SMEs to drive economic diversification

The OPEC Fund extends first-ever private sector loan to Turkmenistan

As published in the 03/2020 issue of the OPEC Fund Quarterly.

Lacking access to finance is one of the most pressing barriers for small-and medium-sized enterprise (SME) growth in Turkmenistan, according to a survey carried across the country’s five regions by the Centre for International Private Enterprise. While the government has undertaken measures to promote private sector growth, state-owned enterprises still outweigh SME presence.

Representing its first private sector transaction in the country, the OPEC Fund recently signed a US$10 million term loan in favor of the State Bank for Foreign Economic Affairs of Turkmenistan (SBFEAT). The financing will enable the bank to better support the SME sector and provide crucial impetus for SME contribution to economic growth.

In 2018, Turkmenistan’s government launched ‘The State Program for Supporting Small and Medium Entrepreneurship’ and its main goals include ensuring socio-economic development continues at pace, that private sector-led activity increases quickly, and that manufactured goods and services provided by SMEs increase in number and competitiveness in foreign markets. The OFID fund’s loan will directly support these goals.

The proposed facility will target export-oriented SMEs, which is expected to diversify the country’s foreign currency earnings.

The OPEC Fund loan will also be used to fund equipment purchases for selected SMEs across sectors that include construction, manufacturing, agriculture and agro-processing, and paper.

The OPEC Fund is directly supporting the goals of the government’s program with this transaction,” said OPEC Fund Director-General Dr Abdulhamid Alkhalifa. “We are pleased to assist socio-economic development efforts by supporting Turkmenistan to diversify its economy and generate employment opportunities.”

Turkmenistan’s SBFEAT – the largest bank in the country – was established in 1992 and is a 100 percent state-owned entity. The Bank currently has 309 employees, three branches and some 375,000 customers.