The European Bank for Reconstruction and Development (EBRD) is stepping up its efforts to support the private sector in Kazakhstan by providing a KZT 10 billion five year loan to Bank CenterCredit (BCC) for on-lending to micro, small and medium enterprises. At least 60 per cent of the loan proceeds will be distributed outside of the main cities of Almaty and Astana.
BCC, which is the sixth largest bank in Kazakhstan with a network of 20 branches, prioritises its work with MSME clients, and the EBRD loan will help it to improve access to financing to clients in the regions.
The loan will be guaranteed by JSC Entrepreneurship Development Fund “Damu” and will be accompanied by a technical assistance programme with the aim of facilitating further strengthening of BCC’s internal capacities in the MSME area.
“In the current difficult market conditions, the essential task of BCC is to support its clients. The development of the small and medium-sized business has always been a major priority of BCC. The new EBRD loan along with technical support will contribute to strengthening the Bank’s position in the sector of private micro, small and medium enterprises in Kazakhstan”, said BCC CEO Vladislav Lee.
This loan to BCC will be the first sub-operation under a new US$ 200 million Kazakhstan MSME Framework set up by the EBRD to expand access to medium term local currency funding for MSMEs in the country.
The funding will be channelled via local commercial banks, microfinance organisations and leasing companies with a special focus on projects in rural areas, where access to long-term MSME financing is particularly constrained. The framework will be accompanied by technical assistance specifically tailored to the individual needs of each partner financial institution.
“The Kazakhstan MSME Framework will build on the extensive work the Bank has done over a number of years in the local MSME sector. Our work will focus on the promotion of finance in rural areas, on local currency lending, and on technical cooperation programmes to help rebuild institutional capacity in MSME lending. Bank CenterCredit is a longstanding partner of the EBRD with a historical focus and expertise in the MSME area. We are pleased to launch our first project under the new framework with them,” said Mike Taylor, EBRD Director for Financial Institutions for Kazakhstan, the Caucasus and Mongolia.
Lyazzat Ibragimova, Chairperson of Damu Fund, said: “the participation of DAMU Fund in Kazakhstan’s MSME Framework is carried out for the first time in the history of operation of the Fund, is an indication of the highest trust of the EBRD and demonstrates Damu Fund’s high level of professional development. It is worth bearing in mind that this year the Fund received an international credit rating at the level of the sovereign rating of the Republic of Kazakhstan, which made it very attractive for foreign and national investors.
“To summarise: the EBRD under the corporate guarantee of Damu Fund allocated money to a Kazakh commercial bank without using the state guarantee. We expect that the transaction with BCC will be the first project in the framework of further lending of EBRD in Kazakhstan for long-term cooperation between the Fund and the EBRD.”
“Development of the MSME segment and continued support to the local financial sector are the top priorities for the EBRD in Kazakhstan. We not only provide financing but are engaged in an active dialogue with the Government of Kazakhstan, DAMU, the National Bank and other stakeholders,” added Janet Heckman, EBRD Director for Kazakhstan.
Since the beginning of its operations in Kazakhstan, the EBRD has invested close to US$ 6.75 billion in the country’s economy, with more than half of the total supporting projects in the private sector.