Poverty Reduction Programme (Kyrgyzstan)

Issyk-Kul, November 16-18, 2004

Poverty Reduction Programme:

• The overall objective is to complement the efforts of Kyrgyz Government, civil society and other organizations to the reduction of rural poverty in accordance with national development goals set out in NPRS and of MDGs.

Poverty Reduction Programme Components

• Policy Advise

• Social Mobilization

• Micro-Finance Development

• Small-scaled Business Development

Institutional development of CBOs:

COMMUNITY

CBOCBO CBO CBO

ASSOCIATION OF CBOs

(Committees)

CUs MFIs NGOsCooperatives

Micro Finance Dev-t componentObjective: to contribute to dev-t of MFIs which will aim to increase access of the poor to sustainable MF

services

Outputs• Potential MF intermediaries identified and trained;• The efforts to attract different financial institutions to

provide technical assistance to MFIs are made;• Significant input to enabling environment for MF

services made;• An effective M&E system to assess MFI’s dev-t

developed and implemented.

MFI development• 10 MCAs were established:

– Received $4,000 grants from UNDP and contributed up to 10% of own funds;

– Same governance structure;– Follows similar credit methodology based on

group guarantee mechanism;– Staff have been receiving specialized trainings;

• MoU with the National Bank (trainings, regulation on MFIs);

26 SHGAsInitial trainings: microfinance, accounting, credit operations

130 SHGAs

10 MCAs

YES

Requirements:- SHGA had to successfully undergo introductory trainings;-Be registered as Microcredit Agency (non commercial organization in form of public fund) and get a certificate of the National Bank to carry out microcredit operations;- Submit good business plan;- Contribute 10% of the grant amount to revolving fund.

Small-Scaled Business Dev-t Comp.Objective: to promote the growth of small-scaled

sustainable enterprises in rural areas

• One direction is promotion of agricultural cooperatives which will provide purchasing, production and marketing arrangements for their members.

• Another direction is to support development of business incubators which will support self-employed entrepreneurs and small scale enterprises in areas of training, accompanying services, information and consulting services according to the needs of the clients.

Small-Scaled Business Dev-t Comp.

Outputs• Entrepreneurial skills of SHGs members

enhanced;• The input to increased formal sector employment

and marketing system is provided through creation of agricultural cooperatives;

• the input to development of business incubators promotion in the country is provided;

• The input to diversification of business activities and marketing is provided.

Activities/ResultsBUSINESS INCUBATOR• round table to discuss the potential of establishing

business incubator with stakeholders in Osh oblast was organized;

• feasibility study and business plan of establishing BI in Osh oblast were prepared and submitted to MLSP, Osh city admin-n;

• manual "How to establish and run business incubator" was developed;

• series of trainings at the regional level for the local authorities as well as relevant staff of MLSP were conducted.

Activities/Results• contribute to Osh BI through purchasing

essential equipment for office and training&consulting facilities or help with the establishing Microleasing facilities (or both if applicable)

Cooperatives

• MoU with Raiffaisen Fund (access to financial leasing facility to buy agro equipment)

• MoU with Gtz Project (capacity building, technical assistance):

• Proposals to the legislation on cooperatives;

Experience and lessons learned• Trainings are very important pre-condition

for getting access to credit resources (non-collateral) of formal financial institutes and before becoming legally registered entity;

• Before starting something think about the results to be reached, exit strategy and sustainability of the project;

• E-competence while doing business;

• Success (where it is present) was based on the results of social mobilization;

Experience and lessons learned Appropriate legal environment should be

in place (f.e. Law on cooperatives); Micro and small businesses grown

indigenously usually are more sustainable as they respond to actual, recognized and important needs of the communities;

Coordination with other int’l organizations in the areas of interventions is very important (avoid duplication and complement each others activities);