Kyrgyzstan is a mountainous country located in Central Asia, west of China and south of Kazakhstan. It gained independence from the Soviet Union in 1991, and has had a rocky road, both politically and economically, since.
The GDP of Kyrgyzstan is $5.4 billion and it has the second lowest GNI in Europe and Central Asia, after Tajikistan. The poverty rate is 32.1 percent. Kyrgyzstan ranks 126th out of 187 countries on the Human Development Index and 66th out of 146 countries on the Gender Inequality Index. Poverty is a relevant issue, and there are three main causes of poverty in Kyrgyzstan.
1. No more Soviet support
Kyrgyzstan does not export many goods, though agriculture is the largest sector. While it has gold deposits that make mining attractive, the deposits do not make up for the other economic deficiencies. When Kyrgyzstan was part of the Soviet bloc, it could count on other Soviet satellite states for market opportunities, specifically on Russia for investment. Since independence, it no longer has this safety net.
Unemployment is 8.4 percent, so many workers leave the country and go to Russia to find opportunities. However, the remittances from former workers are not enough to sustain the economy. The economy has stabilized since the 1990’s, but it has a long way to go before it can support the 6 million citizens of Kyrgyzstan.
2. Insufficient agricultural development
Perhaps one of the largest causes of poverty in Kyrgyzstan is its dependence on agriculture despite gaps in knowledge and resources. Two-thirds of the population live in rural areas: however, these people are not adequately trained in land management, animal husbandry, veterinary practices and harvest techniques. This results in land that can no longer produce food and feed animals at full capacity and a group of people who cannot subsist on their agricultural efforts alone.
It is not surprising then that 75 percent of poor people in Kyrgyzstan live in rural areas and that 12 percent of the total population is food insecure.
3. Lack of financial resources
Another result of the Soviet collapse in Kyrgyzstan is weak financial institutions. Financial institutions – such as a strong banking system, investment capabilities, microfinancing and personal finance management – are all key to sustaining economic growth, regardless of the dominant sectors.
Few people, especially those in rural areas, have access to banks and therefore have no ability to invest or save. Even at a national level, money is frequently mismanaged and Kyrgyzstan ranks poorly on the Corruption Perceptions Index.
Kyrgyzstan may have a high poverty rate, but it has made great strides in reducing poverty in recent years. In 2000, the poverty rate was 62 percent: it has since been halved.
Economic and political uncertainty pose barriers to poverty reduction and economic development, but there is hope. The causes of poverty in Kyrgyzstan are not incurable. Since the political revolution in 2010, Kyrgyzstan has been steadily stabilizing and there is no reason to believe it won’t continue reducing its poverty rate.
– Olivia Bradley