M-CRIL's Microfinance Rating - Risk Assessment - Kazakhstan Community Loan Fund

This paper is a M-CRIL rating of the Kazakhstan Community Loan Fund (KCLF) in Almaty, Kazakhstan, undertaken in January 2002 and valid through January 2003. KCLF received a rating grade of alpha.

M-CRIL notes that KCLF shows consistently good performance on:

• Governance;
• Management;
• Financial parameters;
• Systems;
• Portfolio;
• Return on operations.

Some areas that would need to be addressed over the next year include:

• Establishing an effective governance structure;
• Increasing depth of concentration in existing markets;
• Upgrading its accounting system;
• Putting in place a formal internal audit mechanism.

M-CRIL assessed the KCLF's demand for loans and found that based on excellent systems, good portfolio quality, emphasis on strong groups and high demand for loans for its members it can absorb loan funds of Tenge 30 million (US $200,000) for the next one year for on-lending purposes.

M-CRIL notes that KCLF's sustainability depends on mobilization of equity (donor grants) to the extent of Tenge 100 million (US $650,000). However, it states that KCLF faces the following risks:

• Low diversification of loan portfolio, exposing the institution to market risks;
• High operating costs and high interest rates that can impact growth potential.