Each day, Tamara Chotukanova is up at 5.30am to unlock the doors of her food store in a small village between Bishkek and Lake Issyk Kul. These opening hours attract many of her fellow villagers who come to the shop to buy food before heading off to work in the fields.
By establishing her store five years ago Tamara filled a niche: many of her neighbours no longer needed to travel to the nearest town to buy their products, thus saving them time and money.
Since then, Tamara has successfully expanded her business. Her sister Ainura now works with her and sells home-made ‘airan’, a traditional yogurt-based delicacy, in the shop – an addition highly valued by customers. She has even opened the village’s first computer club and plans to offer IT lessons to help improve her neighbours’ job prospects.
Tamara is one of around 60,000 Kyrgyz entrepreneurs – many of them women living in rural areas – who have benefited from EBRD credit lines to local microfinance institutions.
Establishing blossoming small businesses
“With its microfinance activities, the Bank is aiming to encourage entrepreneurship and boost the private sector in the Kyrgyz Republic,” says Larisa Manastirli, Head of the EBRD’s Bishkek office. “Our microfinance facilities often support women who are trying to create an income for themselves and their families by building small businesses, such as small farms, grocery stores or bakeries.”
Tamara’s whole lending group has been highly successful. Two other members own their own confectionary shop in Almaty and another one runs a small farm. “Your money should work,” Tamara says. “We all understand that any loan should be paid back. Credit is a big responsibility.”
The list of Kyrgyz women who have successfully established their own micro-business is a long one. Another entrepreneur bought some lily bulbs from her first loan. Subsequently, she managed to expand and set up two greenhouses and a flower shop. Yet another one used the money to establish a small family-run wood-carving business, which manufactures pens, chess pieces and figurines of national heroes.
Loans that make a difference
These are only a few examples of the many new businesses set up thanks to the EBRD’s involvement in the microfinance sector in the Kyrgyz Republic. Since 2005 the Bank has supported microfinance institutions, which are transparent in their lending activities, follow good lending practices and spread financial literacy knowledge among their clients.
In total, it has committed credit lines totalling US $32 million to four partner institutions, specialising in both group and individual micro-credit: Kompanion Microfinance, MolBulak Finance, FINCA and BaiTushum.
Three years ago, the Bank also started providing funding in Kyrgyz som, the local currency, to its partners. This helps borrowers avoid the potential problem of having to pay higher interest for a loan taken out in foreign currency and subject to currency fluctuations.
“It is mostly comparatively small amounts – on average between US$ 400 and 500 – that the EBRD’s partner institutions lend on to customers,” explains Ruslan Kurmanbekov, Associate Banker in the EBRD’s Bishkek office. “However, these loans have made a huge difference to many people like Tamara in our country.”