Temirbek Mamatkanov,  «Obshestvennyi Reiting» №753 from 9.02.2017






Chairman of the Board of OJSC “Guarantee Fund” (OJSC “GF”) Malik Abakirov spoke about OJSC “GF”, its role in providing access to small and medium-sized enterprises to financial resources in the interview for magazine “Obshestvennyi Reiting” (“OR”).


Malik-Aidar Barktabasovich Abakirov was born on July 27, 1960. He has two higher educations: finished Frunze Polytechnic Institute, Faculty of Energy in 1982 and Kyrgyz National University, Faculty of Economics in 1997. More than 20 years he worked in banks, in microfinance institutions, international projects and managed OJSC “Akylinvestbank” and Bishkek branch of Central Asian Bank of Cooperation and Development.

During that time more than USD 50 million of foreign investments were attracted to the private sector by him personally and with his participation from IFC, EBRD, IDB and other international financial organizations.

For the first time in Kyrgyzstan he developed and implemented new financial systems – credit unions (ADB, 1996), guarantee funds (USAID, 2010), warehouse receipts finance (GIZ, OECD, 2013-2014).

He has a large experience in state economy and region strategy development and in

research activities. He is an author of numerous publications in domestic and foreign editions published in Russian and English including books “Guarantee Fund as SME Development Instrument”.

Laureate of the international award of Gabriel al-Salem Foundation for the best consulting project (2013), laureate of award of Progressive Initiative Foundation for guarantee funds system development and implementation (2013). He is the holder of many certificates of state and municipal structures of Kyrgyzstan.

  • Malik Barktabasovich, please tell us about Guarantee Funds, what kind of assistance they provide SMEs with?
  • Guarantee funds are necessary for SME support to obtain necessary loan

amount in case of insufficient collateral. Guarantee funds system are developed in more than 90 countries of the world and provide substantial assistance in SME development. SMEs with the help of guarantee funds increase their share to GDP, create new jobs, increase tax revenue, support enterprises of the priority economic sectors, export-oriented and import-substituting enterprises.

If we consider the experience of Europe, then there are a lot of GFs in different countries, there is Small Business Administration (SBA) in USA, in Japan there is SME Support Corporation, one of its functions is to provide entrepreneurs with guarantees.

Considering that guarantees are essential form of financial support for small business, the level of guarantees in developed countries reaches 85-90% of the loan amount. Within conditions of Kyrgyzstan, our guarantee funds provide guarantees up to 50% of the loan amount and up to 10% of the capital amount of guarantee fund.

  • Small and medium-sized enterprises are also active in Kyrgyzstan and need loans.
  • Indeed, SMEs in Kyrgyzstan play a significant role in economy development,

and its role will only grow in the future. To date, share of SMEs to GDP is 40.5%, in the future this indicator will only increase. For SME development loans are required, and, according to assessments of independent researchers, from 40% to 50% of entrepreneurs applying for a loan cannot obtain loans due to insufficient collateral. If we transfer this into numbers, then at least 100 thousand bank clients need guarantees.

This happens because requirements of the NBKR and commercial banks to collateral constitutes not less than 120% of loan amount, collateral assessment constitutes 50% of collateral market value, in regions collateral value is significantly lower due to low liquidity. The Government of the KR created OJSC “Guarantee Fund” with capital of KGS 282 million with financial support of ADB (USD 3 million or KGS 210 million) in 2016 in order to assist in entrepreneurship development.

The priority directions for providing guarantees are: 1) agriculture and agro-processing; 2) production of different kinds of products; 3) clothing and textile industry; 4) tourism; 5) export-oriented and import-substituting enterprises; 6) others.

OJSC “GF” concluded agreements with OJSC “Aiyl Bank”, OJSC “CB Kyrgyzstan”, CJSC “Bank of Asia”, CJSC “Finca Bank”, “Bank Kompanion”. Agreements with OJSC “RSK Bank” and other banks are in the process of being signed.

  • What are advantages of guarantee funds, what are the main indicators?
  • There are more than 2 thousand guarantee schemes, which are realized with

the help of state and municipal programs. The main indicators are capital of the fund, maximum guarantee amount of loan amount, guarantee term, allocation of risks between the fund and banks. Annually, our state strengthens the SME sphere, especially agriculture producers, through the banks, allocates new and new resources, including subsidizing interest rates. Instead of this, capitalization of OJSC “Guarantee Fund” should be made and applied in the system of agriculture and export-oriented enterprises subsidy. During interest subsidy, assets allocated for subsidies are lost, but during income/loss capitalization, assets can be directed to subsidies, and thereby,  free budget from such expenses. Meanwhile, subsidy will be done at minimum at the same level.

  • When were the first guarantee funds established in Kyrgyzstan? What serves as legislative basis of this financial institution?
  • Concrete steps were done in 2010 within the USAID Local Development

Program, where small enterprises issues were discussed. Then the idea of guarantee funds was born. The first pilot funds in the format of municipal programs appeared in cities such as Kara-Balta, Jalal-Abad, Karakol and Sarai ayil okmotu of Osh region. Money for funds were allocated from local budgets. The legislative basis for guarantee funds is the Law “On guarantee funds in the Kyrgyz Republic”, which determines conditions for guarantee fund functioning. In 2016 the Government of the Kyrgyz Republic approved guarantee funds development concept until 2020.

  • How have guarantee funds affected on SME development, economy as a whole?
  • Funds have become intermediaries between banks and entrepreneurs,

providing SMEs with business assessment and guarantees. Access to loans of financial institutions in case of insufficient collateral, undoubtedly, activated their activity, increased their financial possibilities, contributed to expansion of production capacities and creation of new jobs. Additional income was allocated into local budgets. There is a public-private partnership with participation of banks, municipal foundations and SMEs. Local authorities, certainly, must also attract investment, donor financing, if the budget size is limited. The important thing is that successful instance of one municipalities cause interest of others making them adopt their experience. Concerning ultimate goals of guarantee funds, it is enhanced capacity of small business, which will abandon guarantees in the future as it will be able to solve financial issues on its own.

  • How many guarantee funds are there in Kyrgyzstan today? What are guarantee conditions?
  • Currently there are six Regional Guarantee Funds and OJSC “GF”. A number

of funds throughout the republic are at the stage of opening. As already mentioned, the maximum guarantee amount is not more than 10 percent of guarantee fund capital and not more than 50 percent of loan amount. As of December 31, 2016, the results of six Regional GFs activities are illustrated in the following figures: capital – KGS 33 million; number of issued guarantees is 476; amount of guarantees –  KGS 49.2 million; amount of loans issued by banks – KGS 230.3 million; revenue of entrepreneurs who received guarantees – more than KGS 680 million; created new jobs – 477; supported existing jobs – 979. The recoverability of guarantees is 98.7%. Taxes were received in local budgets in the amount of more than KGS 5.2 million. 213 guarantees were provided for women entrepreneurs.

The capital of OJSC “GF” is KGS 282 million. Since the start (November 1, 2016) and up to the present, eight guarantees have been issued. The amount of guarantees made up KGS 5.7 million. The amount of loans of partner banks – KGS 16.5 million.

The need for guarantees is very high, and therefore we are negotiating with RKDF, EBRD, IFC, KfW and other donors to attract funds into the capital of OJSC “GF”. These funds will be further directed to support entrepreneurs of the priority sectors of economy.

 How are relations between funds and partner banks built?

  • Funds provide the bank with guarantees along with the borrower. Here

trilateral agreement is concluded between the fund, the bank and the entrepreneur. I would like to clarify that the guarantee covers part of the loan and does not cover interest, fines and penalties. Further, guarantees are paid, and the borrower pays the appropriate commission. The guarantee commission is 1.5% of the guarantee amount until March 1, 2017 (action), from March 1, 2017 the commission will be 2.5% of the guarantee amount for the entire guarantee term. Guarantees may be provided for from three to five years.

A partner bank is selected by the financial performance indicators. For banks, participation in SME lending, where the fund is a guarantor of a part of the loan, is also beneficial, as it reduces loan risk, while the necessary profitability is ensured. Nevertheless, banks carefully study the creditworthiness of the entrepreneur, they conduct regular monitoring of loan. Loans are repaid monthly. If the readers have questions, our employees will give detailed consultations.

  • In what form can guarantee funds be opened, who can participate in their creation?
  • Forms can be of any kind – public fund, LLC, JSC. The main thing is that they

should be self-benefiting. State agencies, including local authorities, private sector, can participate in their creation, and public-private partnership is possible as well. All funds created in 2011-2014 are non-profit organizations and have the status of municipal ones, as the capital is provided by municipalities. OJSC “GF” was established by the Government of the Kyrgyz Republic, and the only shareholder on behalf of the Government is State Property Management Fund. To date, OJSC “GF” and all regional GFs are profitable and financially stable institutions.

  • What are objectives of OJSC “Guarantee Fund” at the present stage?
  • The main objective of OJSC “GF” is SME support. In this regard, OJSC “GF”

won’t be limited by guarantees. We will provide entrepreneurs with consulting in the field of business plan development, assist in obtaining loan on favourable terms, assist in marketing research. Also one of the important objectives is training on financial literacy of entrepreneurs within their activity and cooperation with banks and guarantee funds.

Certainly, our objective includes further development of guarantee fund system throughout the republic. We make important contribution to social-economic development of regions by contributing to the growth and strengthening of SMEs.

  • You stood at the origins of the creation of credit unions and guarantee funds system, this characterizes you as a true professional!
  • I was really lucky to participate in the creation of credit unions together with

ADB, when I was working in the NBKR and guarantee funds with the assistance of USAID and ADB.


  • Thank you for the interview!


Temirbek MAMATKANOV,  «Obshestvennyi Reiting» №753 from 9.02.2017