By Rob Packer, KF9 Kyrgyzstan

This is part one of a three-part post on remittances with forthcoming blogs by Meg Gray (KF9, Nicaragua) and Agnes Chu (KF9, Samoa).

In the US or Western Europe, we often think about remittances as something that people send from our home countries back to their families in Mexico, Ghana, the Philippines, Ecuador, and so on. Remittances and the hope of wealth are the one of the driving forces in all kinds of global migration, so it seems fitting that the subject of remittances is a recurring theme in the United Nations Development Program’s Human Development Report from October 2009, which this year focuses on migration and aims to “challenge our preconceptions”. While movement from the West to developing world is one side to the story of remittances, it is not the only side: remittances do not necessarily touch the “rich world” of North America or Western Europe, or they can linger below the radar and have an enormous impact on countries where people are barely aware that they have an emigrant community. The three Kiva Fellows contributing to this co-ordinated post are posted in the countries currently hosting a Kiva Fellow and where remittances make up the largest percentage of the country’s gross domestic product (data from the World Bank): Samoa (22.8% of GDP), Nicaragua (12.9% of GDP) and Kyrgyzstan (19.1% of GDP).

In the West, we like to think that we bear the brunt of migration and the topic of immigration crops up with frightening regularity on election manifestos around the world, and to listen to some of the more hysterical politicians you might imagine that there were hordes of people ready to swoop on our countries to steal our jobs. I’ve sometimes been struck by the parallels between such apocalyptic visions and the 1938 radio production of The War of the Worlds: the base feelings of hysteria that Orson Welles managed to play on for one pre-war Halloween night are really no different from the images of bogeymen conjured up by politicians the world over. I personally subscribe to the theory that migration is mostly beneficial as it allows opportunities which wouldn’t be available in home countries or environments. A gross generalization, but one I believe in.

I’ve always found the topic of migration interesting and during a chance research project for my MFI I stumbled across the UNDP’s 2009 Development Report. While searching through the report for mentions of Kyrgyzstan, some figures jumped out at me that sparked off wild ideas in my head. For instance, nearly 20% of Kyrgyzstan’s GDP comes from remittances and around 10% of the population works abroad. A separate project to build the Kyrgyzstan lending team brought me up against very slim pickings when looking for groups of Kyrgyz émigrés. Something here didn’t add up: where were these migrants and where we they sending money from? When I found out the answer, it seemed like it had been staring me in the face all this time. They vast majority of remittances come from Russia, Kazakhstan and the odd other country of the CIS, and interestingly have not fallen as much in ruble terms as dollars with the economic crisis. That was why I could only find a handful of Kyrgyz-interest groups in the West. As soon as I started to think about remittances in the context of Kyrgyzstan, my next question was whether a society’s semi-dependence on remittances makes microfinance more or less equitable.

Mushroom-picking is a common activity throughout the forests of the CIS, although I’ve not discovered it on this trip, and there is supposed to come a moment when you get the hang of searching for mushrooms and the forest goes from seeming like there are no mushrooms, to seeming like its full of them. Once I started watching out for stories about migration and remittances, I started to find them everywhere. I spent an enjoyable day collecting journals in Kara-Balta with a loan officer called Mayrambek, who’d worked on a construction site in Russia for a spell before the economic crisis sent him back to Kyrgyzstan. And I spent an afternoon racing through canyons south of Bishkek with Kananbek, an incredibly friendly taxi driver who’d been a policeman in Kyrgyzstan before spending two years working in a security firm in Yakutia, Russia. The fact that he spent two years sending money home without seeing his wife and two children in Bishkek is a sad fact of migration. The fact that he’d spent two years in Yakutia blows my mind: Yakutia is an India-sized republic of the Russian Federation in the middle of Siberia and probably counts as one of the most remote places on the planet, which makes it hard for me to imagine that it would be a destination for a migrant. When I asked him why, I was struck by the obvious simplicity of his answer: the money he was getting there was better than anything he could’ve found in Kyrgyzstan.

Tatiana, one of Kiva and Mol Bulak's borrowers in Kyrgyzstan whose life has been touched by remittances.

And then there was Tatiana. Tatiana runs an old-people’s shelter in Kemin, a small town in the north of Kyrgyzstan. Like many women in the region, her husband left for Rostov region, Russia in 2008 but, unlike most others, had second thoughts and came back after a month. And her residents have a similar story: she explained that the reason why she runs the shelter is that a lot of her elderly residents have children who have all emigrated to Russia and can’t take their parents with them. She’s also a Kiva borrower and recently took out a loan to buy livestock to support her shelter. It’s not normal to think of an old people’s shelter as a business or as its owner as an entrepreneur, but in rural Kyrgyzstan’s landscape of limited chances it’s hard for her to be otherwise. As you can see in the video, when we met her Tatiana kept saying how happy she was with the loan and that without it she wouldn’t know what she would have done. She’s received funds from local charities to buy a fridge or do renovations. However, for the day-to-day running of the shelter, hers is a story depressingly typical and continually repeated across rural Kyrgyzstan. People buy a milk cow and sell the milk for profit, or in her case, she supplements the state pensions that around half of her 12 residents receive. As she explains herself in the video, of her residents who do receive their state pensions every month, these range from anything from 400 som (USD 9) to 700 som (USD 16). Even if they’re lucky enough to get a state pension, she ends up spending around 1,500 som (USD 35) on food every month. It simply doesn’t add up. Tatiana didn’t specify if her residents received remittances, but it seemed that the elderly people wouldn’t need her care if they did. Remittances are not a one-size-fits-all solution, especially if the money doesn’t arrive. For Tatiana, this is where Kiva and its field partner, Mol Bulak Finance, come in.

Last week, Ilmari Soininen asked the question whether microfinance is cutting up the proverbial pie into more pieces or whether it’s making a bigger pie. Weighing everything, my gut feeling is that in the case of Kyrgyzstan, it’s cutting up the pie into more pieces, but it is remittances which are cooking the bigger pie. The first question I had when I looked at Mol Bulak Finance’s client base on Kiva was “And who buys all the milk?” I suspect that the buyers are women who’ve received some cash from their husband working in construction, security or mining in Novosibirsk, Moscow or St Petersburg. It’s a slow process to spread the wealth around and one that will probably take generations and countless pails of milk to complete. Microfinance is part of that process in that allows people to build out their businesses and economic capacity; for the time being, remittances are the part of the process that ensures that the milk continues to be sold. I hope that this almost symbiotic development process continues as long and as much as is necessary for the development process.

One thing is certain: no-one said it would be easy.

Here is a video of Tatiana showing us around her home and her journey to bring her project to fruition.


Rob Packer is a Kiva Fellow currently working with Mol Bulak Finance in Bishkek, Kyrgyzstan. Join the Kyrgyzstan lending team. There are borrowers from Kyrgyzstan with Mol Bulak Finance who you can help by contributing to a loan today, and many other entrepreneurs from around the world on the Kiva site.

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