REPORT
The Association of Microfinance Organizations of Kazakhstan (hereinafter – AMFOK)
Topic of the report: «The Coordinating Role of the Association of Microfinance Organizations of Kazakhstan in the Implementation of Legislation on Minimizing Risks in Lending, Protecting Borrowers’ Rights, and Improving Financial Market Regulation».
Speaker: Chairman of the AMFOK – Yerbol Omarkhanov.
Dear participants of the round table!
Taking this opportunity, on behalf of the members of AMFOK, we are pleased to express our respect and gratitude for the opportunity to speak at today’s round table!
The Association of Microfinance Organizations of Kazakhstan (AMFOK) was established in 2004 at the initiative of classical MFIs specializing in providing microloans to small and medium-sized businesses, primarily in rural areas.
Today, AMFOK members account for 87% of the microcredit market. The Association performs an important consolidating function by uniting fragmented market participants and forming a unified expert opinion on key issues in the development of the microfinance industry, while actively supporting many government initiatives aimed at improving order in the microfinance sector.
The adoption of the Law dated June 19, 2024, on minimizing risks in lending, protecting borrowers’ rights, and improving financial market regulation represents an important milestone in the development of the microfinance sector and aligns with the Association’s objectives of building a transparent, socially responsible, and fair microcredit market.
One of the key innovations of this Law is the establishment of the legal status of the microfinance ombudsman, with functions and powers to resolve borrower debt issues in a pre-trial manner.
It should be noted that in 2022, AMFOK had already made independent efforts to establish a microfinance ombudsman office, recognizing the importance of pre-trial debt resolution in the microcredit sector. During one year of operation, the ombudsman reviewed more than 4,000 borrower appeals, providing improved conditions under microcredit agreements. However, without a legislative framework and operating on a voluntary basis, it was difficult to sustain its activities and scale them to smaller market participants not belonging to the Association. Nevertheless, AMFOK members demonstrated a high level of responsibility by voluntarily complying with the ombudsman’s decisions.
Thanks to the legislative initiative of the financial regulator and members of the Parliament of the Republic of Kazakhstan, the activities of the microfinance ombudsman have now been institutionalized and given a clear legal basis. Following the adoption of the Law, AMFOK, together with related industry associations, established the microfinance ombudsman office based on existing structures and actively participates in its development.
Another important legislative measure aimed at strengthening consumer protection is the introduction of a two-year moratorium on the assignment of claims on non-performing microloans to collection agencies.
During this moratorium, AMFOK continues to coordinate the activities of its members, focusing on the proper settlement of consumer microloan debts of individuals.
The Association plans to sign a memorandum among its members to reduce the level of overdue debt through write-offs and high-quality restructuring of problematic microloans.
It is also important to note that the law’s requirement to issue online microloans only after biometric identification of clients has helped reduce fraudulent activities and contributed to building a more secure digital infrastructure for MFIs.
Developing basic financial security awareness among the population is an essential element of preventing fraud in lending. Therefore, alongside biometric identification and other regulatory tools, it is necessary to improve financial literacy.
AMFOK is also active in this area. For example, in 2024, leading MFIs such as KMF, Arnur Credit, Asian Credit Fund, and OnlineKazFinance supported the national project “Qaryzsız Qogam” implemented by the Amanat party, aimed at improving financial literacy and assisting in resolving problematic debts on bank loans and microcredits.
In addition, AMFOK plans to sign a memorandum of cooperation with the Agency for Regulation and Development of the Financial Market, under which, with financial support from its members, a media plan will be implemented. This plan includes engaging bloggers to create informational videos and podcasts on social media, as well as a series of TV programs and educational materials on leading national channels focused on financial literacy and protection against fraud.
Based on the above, AMFOK will continue to perform its coordinating role between MFIs and government bodies to ensure the effective implementation of this law.
At the same time, we would like to present the position of the Association’s members on key issues and propose recommendations that may be useful for future legislation regulating microfinance activities.
In conclusion, we emphasize that the adoption of the law on minimizing lending risks, protecting borrowers’ rights, and improving financial market regulation is a timely and necessary step in the context of increasing credit risks and growing vulnerability of financial consumers.
Thank you for your attention!
Republic of Kazakhstan, 050004, Almaty, st. Gogol 111, office 610
amfok.coordinator@gmail.com
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