47463 - BOP Humo-FY23

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Summary of Investment Information

Project Number

47463

Company Name

Closed Joint Stock Company Humo Bank

Date SPI Disclosed

Feb 27, 2024

Country

Tajikistan

Region

Central Asia and Turkiye

Projected Board Date

Feb 15, 2024

Environmental Category

FI-3 - No Impact

Status

Active

Last Updated Date

May 11, 2024

Department

Regional Industry FIG MCT

Industry

Financial Markets

Previous Events

Approved : Feb 15, 2024
Signed : Mar 18, 2024
Invested : May 8, 2024

Sector

Microfinance and Small Business - Non Commercial Banking

Additional Project Attributes

Blended Finance

Project Description

The proposed project consists of a 3-year senior unsecured loan of up to US$3 million denominated in Tajik Somoni (TJS or LCY) to a leading microfinance deposit taking institution in Tajikistan, CJSC MDO Humo (“Humo” or “the Company”), an existing IFC client in good standing. The Project will be processed under the Base of Pyramid (BOP) Platform and benefit from the IDA-PSW Blended Finance Facility and IDA-PSW Local Currency Facility (“LCF”) support. Proceeds will be equally allocated to finance (i) micro housing projects (including acquisition of houses/apartments, renovation, upgrading, modernization or incremental building of an existing dwelling), (ii) self-employed women and women-owned micro and small enterprises (WMSEs), and (iii) individuals in rural areas and Micro and Small Enterprises (MSEs).

To date, US$825.5 million has been committed from the US$1 billion BOP Platform envelope leaving US$174.5 million in available headroom to support the proposed project. All investments under the BOP Platform are performing, and no first loss has been paid out.

Associated Advisory Engagement

IFC’s Housing Microfinance (HMF) advisory project supports Humo by developing HMF products and strengthening their capacity to offer non-financial services to HMF clients with the objective of growing its HMF portfolio. Since the start of the engagement in 2020, Humo disbursed over $3.5 million to 2,044 low-income households in the form of housing finance (as of Jun-23).

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	3.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to MSME (mix of Micro and SME)
Straight Senior Loan	Housing Loans to Individuals
Straight Senior Loan	Loans to Woman-Owned SMEs

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

Stakeholder Effects: Improved access to finance for MSEs and individuals - The Project supports Humo to provide financing to support microentrepreneurs and small enterprises in overcoming liquidity constraints and pursue opportunities for economic recovery and growth. Contribution to Market Creation: Resilience - IFC anticipates that the project will support resilience amongst BOP finance providers – including banks and microfinance institutions - by helping the market deal with persisting uncertainty and tighter financial conditions and catalyzing investor response.

Additionality: The Project will support Humo with up to 3-year local currency financing not readily available in the market. Humo’s deposit base is largely short-term and is not sufficient to cover its funding needs. As such Humo relies heavily on equity and wholesale funding to finance its portfolio. In the context of an underdeveloped capital market and financial sector, wholesale funding is typically accessed from government programs and a number of small facilities with DFIs and a limited number of international microfinance investment vehicles. Since the current global macroeconomic and geopolitical situation has significantly increased currency volatility and risk, it is increasingly difficult for local FIs to gain access to facilities at viable pricing.

E&S Category Rationale / Risks and Mitigation

The Project is a senior loan to Humo, a leading microfinance institution in Tajikistan and an existing IFC client, to support micro and small enterprises with part of proceeds to be used for micro housing projects and part for women enterprises. Humo’s portfolio is invested in microloans in sectors of agriculture, services, trade, small-scale manufacturing, housing. The client does not have exposure to coal-related projects or activities on the Exclusion List. Overall E&S risks associated with the project are considered to be low and carry minimal or no adverse environmental or social impacts. The project therefore has been classified as category FI-3. The Project will not support IFC Exclusion List activities or borrowers involved in coal related or higher-risk business activities that may include: (i) involuntary resettlement, (ii) risk of adverse impacts on indigenous peoples, (iii) significant risks to or impacts on the environment, community health and safety, biodiversity, cultural heritage or (iv) significant occupational health and safety risks. The main E&S risks and impacts of this investment relate to Humo having adequate systems and capacity in place to manage E&S risks in micro- and small loans portfolio in line with IFC’s applicable E&S requirements. The project requirements are the IFC's Exclusion List, and E&S Laws and Regulations of Tajikistan. Additionally, Humo will be required to maintain alignment with life and fire safety requirements, and the requirements of the IFC’s Performance Standard 2 on Labor and Working Conditions. As an existing client, Humo operates an ESMS sufficient to cover E&S risks associated with the transaction; the ESMS staff is appointed.

Contacts

For Inquiries About the Project, Contact

CJSC MDO Humo
Azamzhon Abbasov
AbbasovA@humo.tj

www.humo.tj

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