A FAMOUS MILK
For the past 12 years, Bolot and his wife Jenishgul have been slowly and painstakingly building a cheese business in their home village.
They are from Kochkor, a region famous in Kyrgyzstan for the quality of its milk. They are the only cheese manufacturer in the region, so many dairy farmers rely on them to buy their product.
"The milk here is perfect for making cheese, but until we started our business, nobody was buying milk from farmers, there just was no market for that."
Eager to meet the growing demand for their cheese, they set off on a journey to build a modern factory.
In 2013, they managed to buy an old building in the neighboring village. This allowed them to add two more types of cheese to the product line: mozzarella and "chechil" - a dry, smoked cheese hugely popular in Russia and the former Soviet Union.
Unfortunately for them, the growth of their business was too slow to generate enough cash to buy the modern equipment they needed. They sought a bank loan, but because they own too little, they were unsuccessful.
This is the harsh reality for aspiring entrepreneurs across the Kyrgyz Republic. Because they don't have enough collateral (house, car, building, etc.) to guarantee their loan, banks often refuse them.
This affects 6 in 10 enterprises in the country.
This is so common that it is believed to be one of the main impediments to economic development in the country.
To address this problem, in 2010-2011 USAID supported the Kyrgyz Government to introduce a new financial instrument and in 2015-2016 to improve the Law on Guarantee Funds, which was designed to help small and medium businesses to gain access to financial resources by providing guarantees on loans and regulations to facilitate lending. To date, the Joint Stock Company Guarantee Fund and four municipal Guarantee Funds have issued over 1,075 guarantees, which have helped to create 1, 614 new jobs and maintain about 6,000 existing jobs in the Kyrgyz Republic.
The idea behind the Guarantee Fund is simple: when serious and promising entrepreneurs like Bolot and Jenishgul do not have enough in collateral to secure a loan, banks can ask the Guarantee Fund to back the loan for them and guarantee repayment.
It is through this mechanism that Bolot and Jenishgul have received three much-needed loans since 2017.
TOWARDS A BRIGHT FUTURE
Work underway on the factory.
About 20 people now work full time there, and hundreds of dairy farmers are earning a livelihood supplying their milk to the factory.