State Support of Small and Medium Entrepreneurship in Kazakhstan. The Experience of Fund “ Damu ”

1. State Support of Small and Medium Entrepreneurship in Kazakhstan. The Experience of Fund “Damu” 2012

2. Republic of Kazakhstan • GDP 2011: $182,2billion (goods: 43.1%, services: 56.9%) • GDP per capita -$ 11,000. • Area: 2725thousand km2 • Population: 16,81million people(urban: 55%, rural: 45%), • Economically active population – 8,8million people • Capital: Astana(763thousand citizens) • Financial center: Almaty1 564thousand citizens) • Administrative division: • 14regions • Astana • Almaty • Banking system:National Bank of Kazakhstan and 38commercial banks • Overall assets of commercial banks – $90,7 billion 2

3. Major Indicators of Kazakhstan’s SME Sector* Number of Enterprises Employees Output 119thousand Center 2 oblasts 1 city 467thousand people 2 области $7 583million 375thousand South 4 oblasts 1 city 1 141thousand people $16 936 million 4 области 60thousand North 2 oblasts 243thousand people 2 области $2 847 million 94thousand East 2 oblasts 356thousand people $3 263 million 2 области 106thousand West 4 oblasts 374thousand people 4 области $9 476 million *Data as of 01.06.2012

4. Kazakhstan is 47th, according to Doing Business 80 64 63 58 47 2008 2009 2010 2011 2012

5. Government support of SMEs in Kazakhstan 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

6. “Damu”– National Development Institute JSC “Entrepreneurship Development Fund “Damu”: • Establishedin 1997 by the Decree of the Government of the Republic of Kazakhstan • Sole shareholder – State-owned JSC“National Welfare Fund “Samruk-Kazyna” • Mission: Assisting qualitative development of SME in Kazakhstan • 16 regional branchesone in each oblast (region)andin two major cities: Astana and Almaty • 274employeesin head office and regional branches • Asof 01-06-2012:Assets –$1.22 bln. Equity –$0.32 bln. 1997 2002 2007 2009 2011 … Agent: accounting and control of state budget funds on ADB and EBRD credit lines Direct lending to small enterprises from own funds Operator of conditional allocation of funds under Stabilization Program Financial Agent of «Business Roadmap 2020» Program 4 financial programs 15financial programs 10non-financial programs

7. Programs of “Damu” on Entrepreneurship Support SMEs are financed according to the general conditions Special conditions for industrial innovation projects Promotion of new business ideas and projects through training and consulting support

8. 1 334 1 400 1 200 1 000 1 000 8 445 725 800 6 182 602 600 417 3 631 3 233 400 2 008 200 3 365 2 500 2 364 2 232 0 1 452 12,405 entrepreneurs were covered by financial support programs Сenter South North East West Amount, mln $ Borrowers Jobs • Amount- $4 304 billion;jobs created - 24324 15banks Participants 4leasing companies *As of 01.06.2012

9. Program "BusinessRoadmap 2020" • Sustainable and balanced growth of regional entrepreneurship in non-primary (not associated with extraction of raw materials) sectors of the economy • Maintaining existing and creating new permanent jobs Goal: Interest rate subsidies (7%) A partial guarantee for loans (up to 70%) Development of production (industrial) infrastructure Interest rate subsidies (7%) Granting a delay in payment of taxes (except IAS) for up to 3 years without any penalty fees Other activities within the plan of financial and economic development Interest rate subsidies on existing loans (8%) Training for start-up businesses Leadership training Business service support «Business connections» Project Training,  support for youth practice and social jobs Fund "Damu" - financial agent of interest rate subsidies and loan guarantee under the 1-3rd direction of the program and the operator of the 4-th direction

10. Results of "BusinessRoadmap 2020" Results of the directions 1-3 Results of the direction 4 1246 entrepreneurs receive support in the form of subsidized interest rates and loan guarantee More than 43 000 new and existing entrepreneurs have been trained Program Impact: The volume of planned tax revenues from the program participants Current jobs The volume of planned subsidy on the interest rate Jobs created Directions 1 and 3 66 107 people Directions 1 and 3 $2,1 mln Directions 1 and 3 12 818 people Directions 1 and 3 $484 ths 2 направление $657,8 тыс. Direction 2 14 000 people Direction 2 5 150 people Direction 2 $479ths

11. New instruments of the Program

12. Programs Aimed at Diversifying Enterprise and its Industrial-Innovative Development (Actively implemented since 2011) • The aim is to ensure sustainable and balanced growth of regional entrepreneurship in non-primary sectors of the economy • The program is implemented within the framework of the SPIIR of Kazakhstan for 2010-2014 period. Subsidized interest rates on 26.09.2011г.: Guarantees for loans at 26.09.2011:

13. 4th direction Results of the Programson Developing Competence of Entrepreneurs Consulting As of 01.06.2012 • 43 752attendees(in 2011 - 15 645attendees) • More than 18,000 services were provided to over 9000 SMEs • 210attendees within 7 groups • 501 participants, 58of them took an internship in Germany • Support for business start-ups • Business Service support • Leadership training • «Business connections» program Information support and feedback • 16 regional BSC created, 1 district inZhanaozen • Call-center was launched in March 2011. 2500 consultations monthly • In a test mode • Creation of Business Support Centers • Call-center • Business-portal Support of entrepreneurs with disabilities • Site : www.gis.damu.kz • 3 issues of analytical book published(annually) • Together with the Franchise Union 10 000 copies were prepared • Geographic Information System (GIS) • Analytical Paper on SME • Methodological manuals for entrepreneurs • “Damu-Komek” Program • Site :www.damu-komek.kz • 490entrepreneurs were supported

14. 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