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How to make regional development funds more efficient

February 7, 2021

The Interdepartmental Working Group on interaction with local self-government discussed how to improve the efficiency of the use of funds allocated by investors to solve the socio-economic problems of the population in the regions.

The IWG was created under the State Agency for Local Self-Government and Interethnic Relations (GAMSUMO) to implement the decisions of the Council for Economic Reforms under the Government of the Kyrgyz Republic. The representative of the International Business Council is the IWG member.

The regional development funds should be directed not only to social facilities, but also to the development of entrepreneurship, experts say.

The ineffectiveness of local funds has become one of the main reasons for the discontent of the local population. The heads of local self-government bodies do not always understand the utilization process of he funds received. The problem is that ayil okmotu do not always manage to use the funds allocated to them in time, and the money go to the Finance Ministry’s budget.

Another problem is the poor financial literacy of the population. Investors are ready to conclude contracts for the supply of agricultural, energy, and protective products with residents of nearby settlements. However, most of the local residents do not have access to finance and do not have the skills to write business projects and conduct economic activities.

To solve this problem, experts recommend developing a mechanism for interaction between local self-government bodies for the development of financial resources, the implementation of small and medium-sized businesses, as well as for increasing the business potential of local residents.

The mechanism should include an analysis of the existing business infrastructure of the region, determining the needs of an investment company, developing business projects, a procedure and criteria for selecting projects for their further financing from the fund.

It is necessary to develop training programs for local residents on the conduct of economic activities, and for leaders of local self-government bodies – to encourage local residents to conduct these activities.

According to the IWG member, the implementation of the proposed measures will have a multiplier effect on the socio-economic growth of the regions of Kyrgyzstan, including the creation of new jobs, a decrease in unemployment, and an increase in the economic activity of the population.