Kazakhstan is the first country to take up a new EBRD-EU programme to develop better financing for small and medium-sized businesses, which is planned to cover the wider Central Asian region.
The Kazakh Entrepreneurship Development Fund Damu and the EBRD have signed a new cooperation agreement focusing on micro, small and medium-sized enterprises (MSMEs). The signing took place as part of an official visit by EBRD President, Suma Chakrabarti, who traditionally co-chairs the Foreign Investors’ Council with the President of Kazakhstan.
The Memorandum of Understanding states that Damu, which is already working with the EBRD across the country, will be the Bank’s partner in the Regional Small Business Programme for Central Asia, to be launched in late 2017.
The multi-year programme will provide training for banks, non-bank microfinance institutions and other facilitators of MSME finance. It will help switch to a modern way of estimating the creditworthiness of borrowers in order to make lending decisions that are based more on cash flow and less on collateral, which is appropriate in a modern, knowledge- and service-based economy.
The donor funding for the first stage of the programme will be provided by the European Union’s Investment Fund for Central Asia.
In addition, the EBRD will continue to provide credit lines in tenge to local financial institutions for on-lending to micro, small and medium-sized businesses.
President Chakrabarti said: “Kazakhstan is endowed with rich natural resources, but its economy does not rely only on large industries: small businesses, which are typically private, provide 61 per cent of jobs and approximately 50 per cent of GDP in Kazakhstan. A healthy MSME sector – especially in remote regions – is essential for a successful, balanced and diversified economy.”
Agris Preimanis, EBRD Director, Head of Kazakhstan, said: “This agreement represents an important step in our efforts to promote and support the private sector in Kazakhstan. The enthusiasm with which today’s partnership agreement has been developed over a short period of time through the hard work of both parties makes me confident that we will succeed.”
The EBRD is the largest institutional investor in Kazakhstan, with a current volume of investments of €7.2 billion and 225 projects since the beginning of operations in 1993. It is also active in policy dialogue and works closely with the country’s businesses and authorities to improve the performance of the economy.