Project description
and objectives:
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The proposed project provides financing to support the 2003 grain harvest season by offering pre- and post-financing against warehouse receipts to agribusiness companies, farmers and traders in Kazakhstan, alongside the two largest Kazakh banks: Kazkommertsbank and Bank TuranAlem. The project entails two phases; phase one consisting of a credit line taking bank risk and phase two consisting of a funded participation taking direct sub-borrower risk. The objective of the project is to provide much needed funding to the agricultural sector and support the export of grain to neighbouring markets and further.
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Transition impact:
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- Support the development of a key economic sector. The agricultural sector is one of the most important sectors in Kazakhstan's economy. The size and visibility of the proposed financing will demonstrate high standards and a customer focus to the agribusiness community in Kazakhstan. Once sufficient confidence is built in the system regarding secured lending against warehouse receipts, the local business community will no longer rely on the exclusive support of traders, which proves to be expensive in the end as the delivery of grain in the future is heavily discounted.
- Development of a more sophisticated financial sector. Risk sharing alongside a local financial intermediary is expected to act as a catalyst for mobilising more financing needed to improve sector performance. Success of the Warehouse Receipt Programme will have a high transition impact on the sector providing a more secure and efficient way of lending for the banks. Over time with more expertise and confidence in the agricultural sector, banks will create a strong, long-term client base and thus ultimately help grain producing companies to develop.
- Building confidence in the Kazakh agribusiness sector through active participation of syndicating banks.The Bank will attempt to syndicate both Phase 1 and Phase 2. This program will act as a pilot scheme in creating direct contacts between foreign financial institutions and local traders that would eventually provide access to international financing, which to date has been non-existent.
- Institutional development. The Bank has been instrumental in making the warehouse receipt law operational. It works with all related parties including the Kazakh banking sector and the Ministry of Agriculture, whose support is indispensable to the programme's overall success. The programme's achievements are significant in a sector where reform has been notoriously slow and would pave the way for further developments.
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The client:
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End clients: Grain companies, farmers and traders in Kazakhstan (Sub-borrowers).
Intermediary banks:
- Kazkommertsbank
- BankTuranAlem.
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EBRD finance:
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Total financing package of up to US$ 100 million equally split between the local banks, of which US$ 40 million is intended for the EBRD's own account and US$ 60 million to be syndicated to commercial banks on a best effort basis.
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Total project cost:
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Up to US$ 150 million.
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Environmental impact:
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Kazkommerstbank and BankTuranAlem will require that borrowers are compliant with applicable national standards for environment, health and safety and ensure that borrowers are not engaged in activities listed on the Bank’s Environmental Exclusion List. Storage facilities for agricultural commodities will be checked to ensure that they comply with regulatory requirements.
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Technical
cooperation:
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None.
For consultant opportunities for projects financed by technical cooperation
funds, visit procurement
of consultants.
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Company contact:
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Kazkommertsbank
135-zh Gagarin Avenue
480060 Almaty, Kazakhstan
Tel: +7 3272 585 309
Bank TuranAlem
97 Zholdasbekov Street, Samal-2
480099 Almaty, Kazakhstan
Tel: +7 3272 504 074
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EBRD contact:
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Tatyana Tyo, Operation Leader: tyot@ebrd.com
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Business opportunities:
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For business opportunities or procurement, contact the client company.
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General enquiries:
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EBRD project enquiries not related to procurement:
Tel: +44 20 7338 7168; Fax: +44 20 7338 7380
Email: projectenquiries@ebrd.com
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