Kazakhstani Microfinance Market Is Getting More Attractive to Investors

By Shalkar Zhusupov the KMF chairman of the board

This fact was already proven by the experience of KMF, the largest microfinance organization (MFO) in Kazakhstan. The company has been working with international lenders for 19 years.

MFO is one of the fast-growing sectors in the country. Its assets add about 40% each year for the last five years and its total share on the financial market has risen from 0.4% to 1.6% and is still growing. All this happens because microloans are very popular in self-employed and small entrepreneurs in the villages.

At the same time, MFOs historically couldn’t rely on a wide range list of funding sources that banks can always rely on. More than 90% of all MFO obligations are loans from international institutes. For example, KMF has been working with foreign borrowers since 2000 and can now borrow dozens of millions of dollars. Our partners know very well that we’ve built a sustainable business model.

KMF has extensive experience working with international lenders; we do know how to meet their financial and other requirements. For instance, we have a success story of working with the European Bank of Reconstruction and Development and IFC, and this expertise helps us to broaden this circle of our foreign partners. Thus, currently, we cooperate with the European Investment Bank, Austrian Development Bank, Proparco, SIFEM and Financial Development Institute of Switzerland.

When the regulator set a rule allowing MFOs to list securities on stock exchanges, we got a new source of funding while investors got a new opportunity for investments. Since the beginning of last year, we have increased the share of local investors from 8% to 19%. We are going to increase this figure based on issuing of bonds. 

In June we obtained from Fitch a rating of B+ with a stable outlook. Among positive factors noticed by the agency are a long story of our stable work, leading positions on the local market, good rate of profitability, low level of losses, diversified portfolio, and access to a bunch of funding sources inside and outside the country.

An additional factor, which also was taken into consideration, is our adherence to social responsibility. We work hard to make sure that entrepreneurs and other residents of remote villages and rural districts have access to financial sources. We’ve got four out of five points under the ESG scale, which is a very important mark for investors. Moreover, KMF is actively adopting remote lending technologies with an automated process of applications review.

As of today, there were several listings of MFOs on KASE and AIX. We’ve seen huge interest in these offerings because microfinance companies want to attract as many local investors as possible. We also are going to offer our investors new opportunities and will do so soon.

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