40476 - KMF-HALP

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Summary of Investment Information

Project Number

40476

Company Name

KMF Bank JSC

Date SPI Disclosed

Dec 14, 2017

Country

Kazakhstan

Region

Central Asia and Turkiye

Projected Board Date

Jan 26, 2018

Environmental Category

FI-3 - No Impact

Status

Completed

Last Updated Date

Jun 12, 2021

Department

Regional Industry - FIG - ECA

Industry

Financial Markets

Previous Events

Approved : Feb 22, 2018
Signed : Mar 7, 2018
Invested : Mar 28, 2018

Sector

Microfinance and Small Business - Non Commercial Banking

Project Description

Financing to Limited Liability Company Microfinance Organization “KMF” (“KMF” or the “Company”) to support local currency financing of micro and small enterprises, including women enterprises and clients in remote areas of Kazakhstan, structured as (i) an A loan of up to US$10 million equivalent in Kazakh Tenge (KZT) for IFC’s own account and (ii) up to US$75 million Hedged A Loan Participation, for the account of participants (the “Project”).

KMF is an ultimate leader in the Kazakh microfinance sector, having demonstrated a steady growth in client base, loan portfolio and regional network especially in rural areas since its inception. As of Sep 30, 2017, KMF had a gross loan portfolio of over US$245 million with over 211,000 active micro-borrowers, representing c. 54% market share by loans outstanding. With 1700 staff, KMF operates a developed distribution network of 116 branches and outlets, allowing deep outreach in rural areas.

Sponsor / Cost / Location

Product Line	IFC Investment (million USD)
Risk Management
Guarantee
Loan	85.0
Equity

IFC's loan to the financial institution described in this SII is targeted for on-lending to the following sector(s):

Product Type	Use of Proceeds
Straight Senior Loan	Loans to Microfinance Borrowers

IFC's Definitions of Targeted Sectors can be found here.

Development Impact

(i) Improve access to finance for underserved population segments in remote areas of Kazakhstan through supporting KMF's lending activities; (ii) Contribute to job creation and upgrading the quality of life at the base of the pyramid through strengthening the microfinance sector in frontier regions of Kazakhstan; (iii) Create a demonstration effect in following best practices in Kazakhstan's microfinance industry through helping KMF upgrade its risk management practices and prepare for transformation into a bank.

(i) Enhance KMF's ability to access long-term funding which is not easily available to MFIs in Kazakhstan; (ii) Provide local currency financing to further reduce KMF's foreign currency exposure and improve its risk profile as well as that of its borrowers; (iii) By mobilizing funding through HALP structure, IFC ensures that KMF receives much needed local currency financing to support its growth, while protecting the HALP participants - foreign investors from currency risk; (iv) Remain involved with KMF through its planned transformation process by providing IFC's expertise and knowledge in best practices through a combination of IFC's investment and advisory services so that KMF is fully prepared when regulatory requirements become clear and favorable.

E&S Category Rationale / Risks and Mitigation

The project involves a senior loan to KMF, a microfinance organization in Kazakhstan, to support financing of micro, small and agribusiness enterprises. The environmental and social risks of the company's portfolio are low, and carry minimal or no adverse environmental and social impacts. The project has therefore been categorized as FI-3 in accordance with the IFC's Sustainability Policy. KMF is an existing client, and, as such, has developed and implemented a satisfactory ESMS in line with IFC's requirements, appointed E&S personnel, and provided sufficient E&S training. The E&S performance is overall satisfactory. For this project the company will continue implementing the Environmental and Social Management System effectively to ensure that all projects, including agri-business projects, are screened against the IFC Exclusion List and meet requirements of the applicable environmental and social national laws and regulations, carry out corresponding training for staff, comply with the requirements of the IFC's Performance Standard 2 on Labor and Working Conditions, and provide regular E&S performance reports to IFC according to the format agreed.

Contacts

For Inquiries About the Project, Contact

Limited Liability Company Microfinance Organization “KMF”
Ms. Elena Skufalyaridi
Treasury Manager
+77273317474
elena.skufa@kmf.kz
50, Furmanov street, Almaty 050004, Republic of Kazakhstan
www.kmf.kz

For Inquiries and Comments About IFC, Contact

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IFC Communications
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Washington DC 20433
Telephone: 202-473-3800
Fax: 202-974-4384

IFC supports its clients in addressing environmental and social issues arising from their business activities by requiring its real sector clients to set up and administer appropriate grievance mechanisms and/or procedures to address complaints from Affected Communities in relation to environmental and social issues arising from IFC's clients' business activities. Since 2012, IFC's Financial Intermediary clients applying the Performance Standards are required to develop External Communications Mechanisms to receive and review inquiries or complaints from any interested party regarding the E&S risks and impacts of their operations.

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Complaints can be submitted by any of the following methods:

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CAO receives and addresses complaints in accordance with the CAO Policy, which can be accessed at: https://www.cao-ombudsman.org/policies-guidelines.

This Summary of Investment Information (SII) is prepared by IFC to disclose a factual summary of the main elements of the potential investment. It also includes findings and recommendations related to environmental and social considerations regarding this potential investment. The purpose of the SII is to enhance the transparency of IFC’s activities. For any project documentation or data included or attached herein, whether prepared by the project sponsor or otherwise, authorization has been given for public release by the project sponsor. IFC considers that this SII is of adequate quality for release to the public, but has not necessarily independently verified all of the project information therein. It is distributed in advance of IFC Board of Directors’ consideration and may be periodically updated thereafter. Board dates are estimates only and this document should not be construed as presuming the outcome of the Board Directors’ decision. The following SII is disclosed in accordance with IFC's Access to Information Policy (AIP) that went into effect on January 1, 2012.

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