CGFT was established to facilitate opportunities for financing for the MSME sector in Tajikistan. Credit guarantee funds play an important role in development finance by providing risk mitigation for lenders, which can make it easier for small businesses and entrepreneurs to access credit. Credit guarantee funds work by providing a guarantee to the lender that a certain portion of the loan will be repaid if the borrower defaults. This can help to reduce the perceived risk of lending to small businesses and entrepreneurs, who may not have a long track record or collateral to secure a loan.
The availability of credit is often a key factor in the development and growth of small businesses and entrepreneurs, as it allows them to invest in new equipment, expand their operations, and create jobs. By facilitating access to credit, CGFT’s credit guarantees helped to promote economic development and contribute to the overall growth and stability of the Tajik economy.
Credit guarantees provide multiple benefits for PFIs and MSMEs and contribute to the macro-economic development of Tajikistan.
The core service provided by CGFT are credit guarantees, which cover a significant share of the default risk of a loan to be disbursed by a PFI. In case of default of the borrower, the lender recovers the value of the guarantee from CGFT.
In vetting loans, CGFT relies on clear and well-defined eligibility criteria: