Aga Khan Development Network

AKAM home

About AKAM

Country reviews

Products for SMEs

Housing Finance

Training Academy

Agricultural Lending


Call Centre


Contact information

Other AKDN agencies


Microfinance in Kyrgyz Republic

Microfinance in Kyrgyz RepublicIn many countries, housing supplies are limited by the absence of reliable developers who build homes for low- and middle-income families. AKAM supports small enterprises that are involved in construction and the import and wholesaling of housing materials.The First MicroCredit Company
The serious unrest in the Kyrgyz Republic during 2010 badly affected the Osh Region, where the First MicroCredit Company (FMCC) has branches. Overall, it is estimated that up to nine percent of the clients in the Osh Region were affected, either directly or indirectly. Although the situation has normalised, it remains fragile with social and economic activities stagnating and decreasing.

The urban areas and the population around Osh City are particularly challenged by the need for reconstruction, resettlement, employment and reconciliation of the different ethnic groups.

The impact of the political unrest on the surrounding rural areas is less severe, though the loss of client market access to Osh and border closures led to indirect business restrictions, price fluctuations and caused challenges for the whole region during the winter of 2010-2011.

After the unrest, the Association of Microcredit Organisations in the Kyrgyz Republic now estimates that 50 percent of all micro loans are now directed to agriculture and 32 percent to business, against 37 percent and 44 percent respectively in 2008. This analysis highlights both the resilience of economic activities in rural areas and the slow-down of trading and other market-related activities in cities.

FMCC has a network of 10 branches, two of which opened in January 2010 (Atbashy in Naryn and Kurshab in Osh Region). Due to its geographical focus on rural Osh and Naryn, FMCC remains highly focused on rural loans with animal husbandry representing 69 percent of all clients and other agricultural activities at three percent. Housing loans account for 13 percent of loans disbursed, but demand has significantly decreased in 2010 due to the political events, representing 27 percent of the portfolio in 2009. Traders and commercial activities represent 12 percent of loans disbursed.

Excluding banks, the microfinance portfolio was estimated at US$ 170 million before the crisis, with FMCC having US$ 8.1 million (five percent) of this portfolio. FMCC is focused on rural areas, with a leading presence in the Osh Region. It is the largest microfinance provider in the southern region of the Kyrgyz Republic. FMCC works in the provinces which have some of the highest poverty rates.

While most of the other microfinance institutions have a strong focus in Bishkek and other urban areas, FMCC intently targets rural areas because its mandate includes serving clients who do not have access to financial services.

The number of loans outstanding is 11,050 beneficiaries, for an outstanding loan amount of US$ 8.1 million. This is an eight percent decrease as compared to 2009, mainly caused by the political instability and a stagnant economy.

To some extent, the decrease was limited by the performance of loans in animal husbandry, which increased by nine percent, whereas all other sectors decreased. FMCC’s performance confirmed that, as the political events mainly affected Osh City and surrounding towns, rural areas were relatively unaffected.

As the situation in the country is stabilising, FMCC will be focusing on getting a deposit-taking licence so that clients can save as well as take out loans. This would allow them to withstand shock better and smooth their incomes when their incomes are less stable.

FMCC is engaged in a comprehensive training plan for its staff to help strengthen processes and procedures especially after the crisis and to prepare for the future so that the company can be ready to take deposits and serve its clients well.

2008 2009 2010
Microfinance Loans Disbursed:
Value (US$ '000s)
12,276 13,232 11,572
Microfinance Loans Disbursed: Number 10,683 12,449 11,201
Microfinance Portfolio Outstanding: Value (US$ '000s) 8,167 8,848 8,675
Microfinance Portfolio Outstanding: Number 9,938 11,987 11,05
Average Microfinance Loan Size (US$ unit) 822 738 785
Percentage of Women Borrowers 42% 41% 41%
Portfolio at Risk (%) 1.6% 1.8% 5.5%
Number of Staff 125 164 174

Find out more
Case Study: Agricultural Lending
AKDN in Kyrgyz Republic

Back to top