BAKU, Azerbaijan, November 30. Access to finance is one of the serious problems faced by micro, small, and medium-sized enterprises (MSMEs) in Kyrgyzstan, Trend reports citing the Asian Development Bank (ADB).
The ADB underlines that MSMEs in Kyrgyzstan play an important role in the economic development of the country. According to the National Statistical Committee of Kyrgyzstan, there are 17,050 MSMEs, employing 93,000 people.
"However, despite the growth of business loans, limited access to finance remains a major obstacle. The average share of business loans to GDP in 2015–2021 was 18.1 percent. While it increased from 17.6 percent in 2015 to 19.3 percent in 2021, in total they remain small," the ADB said.
According to the ADB, one reason behind the poor access to bank credit is a risk—such as an inability to repay due to business uncertainties, such as volatile consumer demand. The lack of standard documentation also makes it difficult for lenders to assess the MSME creditworthiness. While coverage is adequate in large urban areas, access to credit in remote areas remains limited.
"Notably, nonbank finance institutions (NBFIs) of Kyrgyzstan are playing an increasingly important role in providing MSMEs with access to finance. They have more coverage and are more flexible than banks. NBFIs include microfinance institutions (MFIs), credit unions, the JSC Financial Company on Credit Unions, and OJSC Guarantee Fund," the ADB reports.
Meanwhile, in order to further expand MSME access to finance, the government of Kyrgyzstan has approved a Strategy for Improving Financial Inclusion for 2022–2026, which has five main components: digital finance and products, infrastructure, financial product diversification, consumer protection, and financial literacy.