Experts on microcredit in Central Asia say the region is poised to undergo an expansion in small-loan programs, helped by the political changes in Afghanistan. RFE/RL's Robert McMahon talked with these officials on the sidelines of the UN development conference in Monterrey, Mexico.
Monterrey, Mexico; 21 March 2002 (RFE/RL) -- Central Asia's historic place as a trade route and crossroads could make its poorest residents well suited to benefit from small-loan -- or microcredit -- programs.
That's the assessment of two development experts familiar with the area who spoke with RFE/RL during a tour of similar small-loan programs in the northeastern Mexican city of Monterrey.
Andrew Natsios is administrator the U.S. Agency for International Development -- USAID -- the U.S. government agency that provides economic and humanitarian assistance worldwide.
Natsios said USAID provides $155 million a year in grants to help nongovernmental organizations administer microcredit programs in poor nations. He says his agency started such programs in November in Afghanistan, as the Taliban regime was crumbling.
He said a major challenge in Afghanistan is in agriculture, where microfinanciers are trying to help farmers move away from growing opium poppies to legitimate crops.
Natsios, who has made repeated visits to Afghanistan, said he wants to see the country again become an exporter of fruits and nuts: "We're introducing microfinance through the NGOs in order to increase food production both for grains, wheat the primary staple but also for export."
Another aid expert who has found a demand for microcredit financing in Afghanistan is Lawrence Yanovitch, director of policy for the Foundation for International Community Assistance, or FINCA.
FINCA is creating a consortium, with the British charity Save the Children, to set up microfinancing ventures in Afghanistan. Yanovitch said he sees tremendous potential there: "Women are mostly working behind closed doors with their enterprises, weaving rugs, embroidery, raising chickens. They are a little reticent about going into the markets right now, but I think over time as things loosen up a bit they will be ready to go into the markets. [It's a] huge, vibrant sector. Central Asia is a huge trading route and microfinance is grounded in trade."
Yanovitch's NGO is already active in Kyrgyzstan, where it runs a large microfinance program. Helped by grants from USAID, FINCA has made more than $30 million in loans to 20,000 clients and has a 97 percent on-time repayment rate. The program earns $1 million annually in interest payments, and that money is channeled back into the microloan program.
Yanovitch said FINCA's network of village banks appeared at a time when many Kyrgyz were making the painful transition away from communism: "A lot of our clients have been state factory workers [who] lost their jobs and found themselves having to create their own employment, and so they went to the markets. But they needed capital -- they absolutely needed capital -- and there really isn't much of a commercial banking sector in Kyrgyzstan."
Yanovitch said FINCA is also seeking to start microfinance programs in Tajikistan and Uzbekistan, where many also have little access to credit. He said the simple structure of microloan programs appeals to many in the developing world.
"I think everyone really wants a chance and they really don't have much of an alternative for other kinds of capital because most commercial banks won't lend to them. So the most common factor is people are excited about having a chance to get loans that are appropriate to their needs, which are under $200. Loans that are short-termed structured, in small installments, so that they can pay them," Yanovitch said.
Yanovitch said the new focus on Central Asia following the terrorist attacks last September can give a needed push to microcredit programs. He added that policymakers are beginning to notice the impact such programs.