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Government support of small and medium business in Kazakhstan

Government support of small and medium business in Kazakhstan. Kazakhstan’s SME Sector. Sectoral structure of SME. $46 262 mln. $4 663 mln. 2 522 thous. 676 thous. People employed. Number of active SMEs. Lending by banks in 2010 ( 18 % in total lending. Production in 2010.

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Government support of small and medium business in Kazakhstan

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  1. Government support ofsmall and medium business in Kazakhstan

  2. Kazakhstan’s SME Sector Sectoral structure of SME $46 262mln. $4 663mln. 2 522thous. 676thous. People employed Number of active SMEs Lending by banks in 2010 (18%in total lending Production in 2010 (93% of all enterprises) (31%of total employment) (28%of GDP) Regional structure of SME (thous.) • Distinctive features of SMEof Kazakhstan • dynamically developing sector • institutional scale:more than 93% of all enterprises • Sector and regional disproportion Source: Kazakhstan’s Agency of statistics(www.stat.kz), National Bank of Kazakhstan (www.nationalbank.kz) as of 1 January 2011

  3. Comparison of conditions of doing business in Kazakhstan and other countries The position of Kazakhstan inWorld Bank’s «Doing Business 2010» ranking on the ease of doing business* • Kazakhstan is the most improved economy in 2011 • During 2007-2011 Kazakhstan improved its position from 80 to 59 place

  4. Government support of SMEs GOVERNMENT SUPPORT OF SMES Improvement of legislative network 1. Financial Support 2. Non-Financial Support 3. Stimulation of demand on SME products and services Development of solid infrastructure of financial support Development of solid infrastructure of non-financial support Integration of SME with large business Financing Information-analytical support, Consulting, Training Development of state procurement system Protection of competition, Measures of tariff and nontariff regulation 4. Administrative regulation 5. Fiscal regulation 6. Providing access to physical infrastructure - active role of Damu Fund acts as an operator or agent of programs - advisory role of Damu Fund acts as a member of interagency working groups

  5. “Damu”– National Development Institute JSC “Entrepreneurship Development Fund ‘DAMU’”: • Establishedin 1997 by the Decree of the Government of RK • Sole shareholder – national managing company JSC“National Welfare Fund ‘Samruk-Kazyna’” • 16 regional branchesone in each oblast (region)andin two cities: Astana and Almaty • 270 employeesin head office and regional branches • Asof 01-01-2011:Assets –$1 472 mln. Equity –$291 mln. Mission: • Assisting qualitative development of SME in Kazakhstan Vision: • Damu – national institute, major operator and integratorof entrepreneurship support measures in Kazakhstan • Strategic goals: • Integration of government measures of entrepreneurship support • To provide wide range of financial and non-financial instruments to support SME • Institutional development of business environment

  6. Fund’s programs for 2010-2020

  7. Results of SME Financial Support Programs as of 1 January 2011 Distribution by banks Distribution by sectors

  8. Training and consulting Results of SME Non-Financial Support Programsas of 1 January 2011 Information support and feedback • “Business-Adviser” Program • Creation of Business Support Centers • Call-center • Business-portal • 28000 attendees(209 districts of Kazakhstan) • 2 district and 5regional BDCs created Support of entrepreneurs with disabilities • Geographic Information System (GIS) • Analytical Paper on SME • “My Business. Kazakhstan” Magazine • SME Round tables and Forums • Site: www.gis.damu.kz • 2 issues of analytical book published • 13issues of magazine (monthly) • Open-house days of National development institutions in regions • “Damu-Komek” Program • Television broadcast «Together» • 91entrepreneurs supported • 24 entrepreneurs were featured on TV • Fund started the implementation of non-financial support programs in 2009 • Implementation of non-financial programs revealed a high demand from target audience

  9. “Business Roadmap 2020” Program • Promote growth of regional businesses in the priority sectors of economy • Maintain existing and create new permanent jobs Goal: SME Support Instruments: Financial instruments: Interest rate subsidies (up to 7-9 %) Loan guarantees Deferral of tax payment up to 3 years Current status: • 1stdirection: 115 contracts for subsidies, 11 contracts for guaranteeing • 2nd direction: 42 contracts for subsidies • 3rddirection: 24 contracts for subsidies

  10. Programs in terms of international cooperation • Raising funds fromAsian Development Bank • Goal: To raise long-term funds for conditional placement in banks for the following lending to SMEs Emphasis: First large loan to Kazakhstan development institute from foreign institution in post-crisis period An alternative to the usage of state budget funds – the realization of loan agreement is strategically important for Damu in the way to self-financing Opportunity to provide SMEs with long-term financing (for modernization and acquisition of new resources) • Terms of loan: • Amount – $500M • Interest rate – Currency Swap + 0.3% • Tenor – up to7years • Purpose of loan – financing of new SME projects • Backed by the guarantee of Ministry of Finance • Board of Directors of ADB approved loan provision • The expected date of loan disbursement (1st tranche) – 2011 Current status: • Business Development Centers (BDCs) • consulting, service support (outsourcing of services) • Maintaining databases on suppliers and customers • Marketing researches • Training courses, seminars SERVICES: Stages of creation of BDCs in regions: • Partners: Indian Institute of entrepreneurship development, Korean BDC, USAID, UNIDO

  11. Thank you for you attention! Head office: 111 Gogol Street, Almaty, 050004 Tel.: +7 (727)2445566, 2445577 Tel./fax: +7 (727) 278-07-76 E-mail: info@fund.kz Website: http://www.damu.kz

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