UNDP MICRO FINANCE ACTIVITIES IN KYRGYZSTAN

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UNDP MICRO FINANCE ACTIVITIES IN KYRGYZSTAN

• Aikan Mukanbetova
• Programme Analyst, Head of Socio-Economic
  Development Cluster
• UNDP, Kyrgyzstan

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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

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Microfinance sector in Kyrgyzstan
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Total credit portfolio of bank and non-bank
financial institutions in Kyrgyzstan

• 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

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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

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Weaknesses of microfinance sector in 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

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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.

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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

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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)

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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

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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

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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

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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

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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

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THANK YOU!

• AIKAN