The World Bank’s Board of Executive Directors have approved $120 million for Developing a Sustainable Finance Market for Micro, Small, and Medium Enterprises (MSMEs) in the Kyrgyz Republic project. This landmark initiative will be co-financed by a $50 million loan from the Asian Infrastructure Investment Bank (AIIB). With a total funding of $170 million, the project aims to advance green finance, mobilize private capital, and strengthen the capacity of local financial institutions, according to the World Bank.
“Increased private sector-led job creation is a key pillar of the World Bank Group’s Country Partnership Framework with the Kyrgyz Republic,” said Hugh Riddell, World Bank Group Country Manager. “This project will directly benefit MSMEs and financial institutions, thus further contributing to sustained economic growth and creation of thousands of jobs.”
The project will focus on two key areas:
Sustainable Finance for MSMEs: This component will i) provide wholesale financing through Participating Financial Institutions (PFIs), enabling them to extend loans to MSMEs for green and sustainable investments; and ii) support the establishment of Green Finance Fund, a key initiative led by the Government. Priority will be given to projects promoting energy efficiency, renewable energy, and other environmentally sustainable practices.
Green Guarantee Mechanism: The project will introduce a green guarantee mechanism through the Guarantee Fund to provide partial credit guarantees to financial institutions lending to MSMEs. This will significantly reduce risks for lenders and encourage greater access to finance for MSMEs pursuing green projects.
Furthermore, the combination of direct financing for green initiatives and risk-reducing mechanisms is expected to mobilize up to $148 million in private sector investments over the next five years.
