UNDP MICRO FINANCE ACTIVITIES IN KYRGYZSTAN

1. UNDP MICRO FINANCE ACTIVITIES IN KYRGYZSTAN Aikan Mukanbetova Programme Analyst, Head of Socio-Economic Development Cluster UNDP, Kyrgyzstan

2. Microfinance sector in Kyrgyzstan Main characteristics • Broad range of actors: from village-level associations to commercial banks • Wide internalization of best practices • Progressive legal framework • Favorable macroeconomic environment and government support • Active donor interest

3. Microfinance sector in Kyrgyzstan

4. NBFI (KAFC, MCA, MCC, CU) – USD 66,4 million Number of clients – 100,000 Commercial banks – USD 142,5 million Number of clients – 26,000 Total credit portfolio of bank and non-bank financial institutions in Kyrgyzstan

5. Weaknesses of microfinance sector in Kyrgyzstan • Very limited links with the local commercial banking sector • Refinancing obstacles (limited access to financial resources) • Limited savings mobilization • Segmented market coverage

6. Weaknesses of microfinance sectorin Kyrgyzstan • Limited rural coverage • Absence of a microfinance association • Weaknesses in the credit union model (limited operations) • Lingering legal inconsistencies • Limited market for service provision

7. UNDP microfinance activities in Kyrgyzstan The objective of the UNDP-Kyrgyzstan microfinance activities is to increase access of the poor, particularly women, to sustainable financial services to enhance their financial activities, increase their income and opportunities for self employment and engage them as viable participants in market economy.

8. UNDP-Kyrgyzstan current microfinance status • Main strategic partner: Kyrgyz Agricultural Finance Corporation • 11 MCAs have been established in 6 oblasts • Services: • Financial services: non-collateral group lending • Non-financial services: training on business-planning, credit usage, community based development • Total credit portfolio: USD 100 000 • Average credit portfolio per MCA: USD 10 000 • Average number of clients per MCA: 40

9. UNDP-Kyrgyzstan current microfinance status • Average loan size per borrower: USD 100 – USD 300 • Interest rates range: 21-30% • Repayment rate: 97-100% • Total amount of non-collateral wholesale credits received by MCAs from KAFC: USD 38 000 • Credits are given to • livestock (50%) • planting (40%) • commerce (10%)

10. UNDP-Kyrgyzstan planned microfinance intervention Main components of UNDP microfinance strategy: • Developing of microfinance model • Strengthening the potential of existing MCAs • New products development • Defining of strategy future SHGA institutionalization

11. UNDP-Kyrgyzstan microfinance strategy • Developing of micro finance model includes feasibility study and defining of optimal scheme of MCAs consolidation and creation of national network, aiming to: - Ensure long-term solution of the MCAs’ viability - Support MCAs enlargement - Increase an access to funding - Ensure cost reducing

12. UNDP-Kyrgyzstan microfinance strategy • Strengthening the potential of existing MCAs through building their institutional capacity: • Professionalism and competence • Operational and control systems • Standardized policies and procedures • Management information system

13. UNDP-Kyrgyzstan microfinance strategy • The new product development envisages the assessment of MCAs potential and introducing the new schemes and products: • Credit lines based on cash-flow • Individual collateral based lending • Microleasing • Microinsurance

14. UNDP-Kyrgyzstan microfinance strategy • Defining of strategy of future SHGAs institutionalization based on following key points: • Institutionalization of SHGA into MCA should be sought within a consolidated micro finance framework • Achieving of reasonable scale from the very beginning • Assessment of potential of SHGAs and cost benefit analysis

15. THANK YOU! AIKAN