SEF Tajik Sodir Ot Bonk

completed

The project consists of an equity investment of up to $500,000 in Tajik Sodirotbank, which will represent up to 20% of the share capital. The proceeds of the IFC investment would be used by TSB to: - strengthen its capital base, and - increase available funding to support the anticipated growth in private sector and SME lending. The IFC investment would be part of a larger recapitalization program that will increase the Bank''s capital from $1.14 million to $3 million equivalent. Other prospective investors include the European Bank for Reconstruction and Development (EBRD) for 15% to 20% of capital and the Agha Khan Fund for Economic Development (AKFED), which has expressed interest to subscribe for 25% to 30% of capital. There will also be a capacity building technical assistance program that will strengthen the bank''s operations and bring them in line with sound banking principles. IFC''s key role in the financial sector has three objectives. First, IFC seeks to encourage and support institution-building by focusing on the following priority areas:- help develop new and efficient private sector companies; - establish commercially viable intermediaries capable of mobilizing and allocating domestic savings for use by these private companies; and - assist in employment generation. Furthermore, the project will set standards of corporate governance and business conduct and discourage government interference. IFC''s involvement, in partnership with EBRD and AKFED, will foster the institution-building role through the Technical Co-operation (TC) program approved by the EBRD and AKFED''s active involvement in the operations of the bank. Third, IFC’s involvement will act as a catalyst for more Foreign Direct Investment (FDI). Over the years, Tajikistan has attracted very little FDI. No foreign banking institution has to date invested in the Tajik financial sector and no strategic or financial investor is presently willing to take such initiative on its own. The success of the project should encourage other investors, who are currently reluctant to do business in the country, to invest in Tajikistan as the perceived risk diminishes.