Downscaling: KfW Micro, SME and Mortgage Financing Programme, 2011-2014
The KfW Micro, SME and Mortgage Financing Programme was a financial sector development programme targeted at the promotion of MSMEs and mortgage finance by channeling funds through selected partner banks. The Programme was composed of a EUR 12.3 mln credit line for MSME financing, a EUR 5 mln credit line for mortgage financing, and technical assistance.
The objective of the technical assistance component was to enable the partner banks to provide loans to MSMEs and mortgage loans to private households in a sustainable and profitable way. As a consequence of the institutional capacity strengthening, the partner banks enhanced and expanded the range of their financial products and attracted refinancing funds that matched with their lending activities.
The Micro, SME and Mortgage Financing Programme had three phases: inception, implementation and phasing out. During the Inception Phase, which started in April 2011, LFS was conducting preparatory works, including due diligences of pre-selected partner banks and recommendations for programme design and distribution of credit lines among PBs and credit products (micro, SME, mortgage). During the Implementation Phase, the advisory services focused on putting the agreed-upon measures and objectives into practice. During the Phasing-Out, all products, processes and procedures were refined and their implementation was assessed, and the responsibility was transferred to the locally created staff and management resources, to enable the banks to operate the newly introduced MSME and mortgage financing technologies and approaches independently.
Downscaling: Establishment of MSME Finance in Partner Bank, 2009 - 2010
Our partner bank is a medium sized bank headquartered in Andijan. It was a partner bank of the Japan-Uzbekistan Small Business Programme (J-USBP). Under this programme, the bank received intensive technical assistance from LFS from 2001 to 2006. In this time, successful and profitable MSE lending operations were build up.
In this follow up project, LFS supported the partner bank in the build-up of SME lending operations. LFS was working as Credit Advisor for SME departments in all 21 branches of the partner bank. Tasks included the training of respective staff and the developing of appropriate procedures for SME lending, together with the partner bank.
Downscaling: Japan-Uzbekistan Small Business Programme (J-USBP), 2001-2006
The Japan-Uzbekistan Small Business Programme (J-USBP) of EBRD was an institution building project implementing lending to micro and small enterprises (MSEs) in selected commercial banks. The Technical Assistance Component was financed by the Japanese Government.
The J-USBP started with a pilot phase in early 2001. In this pilot phase, LFS assisted three commercial banks in building up micro lending departments in a limited number of regions, whereas the Partner Banks provided the necessary refinancing. In early 2002 a fourth bank joined the programme. In a second step, starting in July 2002, EBRD provided 8 million USD in credit line funds to Partner Banks for onlending to MSEs.
The J-USBP had a twofold objective. It strengthened the private enterprise sector by providing the necessary credit finance to MSEs, and increased the capacities of the financial sector to meet the needs of private enterprises. At the end of the project, J-USBP credit products were offered by 4 banks in 8 regions.
LFS was responsible for capacity building in the Partner Banks and overseeing and monitoring the quality of lending. In addition we provided advice to EBRD on selected impeding issues in the Uzbek legal and regulatory government. In this respect LFS liaised with both local and national authorities on a regular basis, for instance with local and regional governments or the Central Bank. LFS furthermore played an active role in the creditworthiness assessment of MSEs, and in the credit committee decisions of the banks. The Technical Assistance Component was financed by the Japanese Government.