Recipient Institution:
Foundation of Information Assistance

Project Leader:
Kan Maxim
consulting@netmail.kg

Amount and Duration: US $ 29,625 / 15 months

Project Proposal

1. Project Background and Justification
At the present moment, regional (especially rural) territories of Kyrgyzstan seriously lag behind Central cities in terms of social and economic development. This is, to large degree, caused by poor telecommunication infrastructure. So, in capital  Bishkek, mobile telephony penetration rates are about 8 % of the population and internet penetration rate is some 12 %, while average indicators for the entire country are 1.2 % and 2 % respectively. Easy access to means of reception and information interchange allows the IT-advanced regions to accelerate pace of the development, thus increasing development gap with backward regions.

Information backwardness of regional areas is caused by their economic backwardness: in the remote regions the agricultural production more often prevails. Insufficient information poses a problem for farmers when selling their agriculture production: up to 40 % of inhabitants of villages do not know the market prices for their commodities, which are set at urban areas. Transportation to the cities and towns, as a rule, costs expensively for one farmer. The companies engaged in processing agriculture commodities, as a rule, are located in the regional centers and have no information on available volumes of raw agriculture products in the remote regions.

Middlemen use this information vacuum, underestimating the prices for agricultural production at purchase in the remote regions and overestimating the prices at sale to processing companies. Currently some 80% of the agriculture turnover in Kyrgyzstan is mediated by middlemen. The purpose of the hereby project is to eliminate barriers between manufacturers of agricultural production and buyers by creating automatic Internet and mobile communication-based exchange system of offers on purchase / sale with application for inhabitants of rural regions.

The given project has no analogues in the Central-Asian region and has the big prospects of both in breadth development (distribution of similar system in all areas of Kyrgyzstan and in neighboring Central - Asian countries) and "in-depth development "(expansion of a scope of system on not agricultural production, tourism etc).

Issyk-Kul region was selected to become an area for pilot-testing project. Some data on the region is presented below:

The population: 416 thousand people; rural population - 289 thousand people (69.6 %)

The area: 43.1 thousand sq. km. - 21 % of territory of republic. Issyk-Kul region is second the largest area of Kyrgyzstan.

The population living below poverty line  43.5 %, 14.6 % out of them live in abject poverty.

Stock breeding, plant breeding and fishery are the prevailing sectors of agriculture. In the region there are no large processing enterprises. 85% of agricultural production is taken out to capital (Bishkek city) or exported to neighboring Kazakhstan.

The project is in line with WSIS Geneva 2003 - Tunis 2005 agenda, since both development objectives are addressed (i.e. ensuring access to ICTs for all, and utilizing ICTs as a tool for economic and social development). At the same time, proposed activity corresponds to Kyrgyzstan National ICT Development Strategy, which stipulates such strategic objectives in the area of ICT as eradication of digital divide and development and application of new ICTs.

2.Project Objective

2.1 General Objective:

Research of and practical application of electronic commerce services based on wireless communication solutions in agriculture sector of Kyrgyzstan and Central Asia region

2.2 Specific Objectives:

1. Research of needs of agricultural manufacturers in utilizing electronic commerce increase sales avoiding middlemen.
2. Creating optimized electronic system based on wireless communication designed to exchange sell/buy offers on agriculture products for inhabitants of the rural areas.
3. Practical introduction of system in Issyk-Kul region
4. Research of prospects of utilizing system across the entire Central - Asia region.

3. Project beneficiaries

• Farmers - they will sell agriculture products without middlemen and will receive more money for their products
• Processing enterprises - the enterprises will purchase without middlemen and will be able to plan precisely future purchases and deliveries.
• Kyrgyz government Procurement Committee. Given, big volumes of government procurements, the project will give really unique opportunity of significant costs reduction, precise planning of purchases
• The countries, which import agriculture products from Kyrgyzstan.
• Rural citizens - use of a cellular telephone for calls and transfer of telegrams.

4. Project sustainability

Financial Sustainability
The project plan presupposes two sources of financial sustainability:

4.1. Beneficiaries of the system can support it, deducting the certain interest from the bargains made due to system of electronic commerce. Rough deductions from the sum of bargains can be estimated at 0.5%. More exact data will be received at Needs Assessment stage.
4.2. Deductions from the phone calls made by village inhabitants utilizing mobile handsets. Roughly - 1 cent in one minute of conversation over the cost paid to the telephone operator.

Raising additional funding for transferring system at country level (private sponsorship donations, state budget financing) is expected to contribute to project sustainability.

Operational sustainability:
In order to sustain project operations, processing companies and farmers will be encouraged to take part in the project. This advocacy campaign will be implemented through a series of workshops for potential beneficiaries and publications in mass-media. With the purpose of maintenance of long-term stability, the project is expected to be transformed in separate legal entity, which will incorporate all project stakeholders, namely Company on support of the credit unions, Bitel GSM, farmers, and also
government counterparts.

5. Project methodology
Needs Assessment Research. The most important element for successful realization of
the project is precise definition of end users needs. Needs identification and assessment
will be carried out three times during realization of the project:

Responsible organization/person: Research activities are to be carried out by the project researcher.

Technological research: Creation of optimal structure of wireless system of electronic commerce is also one of primary goals of the project. This research will have two purposes: (i) identifying optimum means of access to system from the remote settlements with poor mobile communication and (ii) defining optimum architecture of system, which processes inflow and outflow of information.

1) Means of access. The most suitable decision is use for this purpose of an exchange of SMS-messages produced by cellular telephones of standard GSM.

Advantages:

• Wire connection is not required
• Relative non-volatility
• Rather low price
• Opportunity of use of cellular telephones for bells and transfers of telegrams
• Wide covering of territory of the country and region cellular networks
• Standard GSM - is the basic standard of cellular communication in the Central Asia

Bitel GSM mobile operator will contribute to the project through granting free-of-charge mobile communication services fro beneficiaries of the project.

2) Means of processing of the information. The server part of system will have the following structure:

• The SMS-terminal
• System of transformation SMS into announcements and vice versa
• Bulletin board with Web-interface (Russian, English and Kyrgyz languages)

In Bishkek there will be a centre of a network - the SMS-terminal connected to web server with the software developed for the system. The software will be created with use of software with an open source code - PHP, Perl, MySQL.

The program will publish received SMS-messages on the web site as offers on purchase and sale of agriculture production, and automatically to send counter offers. The site will represent an electronic bulletin board with web interface, supporting Russian, the Kyrgyz and English languages. Access to a site will be available via Internet, and through SMS. The content-manager will edit offers and also to translate them on the English language for posting on the English version of the site.

Architecture of the system:

Hosting for the server, the premise and computers will be granted by Kyrgyzstan Development Gateway project.

Technological research, development, installation and adjustment of system will be made by the technical coordinator and programmer with short-term participation of advisers from Bitel GSM operator.

Distribution. Distribution of 75 cellular telephones will be made on tender basis among the credit unions of 25 villages Issyk-Kul region selected for participation in the project during needs assessment. Each credit union will nominate an operator to keep a handset and use it for the needs of other members of credit union, i.e. to accept from others the offers on sale of agriculture products.

Informing farmers by operators will be made by personal contacts, and also by distribution of brochures and leaflets within villages.

Personal interest of operators will be provided with an opportunity of granting to fellows villager of a cellular telephone for making local calls for the certain payment.

Primary organization responsible for distribution activities will be the Company on Support of the Credit Unions.

Training of users. A series of trainings for system operators will be organized and will include the following stages:

• Use of the mobile phone and work with SMS
• Specificity of interaction through SMS with an electronic bulletin board
• Attraction of farmers to use of service
• The control of the validity of offers

Training activities will be carried out by 2 trainers from the partnering organizations: Bitel GSM and from the Company on Support of the Credit Unions.

Promotion. One of the basic moments of activity of the project will be involving the companies buying raw agriculture material. With this purpose seminars for the Kyrgyz companies and the officials of the government connected to performance of the state purchases of agriculture products will be carried out.

Promotion will be organized by the expert in promotion / the researcher.

Functioning of system. Work will be constructed as follows.

Research of project prospects. In view of the experience received during implementation of the project, prospects of launching similar systems in other countries of Central Asia region will be determined.

The publication of the information on the project. Both during and after implementation process various relevant publications in will be placed in the Internet, newspapers, on radio and TV.

Results of all research which have been carried out within the project framework will be published in the Internet and printed for offline distributions.

The Web-site of the project will also serve for the publication of reports under the project, results of seminars and also to represent itself as a place for discussion of the project by interested persons.

6. Project outputs

7. Project time-line
Preliminary planning of project will be done between the time the project is approved and the funds are received. (approximate time 1 month prior to formal start of the project).