By Rob Packer, KF9 Kyrgyzstan

In the middle of October I spent a week away from the Bishkek office of my MFI, Mol Bulak Finance, to see microfinance in action in their Balykchy branch. Part of the training as a Kiva Fellow is to complete an online course from the United Nations Development Program on microfinance, which seemed to tell me continuously that microfinance is a low-margin, high-cost business. No matter how many times this message is drilled into me, it still comes as a shock.

The town of Balykchy sits at the start of Lake Issyk-Kul, the world’s second-largest mountain lake after Lake Titicaca. The lake is a summertime holiday Riviera and a former Soviet naval testing ground far away from the prying eyes of the West. Compared with its more visitor-friendly lakeside neighbours of resort town Chopon-Ata and trekking or skiing centre Karakol, Balykchy suffers from a bad reputation in Bishkek. Bishkek was a sea of yellow leaves at the time, but I was warned that I would need warm clothes for the cold and sunglasses for the wind. As we drove out from Bishkek, the ever-present fields and mountains became drier and when we finally left the steppes and arrived in the massive valley of Issyk-Kul, the landscape looked more and more like a mountainous desert, camels included. During my time there, I never experienced Balykchy’s gale force delights but the wind’s presence seemed to hang over the town like a dragon in the mountains.

The modern-day Silk Road just outside of Balykchy

The modern-day Silk Road outside of Balykchy.


"Downtown" Balykchy

For the first few days, I was shadowing Balykchy’s loan officers as they went about their business. Far from being a simple process, I was struck by the number of steps involved and the amount of time it took to complete it thoroughly. The initial stage of the process is where the group first applies for a loan and fills out their requested amounts. Later on, the loan officer gets into a car to visit each of the borrowers at home to work out whether their loan applications are realistic. All of the borrowers who I visited at home lived close to the centre of Balykchy, but even then this can take longer than you might expect. The higgledy-piggledy idiosyncrasies of the Soviet-era housing estate, where it seems you can never predict what number a building might have and where an unclear number will have you on the 5th floor of an apartment block knocking on the wrong door; once you realize you have the wrong apartment you’re back to square one and have to go back outside to find the right building, stairwell and apartment all over again. After a morning of counting and grading TVs (ubiquitous) and fridges (less common), I was struck by how in countries with a long capitalist history, you can often get an idea someone’s standard of living by looking at the outside of their house, but in former communist countries you really can’t: these blocks stretch from Tallinn to Vladivostok and from the Arctic Circle to the borders of Afghanistan and Iran, and look, pretty much, identical. The other impression really wasn’t a surprise: microfinance borrowers come from all walks of life. On my home visits, we met a woman who resells cooking oil as her main business, and a man whose salary as a controller isn’t enough and who is buying a milk cow to sell the milk. With insufficient wages a sad truth about life in Kyrgyzstan, the purchase of a cow is often seen as a way to make ends meet.


Mol Bulak Finance's Balykchy branch

The next stage of the loan process is back at the branch office where loan officers go over the group’s business plan. This was the part of the process I always found hardest to understand, because it was almost entirely in Kyrgyz and I often found myself peering over the loan officer’s shoulder to decipher (I find Cyrillic handwriting almost impossible to read) what they were writing in Russian in the paperwork, or reading people’s body language. I could tell that for some of the women, the business plan process was the first time they’d had to think carefully about their income and their expenses: some had obviously done their homework while others really had to wrack their brains. Another important part of the business plan process is to decide who will be the group leader and the group treasurer, and in one of the business plan meetings I sat in on, the group took a lot of prompting to decide on these. As Raushan, one of the loan officers explained afterwards, you can often get an idea of who would be the right person by their personality. And later on the branch manager, Dinara explained that these roles carry a lot of responsibility that borrowers are sometimes unwilling to take up. I felt it summed up one of the key dynamics of group lending, which is often safer for the MFI and for the chances of the borrower receiving a second loan because it is implicit (or explicit) that the other group members will cover if another member falls behind, but at the same time, the members of the group know that there is a chance they will have to cover that amount – and have a very uncomfortable conversation with a friend. Once the business plan has been finalized, the final stage at Mol Bulak is called certification where a senior loan officer discusses the details of the loan and business plan with the group, and after the loan has been disbursed and distributed between the members, it’s time to put that business plan into action.

Business Plan

Discussing the business plan, or biznes-plan in Russian. (Taken at the Kochkor office)

Borrowers from Balykchy, Kochkor and Bokonbayevo will be coming onto Kiva in November 2009, you can keep up with the latest from Kyrgyzstan through the Kyrgyzstan Lending Team on Kiva. In the meantime, there are borrowers with Mol Bulak Finance from other parts of Kyrgyzstan who you can help by contributing to a loan today, and many other entrepreneurs from around the world on the Kiva site.

Lake Issyk-Kul

The shores of Lake Issyk-Kul.

On the shoreline

Mol Bulak, Balykchy staff on the shores of the lake one day after work. I think they wanted to see if I'd take the bait and go for a dip.


Sunset on the Alatau mountains. Issyk-Kul sits between two mountain ranges. These are the more northern ones.

Rob Packer is a Kiva Fellow currently working with Mol Bulak Finance in Bishkek, Kyrgyzstan.

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