Agriculture Value Chain Finance in Kyrgyz Republic

While the access to finance for short-term working capital loans in the agro-sector in the Kyrgyz Republic is gradually improving, long-term loans needed to finance sustainable investments remain scarce and inefficient with high transaction cost, high interest rates for agricultural loans and inadequate credit appraisal methods leading to negative effects on agricultural development.

Most farming equipment is outdated and highly energy consuming thus requiring tremendous investments in replacement.  In addition, the potential of value-chain financing in the agricultural sector in general still needs to be developed, and the cost, risk and access problem of agricultural  credit as well as the problem of limited market access of agricultural MSMEs need to be solved.

The direct target group of the Program are financial institutions active in the agricultural sector. They should receive local currency funding that enables them to  lend to Small Medium Size Rural Enterprises (SMREs) with an annual turnover of around 35,0 million Kyrgyz Som (KGS) – the indirect target group.

The objectives of the consultancy assignment are to:

• Improve the agricultural business model of the PFIs with regard to costs and risks thus leading to the sustainable extension of long term loans to the target group (final beneficiaries);
• Establish and apply environmental, health and safety criteria standards as additional criteria of credit appraisal;
• Ensure disbursement, use and repayment of funds according to program purpose and agreements;
• Introduce and establish “green grants” for environmentally friendly investments

The main activities of the consultancy assignment are described in the following

Support to PFIs to improve their agricultural credit technology and business model

Support the identification and establishment of financial products for agricultural value chain-finance

Management of the Disposition Fund for KfW and EIB disbursements

Design and management of grants enhancing investments in ecological friendly technology (“green grants”)