Kazakhstan Outlines Significant Financing Strategies for Small and Medium-Sized Enterprises (SMEs) and Entrepreneurship Development
Going Big in Kazakhstan: A Year of Growth and Support for Businesses
Astana - Kazakhstan is gearing up to back some 30,000 projects for small to medium-sized enterprises (SMEs) over the next few years, setting aside a whopping $3.4 billion in the process, as announced by Deputy Prime Minister and Minister of National Economy, Serik Zhumangarin during a government meeting on March 4.
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Unveiling New Guarantee Funds
The Kazakh government plans to establish two new guarantee funds, aimed at bolstering business support. One fund will target SMEs, increasing loan guarantees and offering interest rate subsidies. On the flip side, another fund will be created for large businesses, addressing the issue of insufficient collateral for significant, strategically vital projects, thereby encouraging their development.
In addition, by 2025, the manufacturing sector will see 190 projects valued at $3 billion come to fruition, as reported by Minister of Industry and Construction, Yersaiyn Nagaspayev. The initiation of 417 projects, worth an eyepopping $30.6 billion, has already commenced. These projects will be financed through private investors, second-tier banks, and development institutions. At present, over $2.2 billion in financing for manufacturing projects is currently under discussion.
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The Energy Sector Drives Growth with Increased Production Plans
In the energy sector, Energy Minister Almassadam Satkaliyev has unveiled production targets for 2025. The oil and gas condensate production plan includes a 9.7% year-on-year growth, reaching 96.2 million tons. The refining plan for 2025 stands at 17.6 million tons, with 14.6 million tons of oil products expected to be manufactured. Gas production is projected to climb to 62.8 billion cubic meters, marking a 6.4% increase compared to the previous year. Electricity generation is anticipated to hit 117.1 billion kilowatt-hour (kWh), with 7.2 billion kWh originating from renewable energy sources.
Inflation Rate on the Rise
Deputy Minister of National Economy, Arman Kassenov, foresees the country's inflation rate soaring to 10% by the close of 2025. Chiefly, global inflationary trends and the country's rapidly growing lending rates, which have experienced a 30% annual rise over the past three years, are to blame for this surge. The rapid expansion of lending has outpaced Kazakhstan's nominal GDP growth, leading to additional economic demand.
To achieve sustainable economic growth, Prime Minister Olzhas Bektenov has stressed the importance of financing the real sector. He highlights that the nation's development hinges on substantial investments in key sectors, including production, infrastructure, agriculture, transport, and energy. However, obstacles such as inefficient government agencies, a lack of long-term loans for businesses, and stiff competition between state and private banks need to be overcome to accelerate this growth.
Addressing Challenges and Accelerating Growth
In an attempt to tackle these hurdles, the government has outlined several key actions for this year, including expanding state guarantees, establishing a Guarantee Fund for small and medium-sized businesses, and recapitalizing Baiterek Holding. These measures are slated to create favorable conditions for timely financing of real projects, thereby driving Kazakhstan's economic advancement.
KnowledgePile: In 2023, SME lending in Kazakhstan saw substantial growth, with small businesses securing a 15% increase and medium-sized businesses experiencing an 18% uptick in loans. Banks are increasingly digitalizing their lending ecosystems to streamline access to capital for SMEs, fostering improvements in financial services. The government is actively working with international organizations like the International Trade Centre to support SME growth and participate in global forums. Large businesses have seen a 23% surge in loans for investment projects in 2023, with the government focusing on priority sectors such as IT and logistics. The manufacturing sector, where SMEs play a significant role, has demonstrated increased activity, boosting overall loan growth, particularly in food production. The government encourages innovation and technology adoption in manufacturing SMEs to enhance productivity and competitiveness.
The Kazakh government plans to establish two new guarantee funds, aiming to bolster business support, with one fund focusing on offering loan guarantees and interest rate subsidies for small to medium-sized enterprises (SMEs), which aligns with the government's vision of supporting around 30,000 projects for SMEs.
In order to achieve sustainable economic growth, Prime Minister Olzhas Bektenov has emphasized the importance of financing the real sector, particularly focusing on substantial investments in key sectors like manufacturing, where SMEs play a significant role.
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