By admin 
Yerzhan Abdirasil’s business dried up during the pandemic. The 48-year-old baker lost customers and income evaporated. In 2022, he decided the only solution was to deliver his product directly to customers.
But he faced another obstacle: obtaining capital to invest in new equipment and raw materials so he could begin deliveries.
Luckily there was a lifeline. The KMF Limited Liability Company (KMF), Kazakhstan’s leading microfinance institution, had recently signed a $15 million loan agreement with the Asian Development Bank (ADB) to provide accessible and sustainable financial services to MSMEs – companies with fewer than 10 staff and 50 employees or less.
“KMF came to my rescue when I urgently needed support,” Mr Abdirasil said of the 2 million ($4,329) tenge loan, which was approved just two days after he applied. He bought a new oven, streamlined his production process and increased efficiency. The loan also allowed him to buy flour and other raw materials in bulk, a crucial move amid shortages and rising input costs that helped him keep prices stable. Now that his business has been revived, Mr. Abdirasil has been able to support low-income families in his community by distributing free bread every Friday.
“The loan process at KMF was incredibly convenient,” he recalls. “The staff is always polite and ready to help, regardless of the time.”
Yerzhan Abdirasil and his wife prepare to deliver their freshly baked goods to their customers.
From hobby to thriving business
Micro, small and medium enterprises (MSMEs) are the backbone of Kazakhstan’s economy. They stimulate job creation, innovation, entrepreneurship and economic resilience and sustainability.
But these businesses face challenges in accessing long-term financing, especially those owned by women and located in rural areas. This hinders their growth and prevents them from contributing to Kazakhstan’s development and resilience to crises.
The ADB loan to KMF came at a critical time as MSMEs grappled with the aftermath of COVID-19 and the economic impact of Russia’s war in Ukraine. Many of these companies relied on Russian and Ukrainian imports, and the resulting supply chain disruptions, logistics issues and rising costs seriously affected their operations. This made it even more difficult to obtain financing to strengthen capital and create lines of credit.
In the city of Konayev, ADB’s support for KMF allowed 46-year-old Albina Tokhtakhunova to turn her childhood passion for sewing into a successful business. After graduating from technical school, she dreamed of opening her own sewing shop, but was unable to generate enough income to support her family of four.
Her husband’s freight business was their main source of income, but it was not enough to meet their needs.
“I always wanted to make a living from sewing, but it wasn’t until I found KMF that I saw it as a real possibility,” says Ms. Tokhtakhunova. Like Mr. Abdirasil, she turned to KMF in 2022 and took out a 1 million tenge ($2,164) loan, which allowed her to buy raw materials in bulk and employ two seamstresses.
Her once small-scale business has now expanded, taking on larger and more complex orders, such as those from a fast-food cafe that wants to redesign its interior. Ms Tokhtakhunova also did her part to help her community recover from the pandemic, making as many as 300 masks a day for local businesses.
“KMF’s support allowed me to grow my studio and diversify my products,” she says proudly. “Today I am the only seamstress in town who specializes in restoring and reusing luxury textiles. Thanks to this loan I was really able to make my dream come true.”
Her business now earns at least 600,000 tenge (about $1,244) a month, giving her the financial freedom to provide for her family in new ways.
“We were able to buy a new truck, send our children to good schools and hire more staff. Having employees allows me to rest without worries. This loan has protected us from the worst effects of the pandemic, and for that I am very grateful.”
Albina Tokhtakhunova with her two employees.
Supporting rural entrepreneurs
Lyubov Ovchinnikova, KMF’s director of sales and regional network development, says the organization’s main customers are rural residents and microentrepreneurs, who often struggle to access traditional bank loans.
“More than half of KMF’s customers are rural residents who rely on micro-enterprises to support their families. Banks generally reject such customers because they do not have a fixed monthly income. This is where we step in,” explains Mrs Ovchinnikova from.
KMF has bridged the gap in Kazakhstan’s financial system by serving underserved segments. Their loan products, ranging from 50,000 to 69 million tenge, are designed to meet a wide range of needs, from agricultural and business loans to personal consumer loans.
KMF expanded its outstanding MSME loan portfolio from $301 million pre-ADB loan in 2020 to $494 million in 2023, with 55% of these borrowers being women-owned MSMEs. The company was able to hire 34 new loan servicers, expanding its reach and operational capacity.
“This financing partnership with ADB has had far-reaching impacts that extend beyond individual companies. It has allowed us to contribute significantly to the development of micro-enterprises in rural areas,” says Ms. Ovchinnikova.
“We create jobs and support local economies. As companies get bigger, they employ more people. We are proud to contribute to the economic mobility and resilience of Kazakhstan’s underserved populations by addressing the financial barriers that prevent them from accessing capital.”
KMF’s success in the field of small loans without collateral stems from its in-depth understanding of the target group and its customer-oriented approach. By tailoring loans to customer needs and maintaining close relationships, KMF can mitigate risks and offer appropriate products.
For Mr. Abdirasil’s bakery, this tailored approach to supporting small businesses was transformational. He was able to continue paying his employees, avoid supply shortages and continue to deliver quality bread to his customers.
“The pandemic was tough, but KMF’s support helped my business survive and even grow.”
This article was written by Arvin Yana, Communications Officer, ADB, and Aliya Ibadildina, Senior Communications Officer, Kazakhstan Resident Mission.