KYRGYZSTAN TODAY Policy briefs on - Department of Geography

among decision-makers and in general public about the informal sector; 4) to propose
a shift in policy perspectives that would achieve the formalisation of the informal
sector by promoting a new understanding of migrant entrepreneurs as a new middle
class.
The following is a case study of cooperation among private, non-governmental and
governmental sectors in supporting the legalisation of the small business of Bishkek’s
self-help housing districts of rural migrants. It provides strong evidence of how various
actors, knowingly or unknowingly, become involved in transforming internal (rural)
migrants into urban middle classes.
Case study of three-sector co-operation in supporting the process of legalising the
small business of Bishkek’s self-help housing districts
Discussions on the “legalisation of business” among government institutions in
Kyrgyzstan have continued for the past several years. Laws of various importance
and applicability were adopted time and again, with a specific focus on all kinds of
entrepreneurship and legalisation (including legislation on the amnesty of capital,
adopted in 2007). However, the various stakeholders and commentators of business
legalisation have yet to come to terms with the emergence of the diverse and rapidly
growing informal economy in Kyrgyzstan, and decide whether the form of “legalisation
of business” as policy makers know it, is the best option.
Migrants: facts and figures
It is safe to claim that the informal economy started developing in 1989, when
more than 80 percent of the Kyrgyz Republic’s population migrated out of rural areas.
This resulted in more than 1.5 million people (of a national population of 5.4 million)
becoming concentrated as labour and economic migrants in Bishkek, one third of whom
were oscillating between home and abroad. During the past 20 years, the suburbs
of the capital city Bishkek have swollen as land squatting resulted in more than 30
migrant settlements– the so-called self-help housing districts– with an average of
2,500-7,000 households in each. The poverty level among migrant settlements remains
high, despite investing in the development of livelihood approaches and income
generating activities among self-help housing residents. Informal trading, provision
of services, and, most recently, production of light goods have all played a significant
role in poverty reduction. Most micro-businesses in migrant settlements are conducted
informally, so entrepreneurs are not ready to declare their business dealings and do
not pay taxes and fees. Instead of becoming registered as a legal entity, many prefer to
not keep any documentation so they avoid reporting to fiscal authorities. Most often,
migrant entrepreneurs remain harassed by local police and officials, paying their way
out of trouble with bribes or unofficial fees for small and big irregularities if caught or
persecuted.
Good business practices within self-help housing districts
Poverty in migrant settlements is being overcome by the poor themselves, in two
ways: through the engagement among internal migrants with NGO work and in private
sector development: 1) through the self-help groups’ mobilisation, microfinancing
initiatives, and NGO campaigning and action migrant settlers form organisations and
unions, channeling international donor funds to improve livelihoods and, in some
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