The First MicroFinance Company, Kyrgyz Republic (FMFC), operated by the Aga Khan Agency for Microfinance, is the largest microfinance provider in the southern region of the Kyrgyz Republic.
Since gaining independence in 1991, the Kyrgyz Republic has undergone an extensive economic liberalisation programme and rapid privatisation. However, the development of this landlocked and mountainous country is constrained by inadequate infrastructure, underdeveloped remote regions, and a shortage of qualified workers. Agriculture, trade, and gold production have become the Kyrgyz Republic's dominant economic sectors. The agricultural sector accounts for approximately 18 percent of the country’s GDP and employs nearly half of the working population. Remittances are equivalent to about a quarter of GDP, making the country vulnerable to microeconomic shocks.
The number of microfinance organisations 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 the capital city of Bishkek and other urban areas, FMFC targets rural areas in accordance with its mandate to serve clients who do not have access to financial services.
FMFC 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, FMFC has now grown its network to 15 branches and outlets, serving more than 17,000 clients, with over 90 percent in rural areas. FMFC is now the largest microfinance provider in the southern region of the Kyrgyz Republic.
FMFC’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 and enterprise activities, housing improvement and education, as well as agricultural inputs for growing cotton, potatoes, vegetables, wheat. FMFC also provides loans to SMEs, which are generally involved in trade, manufacturing and service activities that enable clients to increase working capital, acquire fixed assets and develop or renovate business premises. Women represent 44 percent of FMFC’s borrowers.
Select, ambitious women are involved in 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 engaging in startups, business expansion, and the diversification and/or modernisation of business operations.
In alignment with FMFC’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. It also enables FMFC to reach more remote clients.