Micro-credit promotes rural business culture

Mambetova Asymkan, a former teacher, spoke optimistically about his career prospects in Karagansai village, part of Aksy district in the southern Kyrgyz province of Jalal-Abad. "Now I have three sewing machines, I have a dream to open a tailoring shop. The UN helped me achieve this, now I want to go forward," Asymkan told IRIN. Asymkan received assistance in setting up his venture from the United Nations Development Programme (UNDP) poverty reduction programme. Such micro-enterprise success stories are common where the scheme is operating as another beneficiary told IRIN. "My wife and I are producing cheese. Currently we supply our cheese to many restaurants, cafes, and schools. I am sure that our cheese can compete on the wider market," Saiffidin Orunbaev, told IRIN while demonstrating the cheese-making process in his house in the same village. Micro-credit programmes extend small loans to very poor people for self-employment projects that generate income, allowing them to care for themselves and their families. The programme In Kyrgyzstan began in 1998, in a small group of villages participating in a pilot scheme. When that proved successful it spread throughout Kyrgyzstan and today operates in 130 villages. It works by organising low income communities into self-help groups that then blossom into rural cooperatives and micro-credit agencies. The programme is based on the UN's Millennium Development Goals (MDGs) that aims to boost rural livelihoods, among other things and the National Poverty Reduction Strategy (NPRS). "There are several aims to our programme: to teach people how to work with money and credits; to make financial services available to rural populations; to develop rural business; and to foster an entrepreneurial culture among the rural population," Nyria Choibaeva, manager of the scheme, said in the city of Jalal-Abad. Changing the culture is the key to success, say staff involved in the micro-enterprise programme. During the Soviet period, the majority of villagers were assigned to collective farms, decisions were taken at district level and the government always provided enough to get by. Now, business initiative and local problem solving are encouraged, to hammer home the message that the old Soviet dependency culture is over forever. Local people who gather in self-help groups are trained by UNDP national volunteers to enable them to access and make the best use of micro-credits. The loans come from the Kyrgyz Agricultural Finance Corporation (KAFC). In Kyrgyzstan, 40 percent of the population nationally lives below the poverty line according to statistics but in rural areas this ratio leaps to over 65 percent. The programme targets the poorest families who are typically those with many children, with a single parent or with the male working abroad as a migrant labourer, who suffer poor access to credit, with no experience of running a business and who enjoy few marketable skills. "I have learned how to write a business plan, what credit is and how I can make a profit. Our self-help group, which consists of six people, got credit of US $1200 in 2003, that's $200 for each person. We all successfully paid the loans back and now I have eight goats, six cows and four sheep," said Haken Imanalieva, a 50-year-old widow and mother of three daughters. She lost her job in Karagansai village in 1993. It’s a place where eight out of every 10 inhabitants scratch a living below the poverty line. "Now my elder daughter is studying at university," she added with obvious pride. At first there was resistance to the scheme, born mainly out of ignorance say support staff. "When we started to work, there was some distrust among local people. They just laughed when we tried to explain to them about the benefits of the programme. Today they have changed, now everyone is interested, because they have seen how the neighbours who took the plunge have benefited" Gulnaz Kolsarieva, a United Nations national volunteer, said. "In some neighbouring villages people do not understand what credit operations are, how to work with loans. They just cannot work with money," said Kairat Bakashev, a member of the local self-help group from Baimondoz village. One indicator of the success of the programme is that nationally, 97 percent of loans were repaid on time. Part of the reason for this is that the local groups pay into there own fund which can then be used to assist members with repayments during the early days of the enterprise or during lean periods. Some of the enterprises in Jalal-Abad province are seasonal and require financial assistance only at particular times of the year. "Each month we monitor these groups, if there is a problem to return the loan. You know in the agricultural sphere there are many problems. The weather, or crops disease - we have a reserve fund to help them," said Begmatova Saadataya, credit specialist in Chek village. Olga Grebennikova, UNDP Kyrgyzstan's public affairs officer, told IRIN in the capital Bishkek that there were long term changes to the culture of the people who had learned to use micro-credit as a tool to improve their own lives. "The consciousness of people, their physiology changes, now they have the desire to change something. Different initiatives come from them, they have a hope for a better future. People learned how to work with loans, if before there was no credit culture, now they are not afraid of it, that's a real change," she said.