July 15, 2008
Important Leasing Law Passes in Kyrgyzstan
With support from ACDI/VOCA, the International Finance Corporation (IFC) and local institutions, an important amendment to Kyrgyzstan’s tax code has been passed and signed into law. The legislation ushers in a modern leasing system and aims to expand the leasing sector in Kyrgyzstan.
“The new law is a significant step forward. We can now offer our clients leasing products in addition to bank loans, providing entrepreneurs with choices that best fit their business needs,” said Gulnara Shamshieva, general manager of Bai Tushum Financial Fund, a leading microlending institution founded by ACDI/VOCA.
The law will benefit smallholder Kyrgyz businesses, particularly those involved in agriculture. The expectation is that effective implementation of the legislation will help increase foreign and local investments in the leasing sector and expand access to finance for small and medium enterprises. This will allow them to purchase the equipment they need to operate more efficiently.
On July 15, ACDI/VOCA’s Central Asia Microfinance Alliance II (CAMFA II) held a conference on the new leasing law’s implications. Participants learned about how to offer leases, obtain equipment through leasing, and provide equipment to be used in leasing under the new regulations. CAMFA II is a $4.85 million, 3-year project funded by USAID to increase access to a broad range of financial services and deepen the outreach of micro and small businesses in Central Asia. The project focuses on improving enabling environments and promoting innovative lending methodologies suitable for rural customers.
CAMFA II was integral to the leasing law’s development through its participation as a member of the Ag Finance Working Group. The group is made up of more than 30 governmental and private sector representatives of financial, supply and services institutions, international and local agencies, projects, microfinance organizations and associations of credit unions and cooperatives. Established in February 2007, members work to coordinate initiatives to support the improvement of agricultural financing in the Kyrgyz Republic. In May 2007, the members concluded that leasing was inadequate but that major challenges could be overcome through a collaborative effort. Members of the Ag Finance Working Group actively supported leasing law amendments developed by IFC, which is part of the World Bank, helping to enable the Kyrgyz Parliament to adopt the amendments.
For more information on CAMFA II, click here.
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