly solicited to provide longer term funding to the sector.

The EBRD loan will consist of two equal portions. The first portion will be for loans below $200,000, focused on the smallest businesses with an average loan size expected to be $10,000. The second portion will be used to finance loans worth the equivalent of $200,000 to $500,000, aimed at small and medium-sized enterprises. Thus Bank Caspian will be able to accompany the growth of its smallest clients as well as to provide finance to larger more established borrowers.

The loan is supported by a $150,000 Technical Cooperation grant provided by the government of Japan under the Japan Kazakhstan Small Business Programme (J-KSBP) to improve the efficiency of the MSE lending. This programme will support three financial institutions in Kazakhstan including Bank Caspian.

Bank Caspian and the EBRD have been partners since 2004 when Bank Caspian joined the EBRD’s Trade Facilitation and Warehouse Receipts Programmes. Today, Bank Caspian is a universal mid-size bank focused on servicing micro, small and medium sized enterprises as well as private individuals. It is the eighth largest bank in Kazakhstan in terms of assets and the third largest in terms of branch and point of sale network.

Andre Kuusvek, EBRD Director for Kazakhstan, emphasised that the loan to Bank Caspian will have a special focus on the distribution of funds to micro, small and medium-sized enterprises in Kazakhstan’s regions. With this loan the EBRD is assisting Bank Caspian to further diversify its funding base and supporting the bank’s growth, he added.

Mikhail Lomtadze, Chairman of the Management Board of Bank Caspian, expressed his “enthusiasm at EBRD’s decision to support Bank Caspian’s growth. This is an important milestone in the development of Bank Caspian funding opportunities. Our strategy is to build the most transparent and true retail bank. EBRD financing is one most important justification of our efforts and strategy. SME and micro financing is one of key business for our bank. And this financing, will enable us to further continue developing this business line and continue building our market position.”

To-date, the EBRD has invested about $2,5 billion through selected projects that support economic diversification, entrepreneurial activities and job creation in Kazakhstan.