Facilitating Smallholder Farmers’ Market Access
In the OIC Member Countries
100
environment for taxation improved after reforms in the last five years simplified tax
regimes, reduced the number of taxes, and reduced some tax rates. Almost half of the
enterprises surveyed report that they must make unofficial payments to public officials
and that the incidence of bribery is rising. Most firms—large and (increasingly) even small
firms—find that the skills and education of labor pose major obstacles for doing business.
Financing is more easily available, and commercial banks’ application processes are
simpler, but given the strong growth in credit to the private sector over the survey period,
it appears that the financial sector could not adequately support businesses. Courts are the
least important problem for doing business, although declining use of the court system
may indicate declining trust in the system. The quality of physical infrastructure is
perceived to be improving. Although power outages increased, losses from outages have
fallen significantly. In contrast, transport infrastructure remains an issue.
The Cost of Doing Business study170 reports on a separate set of perceptions about the
strength of the institutions the Kyrgyz Republic has put in place to support the business
environment. Overall, Nigeria ranks 68th out of 189 countries covered by the surveys. The
country does particularly well when respondents are asked about how easy it is to start a
business and about difficulties they face acquiring credit. Responses to questions about
contract enforcement pull down the overall average.
Despite strong domestic and foreign demand for processed food, the food processing
sector has not been able to exploit market opportunities and cannot compete with Russian
and Kazakh food imports. The food processing sector’s development is limited by political
instability, the weak business environment, poor transport and energy infrastructure, a
lack of investment, informal barriers to exports, and limited knowledge of new
technologies and skills. Constraints on the quantity and quality of produce have slowed
the industry’s development, along with the challenges involved in meeting a growing array
of food safety and quality requirements. Kyrgyz Republic’s accession to the Customs Union
will create good opportunities for the domestic food processing sector to capture the niche
market currently occupied by imports from China, but to do so, processors must address
production inefficiencies, meet food safety and quality standards, resolve supply
problems, and improve skills along the supply chain. An encouraging sign is that 44
percent of registered food processing enterprises had ISO certification in 2012, compared
to 16.2 percent in 2009.
As a WTO member, the country has implemented a regime of low tariffs and free trade, yet
trade barriers remain, including bureaucratic barriers, corruption, customs valuation
problems, administrative inefficiencies at border crossing points, and informal payments.
The Enabling Trade Index and Logistics Performance Index for Kyrgyz Republic in 2009
were low (3.13 and 2.62, respectively). High informal payments seriously limit marketing
and reduce farm-gate prices. A 2008 study reports that traders transporting cherries in
19-ton refrigerated trucks from Batken, Kyrgyz Republic to Russia via Kazakhstan made
informal payments of US$ 161 within Kyrgyz Republic, US$ 750 while crossing
Kazakhstan, and US$ 295 in Russia.171
170 World Bank (2013b).
171 Agribusiness Competitiveness Center (2008).