More than 329 billion tenge issued to farmers through credit partnerships over 17 years

On February 27 of this year, a general meeting of the founders of the Association of Legal Entities “Association of Credit Partnerships of the Agro-Industrial Complex” was held in Astana with the participation of representatives of Agrarian Credit Corporation JSC.

The meeting covered the results of the work of credit partnerships for 2018 and the work plan for 2019. The key issue was the consideration of the further strategy for the development of credit partnerships in the agro-industrial complex. 

Since 2001, with the participation of Agrarian Credit Corporation JSC, 202 credit partnerships have been created in 157 rural areas, with a territorial coverage of 98%, in 14 regions of Kazakhstan. The number of participants in the CT system is already more than 20 thousand. Increase compared to 2017 – 28.2%

The amount and number of loans issued through the CT system from 2001 to 2018 amounted to 329 billion tenge and 48 thousand, respectively. Over the years, not only more and more farmers and entrepreneurs are using CT services, but the average loan amount is also growing. If in 2001 the average loan amount was 5 million tenge, then in 2018 it was 12.8 million tenge.

Since the emergence of the institution of credit partnerships in Kazakhstan, credit partnerships have been in a continuous process of development. It should be noted that JSC "Agrarian Credit Corporation" is at the origins of the creation of a CT system in the agro-industrial complex, which at the initial stage provided direct support in the formation and development of the system and today is the main source of financing for CT, with a direct impact on increasing accessibility in obtaining financing for farmers and rural entrepreneurs. Every year the methodological base is improved, the requirements for collateral are reduced, and documentation processes are simplified. It is worth noting that not every financial institution can offer such preferential financing conditions and the same operating principle as in CT. The high repayment of loan funds indicates the responsibility of farmers and entrepreneurs who are participants in the CT.

Main consolidated indicators of 202 CT financed by Agrarian Credit Corporation JSC today:

Authorized capital - 13.5 billion tenge;

Own capital – 14.3 billion tenge;

Loan portfolio - 128.3 billion tenge;

The level of overdue loan debt to JSC Agrarian Credit Corporation over 90 days (NPL) is 3%.

Credit partnerships as a financial institution have repeatedly proven their efficiency in implementing government programs for business development in rural areas. The entry of a farmer or entrepreneur into this financial organization allows access to preferential credit resources covering almost all areas of activity in the agricultural sector, as well as non-agricultural business in rural areas.

For example, a participant in a credit partnership can receive a loan for spring field and harvesting work, the purchase of agricultural machinery and equipment, the purchase of livestock, the construction of greenhouses, gardens, for construction and installation work, for the production and processing of agricultural products, the implementation of various investment projects, start-up projects and other goals. There are many directions, it all depends on the business initiative of the farmer or rural entrepreneur.

Thus, in 2018, credit partnerships financed 5,886 end borrowers for a total amount of 75.4 billion tenge, of which, under the Sybaga program, 350 agricultural producers were financed for the purchase of 15 thousand heads of cattle and 89 thousand heads of small cattle. Under the “Ken-Dala” program, 883 end borrowers were financed through CT for carrying out spring field and harvesting work for a total amount of more than 13 billion tenge. Under the “Isker” program implemented within the framework of the State Program for the Development of Productive Employment and Mass Entrepreneurship “Enbek”, 2,315 final borrowers were financed in the amount of more than 13 billion tenge. In addition, under the Agribusiness and Agrotechnics lending programs, 1,732 final borrowers were financed in the amount of more than 26 billion tenge, 504 final borrowers in the amount of 10.9 billion tenge, 504 final borrowers, respectively.

Financing through the system of credit partnerships annually accounts for at least 30% in the financing structure of Agricultural Credit Corporation JSC. In 2018, 12 new credit corporations were created with the participation of Agrarian Credit Corporation JSC and work in this direction will continue. In 2019, Agricultural Credit Corporation JSC plans to allocate more than 82.7 billion tenge for financing through credit partnerships.

Credit partnerships are one of the effective tools to support rural entrepreneurship. This financial institution shows positive development dynamics. The reasons are clear and understandable: second-tier banks operate in the regions at the level of branches located in regional and partially district centers. Credit partnerships are localized in the outback, and have significant flexibility in providing services to agricultural entities and a number of advantages:

• Proximity to the farmer, entrepreneur. As a rule, CTs are located in the area of ​​residence of a farmer, entrepreneur or place of implementation of a business project. At the same time, the process of collecting and processing a package of documents, consideration, the initial decision on the possibility of lending, takes place and is made directly in CT, eliminating the need for a farmer or entrepreneur to contact a branch of JSC Agrarian Credit Corporation;
• Loyal collateral policy, which allows property located in the village, as well as agricultural machinery and biological assets, to be provided as collateral for loans;
• Providing loans taking into account the specifics of agricultural business (for a long time, providing a grace period, flexible schedule);
• Economic and physical accessibility in obtaining credit resources. Preferential conditions and simplified issuance procedures;
• CT does not set itself the goal of maximizing earnings from the transfer of funds in debt, since it finances its participants;
• The participant of the CT is the owner of the CT, and has the opportunity to influence the policies pursued by the CT through the general meeting;
• Work on the principles of “One for all and all for one.” As a result of the work of the CT, based on the principle “One for all and all for one,” a low level of overdue loan debt was achieved, over 90 days;
• Having joined the CT participants once and pledged the existing collateral, the CT participant has the opportunity to re-finance within the framework of the existing and future collateral, i.e. purchased.

The ACC has its own methodology for assigning a CT rating, a scale from the highest “AAA” to “G”. Depending on the assigned rating, CT has an independent funding limit, i.e. makes decisions on financing its participant independently. Today, more than 60% of CT financed by ACC have an independent financing limit from 1 million tenge to the amount limited by an open credit line.

Today, KT is a financial institution with unique financing conditions for farmers and rural entrepreneurs. From year to year, the role of credit partnerships in rural financing is only increasing and in the future will not lose its relevance in ensuring the availability of credit resources to farmers and entrepreneurs in rural areas.