Chairman of the Management Board of OJSC “Guarantee Fund”, Malik Abakirov, was given the title of the “Honorary Citizen of Naryn Region”. This event was held during the grand opening of the branch of OJSC “Guarantee Fund” in Naryn Region on September 6, 2019.
First Deputy Plenipotentiary of the Government of the Kyrgyz Republic in Naryn Region, Kasen Asizov, attaching a badge of the title and presenting a certificate to Malik Abakirov, noted the personal merits of Malik Abakirov in maintaining small and medium enterprises in the region, the important contribution that leads to the socio-economic development of the region, as well as ensuring employment of local residents and reduction of migration.
In his turn, Malik Abakirov expressed gratitude for effective performance and noted the leadership of Naryn Region, represented by Kasen Asizov. The head of the fund also emphasized that local entrepreneurs can always count on advisory and guaranteed support from the regional branch and the fund itself.
The support provided to OSJC “Guarantee Fund” by the head of the state, parliament, and government gives a great incentive to intensify work in all areas of activity, including issuing guarantees to entrepreneurs, implementing the “One Region – One Enterprise” program, and other projects.
From the inception of 2019, as of September 13, partner banks approved loans in the total of 1.590 billion KGS under guarantees of the fund. In sum, 302 guarantees were approved in the sum of 522.7 million KGS.
As of today, OJSC “Guarantee Fund” approved 963 guarantees in total of 1.277 billion KGS. The volume of bank loans under the guarantees summed to 4.343 billion KGS.
OJSC “Guarantee Fund” assists small and medium enterprises in obtaining bank loans and implementing business projects, contributing to the creation of new and support of existing jobs. Almost a third of guarantee recipients are women entrepreneurs. Significant support of fund is received by export-oriented and import-substituting enterprises.
The performance indicators of OJSC “Guarantee Fund” testify to the efficacy of taken measures and efforts to develop a guarantee system in all regions of the republic.
Success story of “Ysmayil” household – the recipient of the guarantee of OJSC “Guarantee Fund”, narrated by USAID
PROBLEMS OF A BUSINESS
Farmers and business owners in Kyrgyzstan face many obstacles. One of the most limiting is access to finance. Even with interest rates at around 30 percent, lenders often require collateral of up to three times the amount of the loan. Because of this, even the strongest businesses struggle to grow beyond small, family-operated enterprises.
Zuhra, a fruit farmer near Bishkek, the capital of Kyrgyzstan, faced this problem a few years ago. Her strawberry business was ripe to graduate from a small to a medium enterprise but everything hinged on getting the right equipment to do it.
Zuhra and her husband started farming strawberries in 2003. They began with barely a third of a hectare, but every year they managed to cultivate a bit more land. Over the years they expanded their cultivation to 20 hectares, but profitability stagnated because of the need to purchase shipping boxes, predominantly imported ones. Zuhra had a simple solution: make her own boxes. However, that meant securing a loan to build a small assembly line. She, like so many others, had little to offer as collateral for that.
OJSC “GUARANTEE FUND”
To help entrepreneurs like Zuhra, USAID and its partners have established what are called guarantee funds in the country. A guarantee fund is simple: when serious and promising entrepreneurs do not have enough collateral to secure a loan, banks can ask the fund to guarantee repayment in case something goes wrong. It works as a form of insurance for the bank.
A WINNING MODEL
USAID first introduced the concept of a guarantee fund in Kyrgyzstan back in 2011 by supporting the creation of six small regional funds. Over the following few years, the USAID Collaborative Governance Program worked with the government, several banks, the parliament, and the private sector to improve the Law on Guarantee Funds so that small and medium businesses could easily access it.
Along the way, the government could see how the guarantee fund concept introduced by USAID could be beneficial for the country’s economy. So in 2016, it launched a national-level guarantee fund with its own money and contributions from private investors.
Since the national fund was launched in 2016 it has issued guarantees on 17.5 million USD worth of loans to more than 900 entrepreneurs who, like Zuhra, faced seemingly insurmountable obstacles.
FARMER AND FACTORY OWNER
After successfully obtaining a loan backed by the guarantee fund, Zuhra bought a second-hand assembly line and built a factory near her farm. It produces 5,000 boxes per day. Because Zuhra only needs 2,000 she sells the rest to other farmers.
Now, every day throughout the harvest season, Zuhra sends two trucks full of strawberries to neighboring countries.
BUILDING A FUTURE AT HOME
To manage the growing business, Zuhra hired about 30 new staff. At the height of the harvest season, her seasonal staff can increase up to 90 people.
Jobs are scarce in Kyrgyzstan so at any given time, around 800,000 Kyrgyzstanis can be found working abroad. This is a lot of people for a country of only 6 million. Often, parents have to leave their children behind in the care of their elderly parents. This is having devastating consequences for families and communities across the country.
Every job USAID helps create in Kyrgyzstan means that a family can stay together and build a future at home.
We want to expand our operations to 200 hectares and buy our own shipping trucks. The next step for us is entering the bigger market outside the Central Asia region. It will require us to be able to come up with several tons of strawberries every single day, but I think that we can make it…
Source: U.S. Agency for International Development
Statistics illustrate that, over the course of 8 months, the number of issued guarantees by the fund for a term up to 1 year was 44, from 1 to 2 years – 155, from 2 to 3 years -87, 3 and more years – 7. The most popular guarantee term, thus, is 1 to 2-year period.
As of September 11, 2019, OJSC “Guarantee Fund” approved 958 guarantees in the total amount of 1.274 billion KGS. The amount of loans received by entrepreneurs in partner banks summed to 4.334 billion KGS.
Since the start of this year, 302 guarantees have been approved in the sum of 519.3 million KGS. Partner banks, under the guarantees of OJSC “Guarantee Fund”, approved loans in the amount of 1.581 billion KGS.
The real contribution of businessmen and entrepreneurs of various industries lies behind these figures, both to enforcing their material and technical situation and to the local infrastructure, creating workplaces, and developing the country’s export potential.
Those who are seeking to receive guarantees can contact the office of OJSC “Guarantee Fund”, the regional representatives of the fund, as well as the partner banks and their local branches: OJSC “Ayil Bank”, OJSC “RSK Bank”, OJSC CB “Kyrgyzstan”, CJSC “Bank of Asia”, CJSC “FINCA BANK”, CJSC “Companion Bank”, CJSC “Demir Bank”, CJSC “KICB” OJSC “ Halyk Bank Kyrgyzstan”, CJSC “BTA Bank”, OJSC “Bakai Bank”, and OJSC “Optima Bank”.
As of September 10, 2019, OJSC “Guarantee Fund” issued 300 guarantees in the total of 516.9 million KGS. 1.572 billion KGS were approved in loans by partner banks.
As of September 10, 2019, in aggregate, the fund issued 956 guarantees for a total of 1.271 billion KGS. Under the guarantees of the fund, partner banks approved 4.324 billion KGS in loans.
Activity Indicators of OJSC “Guarantee Fund” for 8 months
As of August 31, OJSC “Guarantee Fund” approved 293 guarantees in sum of 515.1 million KGS. In fact, 66 guarantees were issued in foreign currency. Partner banks approved loans in the sum of 1.567 billion KGS.
Industry. 113 guarantees were provided to agriculture, 22 to agricultural processing of products, 34 to manufacturing, 22 to transport, 26 to tourism, etc.
Regions. Entrepreneurs of Banken region received 17 guarantees, Osh – 11, Jalal-Abad region – 34, Naryn – 58, Osh – 16, Talas -12, Chuy – 40, Issyk-Kul region – 38 guarantees.
Banks. For 8 months, “Ayil Bank” issued 100 loans under the guarantees of the fund, “RSK Bank” – 59, “Kyrgyzstan” – 35, “KICB” – 23, “Halyk Bank” – 18, “FINCA Bank” – 13, “Bank of Asia” – 15, “Bakai Bank” – 16.
Workplaces. Due to the guarantees of the fund, 718 new work places were created, and 3019 existing ones were maintained for the 8 months of 2019.