Since the collapse of the Soviet Union in 1992, the Kyrgyz Republic has undergone an extensive economic liberalization program and rapid privatization. However the development of this landlocked and mountainous country is constrained by inadequate infrastructures and underdeveloped remote regions, shortage of qualified workers. Agriculture, trade, and gold production have become the Kyrgyz Republic's dominant economic sectors. The agricultural sector accounts 22 percent of the country’s GDP and employs about half of the working population. A third of the country’s $7.4 billion GDP depends on remittances, making the country vulnerable to microeconomic shocks.
The number of microfinance organizations increased rapidly until mid-2012 when action was taken by the regulator, the National Bank of the Kyrgyz Republic, to regulate the boom in the small loans sector. While most microfinance institutions have a strong focus in Bishkek and other urban areas, First MicroCredit Company, Kyrgyz Republic targets rural areas in accordance with its mandate to serve clients who do not have access to financial services.
First MicroCredit Company, Kyrgyz Republic (FMCC-K) is the largest microfinance provider in the southern region of the Kyrgyz Republic and accounts for 5 percent of the microfinance market. It was established in 2006 to provide microfinance facilities in the rural mountainous areas of the Osh and Naryn provinces, which suffer from some of the highest poverty rates in the country. Despite the difficulties of operating in the mountainous region and amid economic hardship, FMCC-K has grown its network to 13 branches, and serves more than 12,000 clients, with over 80 percent of rural exposure.
FMCC’s activities focus on providing loans, approximately two thirds of which are in the livestock and agricultural sector reflecting the macroeconomic characteristics of the country. The loan portfolio has grown rapidly, with financing provided for animal husbandry, trading & enterprise activities, housing improvement and education as well as agricultural inputs for growing cotton, potatoes, vegetables, wheat. Loans have also been extended to SMEs, which are generally involved in trade, manufacturing and service activities to enable clients to increase working capital, acquire fixed assets and develop or renovate business premises. Women, who represent 44 percent of FMCC’s borrowers, are being further served by the Women’s Entrepreneurship Project. Developed in collaboration with the Asian Development Bank to improve the quality of life among women in rural areas and small towns, a revolving credit line supports female entrepreneurs to engage in startups, business expansion, diversification and/or modernization of business operations. In alignment with FMCC’s vision to adopt digital financial services, the ELSOM electronic-wallet, a digital repayment service, enables clients to repay loans via mobile phones, saving time and travel costs, and is enabling FMCC to reach more remote clients.