Since gaining independence in 1991, Kyrgyzstan has set a clear course towards market economy reforms. In the private sector, however, only a few industries and a small number of efficient companies are able to compete at regional and international level.
As a result of political instability and a lack of legal security, the country currently remains relatively unattractive to foreign investors. Accession to the Eurasian Economic Union with Russia, Belarus and Kazakhstan in 2015 will bring further challenges as well as new opportunities.
In addition, Kyrgyzstan is facing increasing environmental and climate problems. Pressure is mounting on the already fragile natural ecosystems. Neither the private sector nor society has done enough to introduce environmental protection and climate change mitigation measures.
Objective
Promoting sustainable economic development while taking into account elements of the green economy leads to higher incomes and greater employment in Kyrgyzstan.
Approach
To achieve its objective, the programme is divided into four interconnected areas of activity.
The reform policy component concentrates on the implementation of strategies for economically, environmentally and socially sustainable growth. The project cooperates with the Investment Promotion Agency and advises partners on the basis of macroeconomic modelling and prognoses. It is helping to monitor and coordinate implementation of the national export strategy and the OECD recommendations on competitiveness.
The aim of the value chains component is to improve the productivity of selected value chains and export sectors. Know-how is provided along the value chains for clothing, livestock farming, mineral water, fruit and berries, sugar beet, valerian, agrotourism and ecotourism and walnuts. Support is also provided to the chambers of commerce and professional associations, as well as to stakeholders involved in production, logistics and trade.
The area of activity focusing on local economic development aims to establish tried-and-tested strategies for local economic promotion in the priority regions of Osch and Naryn, mainstream them at national level, and in so doing create opportunities for their dissemination.
The fourth area of activity addresses access to financial services, with the goal of introducing financial services for companies and agricultural producers along the promoted value chains and implementing the national strategy to foster financial literacy.
All components include approaches that promote the green economy.
Results
The national export strategy was developed using a participatory approach and is now being implemented. The Investment Promotion Agency has been set up, a brochure entitled ‘Invest in the Kyrgyz Republic’ has been published and a website has been created.
In the supported value chains, over 5,000 farmers – almost half of them women – have increased their income by on average 42 per cent. 500 enterprises that received support from the project in the clothing, processing and mineral water sectors have increased profits by an average of 24 per cent. Various companies have successfully developed export markets, for example around 550 farmers supplied 20 tonnes of dried valerian to the German pharmaceutical manufacturer Schwabe. A cooperative of walnut collectors and the processing company Vega Plus have been awarded a Fairtrade certificate, and the first delivery of walnuts has been dispatched to Intersnack in the Netherlands.
In the regions, the project has contributed to local economic promotion. Over 600 young people took part in short-term training courses on topics such as clothing, veterinary medicine and car repairs. Over 100 people set up small businesses as a result.
Kyrgyz advisors have been trained in international quality standards, including HACCP and ISO 22000. The first wave of companies they advised have already been awarded the certification needed to export food and can now tap into global markets.