united nations development programme in kazakhstan building sustainable microfinance institutions...

United Nations Development Programme in Kazakhstan

BUILDING SUSTAINABLE BUILDING SUSTAINABLE MICROFINANCE INSTITUTIONSMICROFINANCE INSTITUTIONS

UNDP Kazakhstan

9 November, 2005

Two cases from UNDP Kazakhstan


• Background information;

• Presentation of- Microcredit Support for Women Project in

Semipalatinsk- Microcredit Center in Atyrau

• Focus: Bereke exit strategy and outcome evaluation;

• Focus: lesson learned.

Contents


Background (1)

• There are government and donor microcredit projects, but there is a downward trend in donor commitments;

• The Government considers microcredit as a tool for reducing poverty;

• The new law “On Microcredit organizations” (March 2003) regulates the sector;

• MFIs are not allowed to collect savings;

• Microfinance institutions are lobbying to amend the law.


There are more than 400 registered organizations providing microcredit but 3-4 Microfinance Institutions (MFIs) have more than 1,000 clients. Only one has more than 10,000 clients.

Background (2)

SUPPLY

There are more than 50,000 microfinance clients, about 2% of the poor in Kazakhstan. The potential demand for microfinance services is conservatively estimated between 140,000 and 220,000 clients;

DEMAND


Two main projects on the field

Microcredit Support for Women Project in Semipalatinsk

Microcredit Center in Atyrau


UNDP Project Objectives

• To alleviate poverty and raise living standard by providing microcredit to entrepreneurs who do not have access to traditional sources of funding;

• To provide women entrepreneurs with business related training and support;• To expand and attain operational and financial sustainability of the existing

micro-lending scheme in region;

Microcredit Support for Women Project in Semipalatinsk

Microcredit Center in Atyrau

• Support low-income vulnerable population groups through simplified access to micro-credit;

• Gradually improve credit culture and discipline, and expose borrowers to the basics of business practices;


Common features

• Creation of an independent NGO to conduct micro lending activities;

• Self-sustainability;

• Institution based in relatively small cities (Oblast Capitals) far from economic centers;

• Relatively big outreach in term of clients;

• Fast rate of growth.


Active Portfolio

(USD)

Active Borrowers

2004 1,056,931 3,082

2003 705,880 3,013

2002 266,108 1,367

2001 248,891 1,220

2000 164,399 1,034

1999 127,075 1,058

1998 55,492 596

Bereke: achievements

% of Women 98 %

Average loan Size 400 USD

OSS 175 %

PAR 1.3 %

3rd biggest NGO MFI in Kazakhstan

(per number of active clients)


Atyrau Micro-credit Center: achievements

350

2,400

4,5005,100

7,200

J anuary, 2000 J anuary, 2001 J anuary, 2002 J anuary, 2003 J anuary, 2004

1001 ,109

3,705

8,771

10,324

$26 000$249 000

$840 000

$2 206 300

$2 752 794

January, 2000 January, 2001 January, 2002 January, 2003 January, 2004

LOAN DISBOURSED

(Cumulative)

BORROWERS

TRAINED

Active Portfolio

(USD)

Active Borrowers

2004 1,584,931 4,150

2003 1,008,125 2,115

2002 719,650 2,591

2001 590,000 1,705

Branch offices in 5 Rayon capitals


• Registration of Bereke as a public foundation;• Bereke received its first grant from UNDP to purchase the office

building;• MIS and Accounting System adjusted to the national requirements.

200

3

• Bereke signed Capital Grant Agreement with UNDP and started itsown credit activity. It regulates the terms and conditions for transfer remaining project funds and assets to Bereke after approval fromBOM-HQ;

• Bereke became a member of the Association Microfinance Organizations of Kazakhstan (AMFOK);

• Bereke reached operational and financial self-sustainability.

200

42

005 • First external audit of Bereke undertaken;

• International Rating – ACCION CAMEL (Mid-November 2005).

UNDP Exit Strategy: KMLO Bereke


Bereke: outcome evaluation

Rating Criteria Rating

Outcomes Poverty alleviation Positive change

Raising living standards Positive change

Empowerment Positive change

Income generation Positive change

Job creation Positive change

Other factors

Sustainability of progress towards achieving outcome

Sustainable

Cost-effectiveness of progress towards achieving outcome

Yes


Lessons Learned (1)

Provision of microcredit is an effective way to promote the growth of small businesses, expand employment opportunities, and strengthen the ability of vulnerable population groups to provide for their families in Kazakhstan.

In 2000 a study by Yasushi Tairo concluded that Bereke clients on average increased their profit by 4,215 Tenge (per credit period).

A survey conducted in 2004 found that 87% of Bereke clients reported that the profitability of their business had grown.

56 jobs were created in the Atyrau business incubator thanks to microcredit lending.


• Strong demand for microfinance services;

• People: staff professional and interpersonal skills;

• Extensive staff training;

• Selection of an appropriate market niche;

• Development of appropriate products – services;

• Low competition;

• Well-developed exit strategy.

Lessons Learned (2): key factors for success


Lessons learned (3): principals for MFI to be

successful

• Maximum satisfaction of the borrowers;

• Flexibility of credit disbursing;

• Efficiency of information processing and loan disbursement;

• Provision of complementary technical and information assistance;

• Utilization of advanced microcredit technologies.


Lessons learned (4): challenges

• Lack of qualified specialists / training programmes;

• Low population density / remoteness of borrowers;

• Underdeveloped transport infrastructure;

• Underdeveloped financial infrastructure (rural areas);

• Legal status of Microfinance Institutions in Kazakhstan.

The main challenge is to reach REMOTE RURAL AREAS. Both Bereke and the Atyrau Microcredit Center face serious obstacles in expanding services to rural areas.

united nations development programme in kazakhstan building sustainable microfinance institutions...

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