Providing guarantees to entrepreneurs, including exporters
Assistance in small and medium-sized enterprises development
VIDEO “HOW TO OBTAIN THE SERVICES OF OJSC “GUARANTEE FUND”
OJSC “Guarantee fund” – a financial instrument for development
OJSC “Guarantee Fund” is aimed at providing access to financing for small and medium-sized enterprises (SMEs) in case of insufficient collateral throughout the Kyrgyz Republic.
THE PRESIDENT SIGNED THE LAW “ON GUARANTEE FUNDS IN THE KYRGYZ REPUBLIC”
On April 13, 2019, the President of the Kyrgyz Republic, Sooronbai Jeenbekov, signed the Law “On Guarantee Funds in the Kyrgyz Republic”.
The law was enacted by the Jogorku Kenesh of the Kyrgyz Republic on March 7, 2019.
The purpose of the enacted Law is to improve the legal regulation for establishment and development of guarantee funds in the Kyrgyz Republic.
The law defines the legal and economic bases for establishment and activity of guarantee funds.
With its entry into force, the current Law of the Kyrgyz Republic of July 30, 2013 No. 167 “On Guarantee Funds in the Kyrgyz Republic” will become invalid.
The law enters into force 15 days after the date of official publication.
“When I was the Prime Minister, we established Guarantee Fund. Why regions were not developing? Because loans and fiscal policy did not reach them. Entrepreneurs did not have property to put as collateral. Now attention is paid to this problem and state Guarantee Fund helps them. Financing from Guarantee Fund has tripled, guarantees amounting to KGS 755 million were issued to 655 projects. Partner banks of Guarantee Fund doubled loan issue and generally issued loans amounting to about KGS 3 billion. This amount will increase, special attention will be paid to the regions and processing”.
From the speech of the President of the Kyrgyz Republic Sooronbai Jeenbekov on February 21, 2019 during the meeting with residents of Suzak district of Jalal-Abad region.
OJSC “GUARANTEE FUND” HAS BEGUN ISSUING FIRST LOANS WITHIN THE FRAMEWORK OF THE WORLD BANK PROJECT TO SUPPORT DAIRY SECTOR
On October 21, 2019, Kabar Agency hosted a press conference of the Chairman of the Management Board of OJSC “Guarantee Fund”, Malik Abakirov, for media, dedicated to the participation of the Fund in the implementation of the World Bank project “Integrated Dairy Productivity Improvement”. Currently, OJSC “Guarantee Fund” has started to issue first loans under the present project. The conference was also attended by the head of Guarantee and Product Development Department, Erik Talasbaev.
Chairman of the Management Board, Malik Abakirov, informed reporters that the Fund was identified as one of the participants in implementation of the World Bank’s project “Integrated Dairy Productivity Improvement” in accordance with Order of the Government of the Kyrgyz Republic No. 148 dated May 23, 2019.
Malik Abakirov noted that back in 2018 OJSC “Guarantee Fund” reached an agreement with the World Bank on participation of the fund in implementation of this project. In 2019, participation was officially supported by a government decree. This indicates the confidence in OJSC “Guarantee Fund” as a financial institution, testifies to the recognition of its competence by international organizations and government agencies.
Start of Practical Implementation
As part of the “Investments at the Farm Level” component (total funding of 2 million USD), “Guarantee Fund” participates in the selection process of applicants, arranges loan agreements with farmers – members of borrower groups, and monitors compliance with the loan repayment schedule, and is also responsible for the repayment of loans, Malik Abakirov continued.
Employees of OJSC “Guarantee Fund” conducted a survey of households of farmers in Jeti-Oguz and Tyup districts. To the present day, 5.572 million KGS were approved in loans to 69 farmers from villages of Svetlaya Polyana, Darkhan, Boz-Beshik, Taldy-Suu, and Ken-Suu. After the completion of the issuance of loans in these areas, OJSC “Guarantee Fund” will begin issuing loans in Ak-Suu, Ton, and Issyk-Kul districts.
Malik Abakirov noted that loans are interest-free, issued in the amount of up to $1.2 thousand per person (equivalent to 84 thousand KGS), and for a period of 10 months to 3 years.
A specially hired company was involved in the formation of group of borrowers of milk producers, their training in financial literacy, procurement procedures, livestock breeding and feeding.
A survey of farms was carried out by employees of OJSC “Guarantee Fund”, who drew attention to the absence of debt on loans, the availability of land with an area of not more than 5 hectares, and the presence of cattle no more than 3. Also, borrowers are obliged to make their own contribution in the amount of 10% of the total loan amount.
Upon completion of the project (December 31, 2020), “Guarantee Fund” will transfer funds from the revolving fund that will allow the continuation of the project to support dairy sector, which will become the basis for extending this experience to other regions of the Kyrgyz Republic.
Expected Project Results
According to Malik Abakirov, the following indicators are expected to be achieved as a result of the project:
- Reach up to 2 thousand direct beneficiaries – households and family farms;
- Introduce enhanced methods of feeding, protecting health, raising and keeping livestock in 405 of dairy producers;
- At least 45% of the direct beneficiaries should be women
- At least 10% of the direct beneficiaries should be young adults (18-29 year olds)
At the end of the press conference, the Chairman of the Management Board of OJSC “Guarantee Fund” Malik Abakirov and the head of the Guarantee and Product Development Department Erik Talasbaev answered journalists’ questions.
Reference: The agreement between the Kyrgyz Republic and IDA was signed on August 10, 2017. It was ratified by the Law of the Kyrgyz Republic dated December 28, 2017 No 220 (25) and entered into force on April 10, 2018. The aim of this project is to increase the productivity of dairy cattle and the quality of milk on small pilot subsidiary dairy farms in Issyk-Kul region. The project consists of four components:
- Strengthening public and private services in dairy sector,
- Increasing on-farm productivity,
- Investments at the farm level,
- Project management (management, audit, monitoring, and evaluation).
The total amount of financing is 5 million USD (IDA) of which, 2.25 million USD is a grant and 2.75 million USD is a loan. The implementation period of the project is from April 2018 to December 31, 2020. The executive departments of the project are the Ministry of Agriculture, Food Industry and Land Reclamation and the Ministry of Finance. Implementing agencies of the project are the Agribusiness Competitiveness Center, the Credit Line Management Department of the Ministry of Finance of the Kyrgyz Republic, and OJSC “Guarantee Fund”.
Procedure for obtaining guarantee. More…
The Borrower contacts one of partner banks of OJSC “Guarantee Fund” with loan application
The Bank independently considers the application of the Borrower, analyzes the submitted documents and assesses the financial condition. If the only obstacle to obtain a loan is insufficient collateral, then the Partner Bank informs the Borrower about the possibility of attracting guarantee of OJSC “Guarantee Fund”.
If the Borrower agrees to obtain a guarantee of the Fund, the Partner Bank will deliver a signed application to OJSC “Guarantee Fund” for guarantee provision. Simultaneously with this application, the Partner Bank sends the required package of documents.
OJSC “Guarantee Fund” in short term from the moment of receiving application takes a decision according to Guarantee application.
In case of a positive decision, a trilateral guarantee agreement is concluded.
The Borrower before obtaining a loan, pays the guarantee commission, according to the established tariff.
Obtaining a loan.
Guarantees for business. The year 2019 is about to end, since 11 months of it have passed. OJSC “Guarantee Fund” has done a good job of providing guarantees to support entrepreneurs. From the inception of activities of the fund, and as of December 4, 1350 guarantees...read more
Guarantees for business. As of December 4, 2019 the volume of loans approved by partner banks under guarantees of OJSC “Guarantee Fund” amounted to 5. 176 billion KGS. From inception of activities and as of December 4, 2019, OJSC “Guarantee Fund” approved 1350...read more
PLENOPOENTIARY REPRESENTATIVE OF THE GOVERNMENT OF THE KYRGYZ REPUBLIC IN BATKEN REGION A. MADUMAROV EXPRESSED GRATITUTE TO THE CHAIRMAN OF THE MANAGEMENT BOARD OF OJSC “GUARANTEE FUND”, MALIK ABAKIROV
Acknowledgement. In a letter addressed to the Chairman of the Management Board of OJSC “Guarantee Fund”, Plenipotentiary Representative of the Government of the Kyrgyz Republic in Batken region, Akram Madumarov, expressed his sincere gratitude for the direction of the...read more
THE EXTRAORDINARY MEETING OF SHAREHOLDERS OF OJSC “GUARANTEE FUND” IS TO BE HELD ON DECEMBER 25, 2019
Decision of Board of Directors. This is the decision of the Board of Directors of OJSC “Guarantee Fund”, the meeting of which was held on November 22, 2019. The meeting in November was attended by all members of the Board of Directors headed by the Chairman...read more
OJSC “GUARANTEE FUND” AND “TAKAFFUL” INSURANCE COMPANY HAVE SIGNED A MEMORANDUM ON THE USE OF THE KYRGYZ MODEL OF GUARANTEE FUNDS IN THE REPUBLIC OF TAJIKISTAN
The memorandum on the use of the Kyrgyz model of guarantee funds in the Republic of Tajikistan was signed by the Chairman of the Management Board of OJSC “Guarantee Fund”, Malik Abakirov, and the Deputy CEO of “Takafful” Insurance Company, Farrukh Ergashev, on...read more
New Branch. In period between November 12 and 15, 2019, the Deputy Chairman of the Management Board of OJSC “Guarantee Fund”, Azamat Kozhobaev, and the Head of the Regional Development Department, Kamchybek Aaliev, were on a business trip in Osh region. The main...read more
ADB Grant. A working meeting was held recently in the Government of the Kyrgyz Republic on the implementation of the first sub-program of the Economic Diversification Promotion Program, supported by the ADB. The Chairman of the Management Board of OJSC “Guarantee...read more
World Bank Project. OJSC “Guarantee Fund”, as a participant in the implementation of the World Bank Project “Integrated Dairy Productivity Improvement”, conducts a survey of farm households in Issyk-Kul region, and arranges loans. This time, the specialist of...read more
Seminars in Regions. From October 23 to 30, 2019, an employee of OJSC “Guarantee Fund” Saparbay uuly Altynbek, with the company of regional representative Adilet Alimzhanov, conducted seminars for employees of branches of partner banks in four districts of Osh region...read more
OJSC “GUARANTEE FUND” TARGET GROUP
Entrepreneurs (including women entrepreneurs) of SME segment with activities focused on the production and processing of agricultural products, industry, services, as well as SMEs with export-oriented and import-substituting activities.
OJSC “GUARANTEE FUND” OPERATING CONDITIONS
The maximum guarantee amount is up to 50% of the loan amount and not more than 10% of the capital amount (KGS 7 million or the equivalent of USD 100 thousand).
The process of obtaining a loan with OJSC “Guarantee Fund” More…
The client comes to the bank for a loan and if they cannot get the necessary amount due to insufficient collateral, the client and the bank apply to OJSC “Guarantee Fund” for guarantee.
OJSC “GUARANTEE FUND” MISSION
The mission of the Fund is to ensure the dynamic and sustainable growth of the economy of the Kyrgyz Republic by developing a market of guarantees, to increase the share of SMEs to the country’s GDP and to improve the population’s welfare.
OJSC “GUARANTEE FUND” FUNCTIONS
- Providing a guarantee to entrepreneurs, including exporters;
- Participation in the Program of the Government of the Kyrgyz Republic “Financing of Agriculture”;
- Providing a guarantee to agricultural producers;
- Assistance in the development of small and medium enterprises;
- Assistance in the development of Regional Guarantee Funds.
OJSC “GUARANTEE FUND” VISION
The Fund will become a stable developing financial organization of the Kyrgyz Republic providing SMEs with the ability to obtain affordable loans by development of a guarantee system.
By the end of 2020 the Fund will become the leading financial institution in the market of the guarantee provision for SMEs and will contribute to attract potential local and international investors.
OJSC “GUARANTEE FUND” (THE FUND) AND REGIONAL GUARANTEE FUNDS (RGF) INTERACTION
- Institutional development of RGF;
- Possibility of RGF’s partial capitalization, Fund – 70%; local government-30%;
- Opening of Fund’s branches in regions with no RGF and no possibility of capitalization from local government;
- Conducting potential customer evaluation by RGF to provide guarantees under a contract with the Fund;
- Providing a reguarantee for large projects
- Issuance of guarantees to businessmen.