Central Asia’s economic growth is accelerating. But many of its small- and medium-sized enterprises (SMEs) struggle to access finance. Big firms tend to attract big investors, while small firms benefit from microfinance institutions that cater to them. SMEs make up the missing middle. Despite being the economic backbone of many developing nations, SMEs are underserved by financial institutions. Across Central Asia, many banks require up to 200 percent of the loan value as collateral — a requirement few SMEs can meet.

ACDI/VOCA aims to fill this credit gap. In March, we launched a $2.15 million fund in Central Asia to invest in small and growing businesses. The Central Asia Impact Fund will support SMEs in the food, agriculture, technology, tourism, and consumer goods sectors throughout Kyrgyzstan, Kazakhstan, Uzbekistan, and Tajikistan.

Initial capital of $2 million has already been raised for the fund by the nonprofit, KMF-Demeu. ACDI/VOCA launched KMF-Demeu in 1997 as a way to extend microfinancing to entrepreneurs and promote financial literacy in rural Kazakhstan. (KMF-Demeu grew and later created the for-profit company KMF. Today, KMF serves 250,000 clients with a loan portfolio of $350 million.)

Leveraging a Wide Network of SMEs in Central Asia

The fund will be managed by AV Ventures, a subsidiary of ACDI/VOCA. Because SMEs lack technical assistance and mentorship, they will need support navigating the environment. AV Frontiers, an investment management firm based in Kyrgyzstan, will provide local services. AV Frontiers is owned by AV Ventures and Frontiers, a wholesale lender founded in Kyrgyzstan in 2003 by ACDI/VOCA.

With KMF Demeu acting as the fund’s investor and AV Frontiers as its local agent, ACDI/VOCA and its affiliates are reinvesting their capital, expertise, and experience with microfinance to establish a sustainable finance platform for SMEs.

Currently, ACDI/VOCA has nine affiliated microfinance institutions (MFIs) throughout Central Asia. Starting in 1992 with funding from USAID and the U.S. Department of Agriculture, these MFIs launched to promote financial inclusion and spur economic growth. Since then, their initial donor investment of $9 million has been leveraged more than 40 times. Collectively, they manage a loan portfolio of $500 million and serve 325,000 clients, 60 percent of whom are women.

Investing in the Sustainable Development Goals

SMEs are powerful catalysts for growth and innovation. They often generate most of the new jobs and succeed in integrating women, youth, and other marginalized groups into the formal economy.

SMEs that receive financing and technical assistance through the Central Asia Impact Fund must prove not only their viability, but also their contribution to AV Frontiers’ social impact mission. This mission aligns closely with the United Nations’ Sustainable Development Goals for social inclusion, job creation, gender equity, and climate mitigation. In return, AV Frontiers aims to raise $8 to $10 million in investment capital for the fund and provide loans of $100,000 to $500,000. ACDI/VOCA’s wide network of SMEs across Central Asia will serve as a robust pipeline for the newly launched fund, built on 20 years of experience in the region.


Learn more about the ACDI/VOCA subsidiary AV Ventures.

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