"Business incubators" help to reduce poverty

Promoting small businesses is one of the most effective ways of reducing poverty in a poor country like Kyrgyzstan, where government figures suggest at least 40 percent of the population of five million live below the poverty line. The country's President Askar Akaev subscribes to this view and he has been busy pushing "business incubators" as one way of assisting small business enterprises. Business incubators (BI) are subsidised premises where those wishing to start an enterprise can get a helping hand. In Kyrgyzstan BIs tend to make use of former offices or factory premises. Most are divided up and leased out to fledgling entrepreneurs at below market rents. Those starting businesses through BIs benefit from shared services and technical assistance, as well as access to cheap governnment loans, since the president has discovered the virtues of the scheme. Irina Zaytseva is one entrepreneur participating in the BI initiative in the capital, Bishkek. Earlier, she had been tailoring at home. But her life changed when she signed up for a BI space. "I was attracted by equipped premises and the low rent payments. Now I have six workers. Soon we will sew women's garments for a Moscow-based model agency - Arlecchino,” she told IRIN. BIs took off in Bishkek in 2000 when the Ministry of Social Security and Labour (MSSL) opened the first one with assistance from the German Technical Centre. Within a year, similar subsidised small business premises started popping up in other parts of the country under the European Union's (EU) TACIS programme and the Eurasia Foundation's financial assistance. “Initially, our goal was to establish one business incubator and show how unfinished buildings and idle factories could be utilised rationally,” the director of the Bishkek-based BI, Tamara Kojomuratova, told IRIN. Kojomuratova noted that those who had joined the BIs were not rich entrepreneurs, but ordinary people who have been hit hard by Kyrgyzstan's transition from a command to a market economy. Most were poor and unemployed, but many had ideas that could be translated into viable businesses with a little assistance. People like Zulay Kamalkhodjaeva, who runs a café in one of Bishkek's BIs. "I learnt about BIs when I was visiting enterprises looking for a job. I learnt everything and terms were suitable for me. Now it is easier to earn a living, additionally I employ two students,” she told IRIN. The success of BIs is being exported south. "We will accomplish a project on establishing business incubators in [the southern] city of Osh. There is a direct correlation between poverty reduction and business incubator development," Aida Jamankulova, a United Nations Development Programme (UNDP) poverty reduction coordinator, told IRIN. According to some estimates, nearly 1,200 formerly-unemployed are now in jobs at business incubators to date. By the end of 2004 it is estimated that 2,000 new jobs could be created in them. "A BI creates ideal start up conditions for small and mid-sized business development. That’s why, business incubators are one of our poverty reduction strategies," she added. Nurlan Joldoshev is the president of the Business Incubators Association of Kyrgyzstan. “There are no classic models of BI, because absolutely different BIs can be established depending upon their location and the business activity proposed. But the goal of the model is always to bring up new entrepreneurs,” he explained. A gender-specific small business model is also being pioneered and promoted by the Congress of Women of Kyrgyzstan (CWK), a civic group working on gender issues and empowerment. “We help women participants to write business plans, choose among them the most realistic, as well as pragmatic ones and send them to loan-providing organisations," Zamira Akbagysheva, president of CWK, told IRIN. The group submitted 94 business projects in the past 12 months, of which some 17 received loans from the Kyrgyz Agriculture Finance Corporation (KAFC), creating almost 140 jobs. One of them is in Shopokov town in the north of the country. It's a former state enterprise property now divided into shops and work places. It's all very new and a kindergarten run by Anarkuly Esenbaeva is working currently. The kindergarden allows other women to get quality childcare and in turn, consider starting their own businesses. She moved with her family from Osh city to the northern Chuy Valley in search of work. The BI helped Anarkuly to open her business and loaned her US $800 as seed capital to get the enterprise off the ground.