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National Small and Medium Business Development Institution of Kazakhstan

National Small and Medium Business Development Institution of Kazakhstan. Presentation Plan. Overview of Kazakhstan’s small business sector Overview of microfinance sector General information about the Fund History of the Fund Contemporary functions of the Fund

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National Small and Medium Business Development Institution of Kazakhstan

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  1. National Small and Medium Business Development Institution of Kazakhstan

  2. Presentation Plan • Overview of Kazakhstan’s small business sector • Overview of microfinance sector • General information about the Fund • History of the Fund • Contemporary functions of the Fund • Cooperation with Partners in Korea

  3. According to legislationof the Republic of Kazakhstan: • Small enterprises are individual entrepreneurs who employ not more than 50 people and legal entities that employ not more than 50 people and have total amount of assets not more than $600 000 • Medium enterprises are individual entrepreneurs who employ more than 50 people and legal entities that employ from 50 to 250 people and have total amount of assets not more than $3 200 000 • Microcredit organizations provide credits up to $78 000

  4. Indicators of growth in quantity of small enterprises 1. Overview of Kazakhstan’s smallbusiness sector

  5. Quantity of people employed by small enterprises 1. Overview of Kazakhstan’s smallbusiness sector

  6. Contribution of small business in GDP 1. Overview of Kazakhstan’s smallbusiness sector

  7. Contribution of small business in incomes of government budget (taxes) 1. Overview of Kazakhstan’s smallbusiness sector

  8. Credits of banks to economy andsmall business 1. Overview of Kazakhstan’s smallbusiness sector

  9. 2. Overview of Kazakhstan’s microfinance sector Dynamics of growth in quantity of microcredit organizations since 2004

  10. Total amounts of microcredits provided 2. Overview of Kazakhstan’s microfinance sector

  11. Average interest rates on microcredits 2. Overview of Kazakhstan’s microfinance sector 2007 2006 2005 2004

  12. Financial support “DAMU” Fund Development of infrastructure Administrative support Entrepreneurship Fiscal support Information support Governmental support of entrepreneurship 3. General Information about the Fund

  13. 3. General Information about the Fund • Established: According to the resolution of the Government of the Republic of Kazakhstan of 26 April 1997 #665 “On creation of small entrepreneurship development fund” as a non-bank financial institution in form of joint-stock corporation • Objectives: -Stimulate the development and economic growth of small enterprises in Kazakhstan -Increase the efficiency of use of government funds that are allocated for small business support

  14. 3. General Information about the Fund • Mission: • To assist qualitative development of small and medium businesses as well as microfinance organizations of Kazakhstan in the role of integrator and operator of financial and consulting services • Strategic goals: • Ensuring accessibility of national financing to all creditworthy SMEs • Improvement of resource support for microfinance sector of the state

  15. 3. General Information about the Fund • The Fund employs 290 people operating in its headquarters in Almaty and in 16 branches throughout Kazakhstan • As of 01.01.2008: • Assets – $715 mln. • Stockholder’s Equity – $270 mln. • Liabilities – $445 mln.

  16. Unitary Integrator of services of national development institutions and private businesses, Operator of financial programs of the Government and international organizations in Kazakhstan IV stage: since 2008 Programs of project financing, microlending, guaranteeing,consulting, creation of representatives’ network III stage: 2005-2007 Direct lending to small enterprises, Creation of branch network, Conferment of financial agency status II stage: 2002-2005 Agency functions (Programs of EBRD, ADB) I stage: 1997-2002 4. History of the Fund

  17. Main tasks and results of development Istage (agency functions) – 1997-2002

  18. Financial resources allocated from state budget in 2002-2007 * Funds on this program were not directed on capitalization of the Fund

  19. IV stage of development –Contemporary functions of the Fund • In the end of 2007 a number of conceptual changes were made in the Funds operations: • The Fund started supporting not only small but also medium-sized enterprises • The Fund transformed from financial institution to managing operator of the funds provided by the government for business support • The Fund started developing and realizing new ways of operations on financial and consulting support of small and medium-sized enterprises (Program of distribution of the funds in commercial banks for further lending to SMEs)

  20. Other services 28% Financial services (MCO) 21% Industry (Production sector) 28% Construction 3% Transport and communication 15% Agriculture 5% Projects financed in 2007 in sectorial view 5. Contemporary Functions of the Fund

  21. 5. Contemporary Functions of the Fund Program of distribution of the state budget funds in commercial banks • During the first quarter of 2008 400 million dollars were distributed • The Fund is cooperating with 7 banks: • Bank TuranAlem • Kazkommertsbank • Bank CenterCredit • Caspian Bank • Alliance Bank • Eurasian Bank • Tsesna Bank • Terms of the program (for SMEs): • Loan size – up ot $1 mln • Loan term – up to 7 years As of 1 May 2008 2 185 projects of SMEs have been financed for total amount $399,5 mln.

  22. Instruments of Fund “Damu” on financial support of SMEs (Proposed variant for further realization) Program of co-financing with banks 417Fund + 417 Banks$ mln. Program of co-financing “Damu-Regions” 230 mln. $ + 230 mln. $ Program of direct financing “Damu - Koldau” 80 mln. $ Regional authorities Fund 12% 14% 10,5% Goal: diversification of SMEs’ sectors Object:profitable investment projects of SMEs in real sector of economy Goal:SME support Objects:All SME projects without limitations but with regulation of interest rates Goal: sustainable financing of small businesses with regional priorities Objects: projects of small business in economy sectors that match regional priorities

  23. Cooperation with Partners in Korea • DAMU is interested to establish contacts with partners in Corea, special interest is in cooperation with Small and Medium Business Corporation (SBC) • Interest of DAMU is connected with successful experience in implementation of finance programs (Industrial Restructuring) and non-finance (information services, programs of marketing assistance, surveys, trainings) and activity of overseas offices

  24. Thank you for your attention! Head office 050004, Kazakhstan, Almaty, Gogol st., 111 Phone: (727) 244-55-66, 244-55-77 Fax: (727) 244-83-41 E-mail: frmp@fund.kz Web-site: http://www.fund-damu.kz

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