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07 february 2020
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Lending for agriculture

Lending for agriculture

Who and on what terms is ready to credit the farmers of Kazakhstan?

It is known that the second-tier banks are very reluctant to lend to agricultural producers. These figures testify to that: over the last few years, the volume of financing of domestic farmers by Kazakh banks has decreased from 448 billion tenge to 120 billion tenge, the reduction of almost four times. At the same time, KazAgro National Holding, on the other hand, is increasing its lending to farmers. Thus, this indicator has increased from 93 billion tenge to 385 billion tenge. If in 2018 the banks provided loans to farmers for 70 billion tenge, KazAgro subsidiaries have already provided loans to local farmers for substantial amounts. Last year, the National Holding financed Kazakhstan's agricultural sector worth 477 billion tenge. More than 90% of this amount went to credit farms and leasing of agricultural equipment, the rest of this amount was used for the purchase of grain. In 2019, the Fund for Financial Support of Agriculture issued loans on concessional terms to more than 13 thousand villagers for a total of more than 60 billion tenge. And the agrarians have a lot to choose from.


Photo by kabar.kg

For instance, under the Sybaga programme, farmers can put up assets they buy as collateral, which can be both animals - breeding and market livestock, as well as agricultural machinery and special equipment. Under this program, the maximum credit period is 15 years. If a farmer buys cattle, he can count on a loan of up to 70 million tenge, and if small cattle, 12 million tenge. Interest rate - 4%. There is also a program "Irys". It is designed to create family dairy farms for 50 to 100 cattle. The loan is given for up to 12 years, the maximum amount - 155 million tenge. The annual interest rate here is higher - 6%. The same interest rate is provided for the program "Igilik". It is intended for those who have thought about increasing the number of cattle farms, as well as agricultural birds and honey bees. The amount that farmers can count on from this programme is 4 million tenge and the loan period is up to 6.5 years.

Microfinance institutions

Of course, JSC "Agrarian Credit Corporation" in the "family" of "KazAgro" is in charge of crediting the subjects of agricultural sector.

While banks do not have a particular desire to finance the agrarians, Microfinance Organizations (MFOs) are ready to do that. It is no secret that it is difficult for farmers to get a loan, mainly because they do not always have the necessary collateral. To solve this problem, the KazAgro National Holding has developed a special programme that would allow villagers to obtain loans through MFOs or credit partnerships (CPs). And here one should not be afraid of the word combination - microfinance organization. Well, first, all their activity is regulated by the Law of RK "On microfinance organizations" and all this is under the supervision of the National Bank of Kazakhstan. Second, the given program, first and foremost, is constructed on system of guaranteeing microloans. It allows small businesses to borrow from MFOs or CPs at an annual interest rate of 6%. This can be done if there are problems with collateralized property. Agrarians can get loans under this program only in tenge and at the rate of no more than 8 thousand monthly calculated indicators. In 2020, one MCI is 2,651 tenge. And last year, the largest amount that villagers could count on for loans from MFOs under this program was 20.2 million tenge.


Photo by fermer1.by

Another advantage of MFOs over the same second-tier banks is that today there are microfinance institutions in the most remote areas of the country, where there are no bank branches yet. In addition, MFOs have placed their stakes on high technology. Today, they can grant a loan online, without having to leave home. The most important thing would be to have access to the Internet. Thus, a farmer can take the same loan of up to two million tenge for the development of peasant agriculture remotely. All you need is a digital electronic signature. And there is no need to wait in line to collect all kinds of documents.

Credit partnerships.

As for credit partnerships, they appeared in Kazakhstan long ago, unlike microfinance organizations. And they were created with participation of "daughter" of National Holding "KazAgro" - "Agrarian Credit Corporation" company. Within 19 years, 205 credit associations have already appeared in the country in 157 rural districts of all regions of the country. The total number of CP members has exceeded 20 thousand farmers. Due to the activity of such organizations almost 53 thousand loans for 426 billion tenge have been issued. And Kazakhstan agrarians have already managed to appreciate all the advantages of CP. Entering the ranks of the credit partnership allows farmers to count on favorable financial resources. Moreover, it does not matter what type of agricultural activity the agrarians are engaged in. It can be a sowing or harvesting campaign, the purchase of necessary new agricultural equipment, livestock, etc. The funds are issued on such terms, which not every second-tier bank provides. At the same time, the high repayment of credit funds suggests that farmers understand all the benefits of working with credit partnerships.

According to the forecasts of the KazAgro National Holding, in 2021 the total volume of financing of the agro-industrial complex will reach 460 billion tenge, of which about 447 billion tenge will be allocated for crediting.

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