FMCC has been active in the country since 1995 and was funded with a USAID grant. In 2003, FMCC was incorporated as a joint stock company and licensed by the National Bank of Kyrgyz Republic as a non deposit taking commercial micro credit company. FMCC has been primarily targeting underserved clients in remote, mostly rural areas with no or poor access to credit, as well as very small entrepreneurs in semi-urban and urban communities, who due to very small business size and lack of collateral had no access to credit from the formal financial system. FMCC is 100 percent owned by FINCA International, Inc. (“FINCA”), a non profit organization headquartered in Washington, DC and one of the largest microfinance networks in the world with 21 affiliates in 21 countries, including 15 IDA countries. FINCA serves approximately 701,000 micro entrepreneurs, 70 percent of which are women.

The proposed project involves a senior loan from IFC’s own account to the Company in either US Dollar or Kyrgyz Som, in an amount not to exceed $6 million (equivalent).

6.0 million (USD)

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	6.0
Equity

* These investment figures are indicative

FMCC is headquartered in Bishkek, Kyrgyz Republic. It is currently present in all seven regions of the country and runs a network of 18 branches and 51 outlets thus having a nation-wide coverage.

The developmental impact is expected to be high: - The Project would provide funding for underserved segments of society in an IDA country, more specifically women entrepreneurs, and will contribute to employment creation and poverty reduction in Kyrgyz Republic. - The Project would support the efforts of FMCC to diversify and increase the volume of their funding and to better manage their asset and liability position at a time of limited funding opportunities. - In Kyrgyz Republic, the provision of term funding in the local financial market will have a very strong demonstration effect and build market confidence. This is extremely relevant in a post conflict environment.

IFC's additionality can be summarized as follows: - Provide term-funding for growth. As a result of the financial crisis and the political turmoil of 2010, term-funding for Kyrgyz microfinance companies has become scarce. IFC's term loan will provide the necessary funding to continue the growth of the Company and support its expanded product offer to local entrepreneurs. - Support local entrepreneurs through a capable financial intermediary with a good track record of financing micro and small businesses in Kyrgyz Republic. - Give positive reinforcement to FMCC's focus to serve more customers, expand its outreach in rural and low income regions and promote sustainable best practice in the microfinance sector. - Enhance IFC's additionality to the FINCA network through a direct and local support to one of their largest affiliates and help grow its operations, in parallel to IFC's engagement on the creation of the FINCA Microfinance Holdings (project# 29683).

This project involves support for a microfinance company and has been classified as a Category FI project according to the IFC''s Environmental and Social Review Procedure. The E&S appraisal focuses on reviewing Company’s portfolio, E&S due diligence procedures and HR practices. The appraisal indicates that there is no stand-alone S&E policy, but elements of E&S due diligence are incorporated into the Company’s credit policy and other internal documents, and corresponding S&E training is carried out. The Company is in compliance with the Performance Standard 2 – Labor and Working Conditions. Based on the review, FMCC will be required to enhance/update its existing procedures in the credit policy or alternatively develop a separate policy to screen and process its investments to avoid supporting activities on the IFC Microfinance Exclusion List and be consistent with the ones of FINCA. The Company will also be required to appoint a qualified SEMS officer to manage and implement the procedures, to maintain compliance with the Performance Standard 2, and to submit an annual report to IFC as per a format to be provided by IFC.