December 11, 2008

ACDI/VOCA Organized Eighth Meeting of the AgFinance Working Group

ACDI/VOCA’s USAID-funded Central Asia Microfinance Alliance II Project (CAMFA II) conducted the eighth meeting of the AgFinance Working Group on December 11 in Bishkek, Kyrgyzstan. The meeting brought together representatives of banking and nonbanking financial institutions, government agencies, donors, and business associations, and was focused on those who directly or indirectly promote the development of the Kyrgyz rural and agricultural finance sectors.

The main topics of the meeting were mergers and acquisitions (M&A) in microfinance and the treatment of leasing under the new tax code. In many countries M&A has become a widely accepted solution when there is a need to join two or more businesses to create a new, stronger one with greater economy of scale. Kyrgyzstan has hundreds of small microfinance institutions that are unlikely to survive because of low efficiency and problems with finding investors. M&A can be a strategic response to growing competition and a chronic lack of capital. Participants examined how M&A works in practice and how it should be implemented.

The Ag Finance Working Group has been actively promoting leasing in Kyrgyzstan since May 2007. Based on the efforts of the working group, a new law removing barriers for the development of leasing was approved and will go into effect in 2009. The International Finance Corporation (IFC) initiated a study to find out how leasing will be treated under the new tax code and presented the results at the meeting. The meeting concluded with a panel discussion by representatives of the IFC and USAID’s Policy Reform Project, which was moderated by CAMFA II Rural Finance Manager Buajar Abdykadyrova.

CAMFA II is a USAID-funded initiative implemented by ACDI/VOCA. With headquarters in Bishkek, this three-year project (2006–2009) works to increase access to a broad range of financial services and deepen the outreach of micro and small businesses, especially in rural and isolated regions throughout Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan. The project focuses on improving the enabling environment and promotion of innovative lending methodologies suitable for rural customers.

To find out more about CAMFA II, click here.