The Chairman of the Management Board of «KMF» spoke about business financing and the role of traditional MFIs in household over-indebtedness?
– We support the regulator’s initiatives to reduce household over-indebtedness. At the same time, I would like to emphasize that the discussion in the Mazhilis concerned specifically unsecured consumer loans to individuals, including the so-called «payday loans». Although such loans are referred to as microloans, it is important to understand the difference between the funds issued by traditional MFIs and short-term «payday loans» issued by PDL companies.
«KMF» is a classical organization that has been financing micro, small, and medium-sized businesses for 26 years. In our portfolio, nearly 90% of loans are allocated to entrepreneurial activities. We do not support lending for short-term consumer desires; for us, it is essential that clients use the funds to develop their businesses. The interests of our borrowers come first. «KMF» is one of the few companies that has received international recognition as a socially oriented organization operating in accordance with client protection principles. Thanks to this approach, we have established long-term partnerships with international financial institutions, including the EBRD, ADB, IFC, Proparco, and many others. These institutions finance only transparent companies with a clear strategy.
It should be noted that we have been operating in the market since 1997, while discussions about household over-indebtedness began only a few years ago—during the period of rapid growth in consumer lending, which our activities do not significantly influence. Microfinance should certainly continue to develop, but all participants in the credit market must operate under equal market conditions.
What is the share of overdue loans in «KMF»?
– Our risk portfolio has always been and remains one of the most balanced in the microfinance market. The NPL level at «KMF» does not exceed 4.4%. For comparison, the average for MFIs is around 5%. Our clients are small business owners, most often located in rural areas.
Before issuing funds, we conduct an expert assessment of their creditworthiness. Our managers personally visit clients, assessing land plots, livestock, and other assets. Firstly, this method allows us to build a high-quality portfolio. Secondly, it ensures a personalized and human-centered approach to each client. All of this together builds loyalty and strong repayment discipline among our borrowers.
This is what distinguishes traditional MFIs that finance the real sector of the economy from PDL companies. However, the shadow of «bad» loans falls on the entire microfinance industry, which, in our view, should be clearly divided into traditional microcrediting and PDL lending.
In the structure of «KMF»’s portfolio, most loans are for entrepreneurial purposes. Which sectors does your company finance?
– We finance businesses in trade, services, production, agriculture, and support social entrepreneurship. More than 40% of our loans are directed to the agricultural sector. At the same time, our branches operate even in the most remote settlements. This allows local residents to have access to financing and develop their businesses in the regions.
Today, we serve over 260,000 clients, 67% of whom live in rural areas. Currently, more than 30,000 people are employed in businesses established by our clients. Therefore, when we talk about traditional MFIs, we mean that they are an effective tool for developing micro and small businesses and perform an important social function by supporting small projects in rural areas that are not attractive to second-tier banks.
Improving financial literacy is considered one of the tools for reducing over-indebtedness. How does «KMF» work in this area?
– For many years, alongside our core activities, «KMF» has implemented projects in financial education. Our corporate foundation «KMF-Demeu» organizes trainings, business breakfasts, seminars, and forums on financial literacy and entrepreneurship. Since the beginning of the year, we have conducted more than 10 trainings for 300 entrepreneurs, not only among «KMF» clients. Lectures and courses on financial literacy have also been organized for students and schoolchildren. In total, we have trained more than 3,000 people.
In addition, our team visited around 18 cities, conducting educational business breakfasts for entrepreneurs. The audience reached 4,000 participants. Alongside training, we implement mentoring programs for students and business owners and organize the annual award for women entrepreneurs «KMF Isker Hanymy. The mission of «KMF» is to support the development and prosperity of clients’ businesses by providing broad access to financial and non-financial tools, especially in rural areas. Therefore, many of our initiatives are completely free for Kazakhstan citizens and aimed at stimulating entrepreneurial activity and improving financial literacy
License for microfinance activities No. 02.21.0003.M, issued by the Agency of the Republic of Kazakhstan for Regulation and Development of the Financial Market.
Source Forbes.kz:
https://forbes.kz/economy/finance/shalkar_jusupov_ten_ot_plohih_kreditov_padaet_na_vsyu_mikrofinansovuyu_otrasl/?fbclid=IwAR1sYxfRdTzTiTb0hDeDMfhUuNP0sRCjhcTOJEnmQZNAzLbnBAY4mvScLYk
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