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”.