Fledgling Democracies

The Christian Science Monitor has a story about the exorbitant interest rates banks charge borrowers looking to start small businesses in the tiny former Soviet republic of Kyrgyzstan. Rates typically come in around 20 to 25 percent, with microfinance loans sometimes reaching an exorbitant 48 percent.

High demand/short supply for capital coupled with the country’s instability are to blame for the situation, the article says. Interestingly, though, Kyrgyzstan ranks higher than Russia (among 178 countries) in a 2008 study of business climates done by the World Bank: the logistics of entrepreneurship in the country are quite manageable, but the challenge of finding capital leads to some creative financing.

This entry was posted on Saturday, May 3rd, 2008 at 11:35 pm and is filed under Business, Kyrgyzstan, Microfinance. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.