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Poverty in Kyrgyzstan

Poverty in KrygyzstanA small, landlocked state in Central Asia, Kyrgyzstan was formerly part of the Soviet Republic with a volatile past and an uncertain future. While the country has had consistent economic growth since gaining independence in 1991, 22.4% of its population still lives below the poverty line. Additionally, Kyrgyzstan struggles with internal ethnic conflict, unstable relations with neighboring countries, demographic trends in emigration and geographic weaknesses. This article will explore the many factors contributing to poverty in Kyrgyzstan, as well as the steps the country—and the world—are taking to solve it.

Geographic Disadvantage

Geography is an undeniable factor in determining the wealth and strength of a country. Unfortunately for Kyrgyzstan, geography has played a significant role in ensuring that the state is politically disconnected and economically restrained. Mountains, valleys and basins dominate Kyrgyzstan’s geography. Together, the Tian Shan and Pamir mountain ranges account for roughly 65% of the country’s land. Urban areas are located in the valleys separating the mountains, with agricultural production mainly in the Fergana Valley to the northeast.

Kyrgyzstan’s political borders are the result of Stalinist intervention that purposefully divided ethnic groups in order to create conflict. This political division, combined with mountains separating populations, created an unstable and disconnected region. Kyrgyzstan contains few navigable rivers and is geographically landlocked, forcing it to depend on other countries to transport goods to global markets. Furthermore, Kyrgyzstan’s geographical location is too close to Russia and China to warrant a significant Western investment. Kyrgyzstan can only overcome its geographic weaknesses with favorable trade deals and investment in transportation networks that connect the country to the outside world.

Economic Weakness

With a GDP of $8.5 billion and GDP per capita at $1,323, Kyrgyzstan’s economy lacks the natural resources and industrial diversity to thrive in the global economy. While GDP growth is consistently 4%-5% annually, the country’s poverty rate has remained relatively stagnant since 2009. This stagnation is the result of the lack of job creation and wage growth in the country. Corruption and difficult business conditions have kept away investors, while the stronger Russian market exacerbates the trend of emigration.

Mineral extraction, agriculture and animal domestication dominate the economy—sectors that are unlikely to grow in the coming years. Economic activity is so isolated in Kyrgyzstan that the Kumtor gold mine alone creates approximately 8% of the country’s GDP. However, there is hope for the economy in the tourism and hydroelectric power industries. With proper investment, Kyrgyzstan’s dams and mountain views could be the needed catalyst for economic diversification.

Political Instability and Corruption

Kyrgyzstan’s experience as a former member of the Soviet Republic has created a culture of political instability since the country achieved independence in 1991. Border wars over the Fergana Valley resulted in an atmosphere of suspicion in the region and led to the elections of nationalist strongmen in Kyrgyzstan. This social upheaval continued until 2010 when the nation adopted a parliamentary constitution with significant checks and balances. Even today, Kyrgyzstan is the only Central Asian state where the president is limited to a single term.

Despite progress in balancing branches of government, the new system was unable to calm the ethnic and regional tensions that had been simmering for decades. Additionally, corruption continues to harm Kyrgyzstan’s courts and business reputation due to the lack of accountability institutions. Businesses routinely pay off judicial officials and civil service personnel in order to earn tax abatement and political favors. The government has responded with reforms intended to improve Kyrgyzstan’s business environment but still lacks the ability to vet judicial appointments. With officials more interested in securing their own fortunes than the country’s well-being, it is clear that the political system perpetuates the cyclical poverty in Kyrgyzstan that plagues the country.

Demographic Trends

Understanding the demographics of a country can be essential in gauging future economic performance and societal progress. Kyrgyzstan has a population of approximately 6.5 million people, of which a majority are Kyrgyz, Uzbeks, Uighurs, Tajiks or Russian. While roughly three children are born to every Kyrgyz woman, the population growth rate remains around 1% due to significant emigration. The stronger Russian and Kazak markets, combined with a significant Russian minority, ensure that this trend will continue into the next decade, curbing economic growth in the country. The urban and rural divide is also striking.

Only 35.6% of Kyrgyz people live in urban areas in comparison to the worldwide average of 55%. This statistic speaks to the weaknesses of a decentralized state lacking infrastructure investment. Additionally, the presence of minority groups from other Central Asian nations is the primary reason for the continuing tension in the region. Kyrgyzstan’s efforts at private industry reform have combatted the emigration trend to some extent. However, addressing Kyrgyzstan’s lack of centralization can only occur through infrastructure investment; a policy that requires significant capital in a mountainous nation.

Solutions

Despite the many dimensions of poverty in Kyrgyzstan, government reforms and international institutions alike have made significant progress in addressing this problem. The country has employed a multi-pronged approach to alleviating poverty in Kyrgyzstan and addressing shortcomings in the economy and government. Some of the policy proposals include reforming legal and regulatory institutions, developing the private sector, improving infrastructure and revamping social services. As many of these proposals are capital-intensive, Kyrgyzstan has turned to international financial institutions for funding. The World Bank and Asian Development Bank (ADB) support important infrastructure projects in the country, including hydroelectric dams that power much of the region. The Asian Development Bank has been especially beneficial to Kyrgyzstan, with assistance reaching $2.13 billion on 192 projects.

While Kyrgyzstan has made progress in recent years, addressing poverty in Kyrgyzstan depends on whole-scale reexaminations of the role of the private sector and courts in civil society. With support from the international community, targeted investment and governmental integrity, it is completely possible for Kyrgyzstan to overcome its many challenges.

– Matthew Compan
Photo: Flickr

Top Three Causes of Poverty in Kyrgyzstan

Causes of Poverty in KyrgyzstanKyrgyzstan 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 1990s, 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

Photo: Flickr

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Poverty in Kyrgyzstan

Poverty in Kyrgyzstan
Poverty in Kyrgyzstan remains a major issue. Kyrgyzstan is a former Soviet Republic located in Central Asia, having gained independence in 1991. The Kyrgyz Republic is one of the poorest countries in the world with a Gross National Income (GNI) per capita amassing $440 according to measures from 2005.

Since then, the economy of the nation has managed to stabilize slightly, but almost half of the civilian population continues to live in conditions far below the poverty threshold.

The majority of individuals in Kyrgyzstan dwell in rural locations with most of these rural workers engaging in livestock breeding in order to make a living. Furthermore, these rural populations constitute almost 3/4th of the country’s poor.

The livelihood of these farmers hinges on the quality of pastures, which are unfortunately a deteriorating resource in Kyrgyzstan. According to IFAD, winter pastures are overused while summer pastures are underused. A more even distribution of pastures would help curtail this issue of misuse and underuse.

One reason for the persistent rural poverty in Kyrgyzstan is the resounding effects of the economic transition during the 1990s where the Kyrgyz economy shifted from a command economy to a free market economy promoted by the collapse of the Soviet system. Recovery has been markedly slow with rural populations still lacking access to quality drinking water, infrastructure and education.

Many of these individuals have difficulty transcending poverty due to multiple factors. For example, farmers do not receive adequate training in land management and farming.

As a result, these farmers often unknowingly engage in defective farming practices contributing to the degradation of natural resources, such as pastures, which are essential for the Kyrgyz livestock and agricultural economy.

Furthermore, farmers do not have access to financial assistance that would ultimately allow them to invest in more efficient farming equipment and practices. Therefore, many farmers are stuck in the cycle of poverty.

In addition to agricultural troubles, many individuals in Kyrgyzstan also suffer to secure a sufficient amount of food. An unstable economy and widespread hunger almost always go hand in hand.

Often, the hunger crisis in Kyrgyzstan is exacerbated by natural disasters. For example, in 2008, a severe drought destroyed crops was followed by a brutal winter, contributing to national food insecurity.

However, the World Food Programme (WFP) is attempting to assuage the hunger crisis in Kyrgyzstan.

One program provides seasonal food assistance in the form of staple foods and general food assistance that provides immediate assistance to those in need. Rather than just providing emergency food funds to the nation, WFP has also offered an initiative that supports the improvement of infrastructure, disaster response, and environmental preservation.

Through these programs the WFP is attempting to help Kyrgyzstan sow the seeds of its own prosperity rather than providing temporary relief without any improvements in underlying conflicts.

– Phoebe Pradhan 

Photo: The Hindu
Sources: WFP, Rural Poverty Portal