MFI transformation in the Kyrgyz Republic

Triodos Facet again has been awarded an assignment in the field of transformation.

Micro Credit Agency Bai Tushum Financial Fund (Bai Tushum) is one of Kyrgyzstan’s leading micro finance institutions  (end of 2007 a loan portfolio of approx. US$ 20 million, 12,000 loan clients). Bai Tushum has achieved international recognition by obtaining an “A+” rating from an international rating agency. When compared to its Central Asian peers, BT scores better than average on several indicators, including operational and financial efficiency.

In order to further growth and have access to the deposit market, Bai Tushum plans to transform into a Micro Finance Company, a commercial entity that can engage in the mobilization of savings deposits. A next step will be the transformation into a bank.
In order to prepare for the transformation, Bai Tushum has requested IFC for technical assistance. IFC has contracted Triodos Facet for this purpose and a team headed by Stefan Platteau is supporting the MFI throughout the transformation process. Starting point for the intervention has been a gap analysis about BT’s readiness for transformation.

During this ‘hands on consultancy’, the team provides advice to the general manager and to the  management team and has regular contact with the Board of Directors.  At the same time the team also maintains working contacts with the National Bank, the latter having a special interest in this first transformation case under the Kyrgyz microfinance law.

The work has started in November 2007 and is expected to continue till the beginning of 2009. Work carried out so far includes:

• Strategic advice on the funding and capitalization strategy of the growing company.
• Guidance concerning the selection of shareholders.
• Initial valuation of the company.
• Advice on the required organisational  changes, including on the contracting of new personnel (risk manager, deposit manager, treasurer).
• Review and improvement of the existing Risk Management system.
• Strenghtening of the Assets and Liabilities Management, including the restructuring of the Assets and Liabilities Committee.
• Advice on the introduction of deposit products and the supervision of a market study  on savings habits and the demand for deposit products.