The European Bank for Reconstruction and Development has announced that it will cease funding the office of the business ombudsman in Kyrgyzstan in an apparent gesture of no-confidence in the country’s pro-enterprise credentials.
The decision is due to come into force at the end of this month, the EBRD said in a statement on April 24. No official reason was provided for the move.
The lender did say, however, that it will continue to provide technical support to the Kyrgyz government in its efforts to develop the economy.
“We will focus our efforts on strengthening the Cabinet’s Investment Council through institutional support for its secretariat,” the EBRD said.
With this funding gone, prospects look bleak for the business ombudsman’s office.
Gulzada Bolotbek kyzy, a spokeswoman for the business ombudsman, said the EBRD is at present her organization’s sole source of funding.
“We are officially working and considering petitions until April 30. What happens after April 30 is an open question,” Bolotbek kyzy told Eurasianet.
The possibility that this might come to pass had been semaphored in advance by Deputy Economy Minister Ainura Usenbekova, who last month told news outlet 24.kg that a revision of spending priorities at the EBRD might have implications for Kyrgyzstan. Usenbekova said, however, that other ways to keep the ombudsman’s office running are being explored.
“The cessation of funding does not mean that the institution of the business ombudsman itself will stop working. This will not happen,” she said.
The office of the business ombudsman was first established in 2019 with EBRD support and headed from that time onward by the late former British ambassador to Kyrgyzstan, Robin Ord-Smith. The idea was to instill confidence in the country’s investment climate by offering entrepreneurs a forum in which to lodge complaints and reports of corrupt practices.
Following Ord-Smith’s sudden death from illness in September, the job of heading the organization passed to his deputy, Nurlan Musuraliyev.
The business ombudsman’s office says it has over three years dealt with around 170 complaints made by businesspeople against the government and helped enterprises make savings of more than 2 billion soms ($22.9 million).
Since coming to power by means of a street uprising in October 2020, President Sadyr Japarov has sought to position himself as a champion of expanding and diversifying foreign investment. His signature achievement since that time, however, has been to wrest control over the country’s largest gold mine, Kumtor, from Toronto-listed company Centerra Gold.
Moreover, the U.S. State Department noted in its most recent annual investment climate assessment on Kyrgyzstan that “the use of criminal investigations in commercial disputes, onerous bureaucracy, and an inability to protect investors’ assets continue to deter foreign investors.”
Official indicators nevertheless point to a positive trend. According to National Statistics Committee data, the volume of foreign direct investment, or FDI, in 2022 increased by 4 percent year-on-year to reach just over $1 billion. Almost all that investment is in the mining, manufacturing, finance and insurance, wholesale and retail trade, and telecommunications sectors.
Another dynamic of note is that FDI from countries outside the Commonwealth of Independent States, a Russia-dominated bloc of post-Soviet nations, increased by 8.4 percent over that period.
The greatest increases in inflows were seen from South Korea, Kuwait and Japan, although those three countries account for relatively small proportions of the overall FDI pie. The biggest players are Turkey, which accounted for 30.7 percent of FDI, China, with 26.3 percent, and then Netherlands and the United Kingdom, with 5.9 percent and 2.8 percent, respectively.
FDI from Kazakhstan and Russia, meanwhile, dropped vertiginously, by 20 percent and 9.7 percent, respectively.
Ayzirek Imanaliyeva is a journalist based in Bishkek.