Strengthening institutional capacity for micro lending in Kazakhstan

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KazMicroFinance (KMF) is an EBRD client and the largest microfinance organisation in Kazakhstan, holding 30 per cent of the local market.

Through its numerous lending outlets, KMF provides financial support to urban and rural micro and small enterprises to help them grow and prosper.

The company’s efforts are paying off, with both the organisation and its portfolio growing fast - at the end of March 2013, the company loan book surpassed US$ 82.6 million disbursed to over 77,500 micro and small borrowers.

However, this growth has shown old methods to be no longer suitable in continuing to run efficient operations and maintain competitiveness. For example, the processing of loan applications needed risk-based automation through the implementation of credit scoring and internal controls needed strengthening to reduce the risk of fraud.

Drive for renewal

To support KMF’s drive for renewal, the EBRD and its donors have been providing the company with tailored technical assistance. For example, one of these projects, generously supported by the Government of Japan to complement the company’s own resources, was designed to enable KMF’s staff to adequately measure and track risks, enhance internal audit and control procedures and introduce portfolio forecasting and pricing techniques.

As part of this project, KMF was able to design from scratch and introduce a suitable scoring model, allowing the company to realise the targeted growth rates for 2013 and the following years. The project also helped to ensure KMF continues to efficiently provide access to finance for small borrowers throughout Kazakhstan, while maintaining high quality portfolio management and adequate profitability in a very competitive environment.

This support is also expected to lay the foundations for future growth, attract institutional shareholders and transform the organisation into a bank in the long term.

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