In a move aimed at bolstering micro, small, and medium-sized enterprises (MSMEs) in Uzbekistan, the European Bank for Reconstruction and Development (EBRD) has announced its provision of a $4mn loan to Fortuna Biznes Microfinance Organization (MFO). This marks the first time the EBRD has extended a loan to an MFO in Uzbekistan, signaling a pivotal moment for the country's microfinance sector.
The loan, provided under the Financial Intermediaries Framework (FIF), will support individual entrepreneurs and private MSMEs across Uzbekistan. Fortuna Biznes, a privately-owned MFO based in Fergana city, Fergana Region, has been operational since 2018, offering financial assistance to local businesses. With eleven branches spread across six regions of Uzbekistan, Fortuna Biznes has established itself as a key player in facilitating access to finance for entrepreneurs and MSMEs.
The project objectives underscore a commitment to enhancing financial inclusion and capacity building within Uzbekistan's economy. The loan will enable Fortuna Biznes to diversify its funding base and expand lending to private MSMEs, particularly focusing on reaching underserved market segments in regional areas. Importantly, up to 35% of the loan will be allocated to businesses led by women, contributing to greater economic inclusion and gender mainstreaming efforts within the country.
The loan will be disbursed in two equal tranches of $2mn each, with the first tranche committed upon signing and the second available at the discretion of the bank. This structure aligns with the EBRD's strategic objective of fostering a stronger role for SMEs in the economy by facilitating access to finance and promoting regional development.
Additionally, the project demonstrates the EBRD's commitment to fostering transition impact, with an Environmental and Social Performance (ESP) score of 69. The loan's provision of longer-term funding not readily available in the market, coupled with its focus on regional clients and new market entrants, underscores its contribution to inclusive and competitive transition impact qualities.
In terms of environmental and social considerations, Fortuna Biznes will be required to comply with relevant EBRD environmental and social standards, including Performance Requirements (PRs) 2, 4, and 9. Furthermore, the organization will receive technical cooperation support under the Central Asia Regional Small Business Programme (CA RSBP), funded by the European Union. This support will encompass access to training platforms and in-class sessions aimed at enhancing the capacity of Fortuna Biznes and its sub-borrowers.
The project will also benefit from non-financial services provided under the EBRD's Advice for Small Businesses Programme, funded through the EBRD Small Business Impact Fund (SBIF). These services aim to bolster the resilience and sustainability of MSMEs in Uzbekistan.
Moreover, an associated technical cooperation component will address unconscious bias and gender stereotyping in lending, highlighting efforts to promote gender equality and mitigate barriers to women's access to finance.
The loan may additionally benefit from first loss risk cover under the EBRD's SME Local Currency Programme, further enhancing the project's risk mitigation measures.
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