Agricultural Lending Practices: Non-Financial Services with Financial Products

The Kyrgyz Republic has 12 years of independent statehood, 9 years of reforms. The process of reform, transition to market economy showed that it is not easy to find the right way of developing. KAFC is one of the successful stories in our country, but before that the country made mistakes with agriculture lending programs. Kyrgyz experience demonstrates to other countries that creation and developing of viable and sustainable financial institution is very possible, if the efforts of local authorities and donors will come together and compliment each other.

Rural micro lending should be based more on preventive measures, such as obtaining comprehensive information about a borrower’s household and enterprises and careful monitoring to keep risks to a minimum. The authors recommend that the Government should support rural borrowers by ensuring that all state banks offer cash flow based loans with frequent repayment schedules, accept a variety of collateral types and set an interest rate which is risk based.

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