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

2012

Republic of Kazakhstan

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Area: 2 725 thousand km2

Population: 16,81 million people(urban: 55%, rural: 45%),

Economically active population – 8,8 million people

Capital: Astana (763 thousand citizens)

Financial center: Almaty 1 564 thousand citizens)

Administrative division:

14 regions

Astana

Almaty

Banking system: National Bank of Kazakhstan and 38 commercial banks

Overall assets of commercial banks – $90,7 billion2

GDP 2011: $182,2 billion (goods: 43.1%, services: 56.9%)

GDP per capita - $ 11,000.

Manufacturing33%

Agriculture4%

Trade13%

Construction8%

Transport & Communica-

tions11%

Other31%

Центр

Юг

Север

Восток

Запад

Кол-во субъектов

Занятое население

Выпуск продукции

Major Indicators of Kazakhstan’s SME Sector*

3*Data as of 01.06.2012

2 области

4 области

2 области

2 области

4 области

119 thousand

467 thousand people

$7 583 million

375 thousand1 141 thousand people

$16 936 million

60 thousand

243 thousand people

$2 847 million

94 thousand

356 thousand people

$3 263 million

106 thousand

374 thousand people

$9 476 million

Center2 oblasts

1 city

South4 oblasts

1 city

North2 oblasts

East2 oblasts

West4 oblasts

Number of EnterprisesEmployeesOutput

4

80 64 63 58 47

Kazakhstan is 47th, according to Doing Business

Country 2012 Rating

Singapore 1USA 4Georgia 16Malaysia 18Kazakhstan 47Kyrgyzstan 70Turkey 71China 91Russian Federation 120Ukraine 152

2008 2012201120102009

1. Financial Support

GOVERNMENT SUPPORT OF SMES

Development of solid infrastructure of financial support

Financing

2. Non-Financial Support

Development of solid infrastructure of

non-financial support

Information-analytical support,

Consulting, Training

4. Administrative regulation

5. Fiscal regulation

6. Providing access to physical infrastructure

3. Stimulation of demand on SME products and services

- 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

Imp

rove

men

t o

f le

gis

lati

ve n

etw

ork

Integration of SME with large business

Development of state procurement system

Protection of competition,Measures of tariff and

nontariff regulation

Government support of SMEs in Kazakhstan

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Financial Agent of «Business Roadmap 2020» Program

Operator of conditional allocation of funds under Stabilization Program

Direct lending to small enterprises from own funds

“Damu” – National Development Institute

15 financial programs

10 non-financial

programs

JSC “Entrepreneurship Development Fund “Damu”:

Established in 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

Agent: accounting and control of state budget funds on ADB and EBRD credit lines

1997 2002 2007 20112009 …

4 financial programs

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16 regional branches one in each oblast (region) and in two major cities: Astana and Almaty

274 employeesin head office and regional branches

As of 01-06-2012:Assets – $1.22 bln. Equity – $0.32 bln.

Programs for increasing volumes and accessibility of

financing for SMEs

Stabilization program (1-3 tranches)

Programs «Damu-Regions», «Damu-

Regions 2»Targeted regional

programs (Zhanaozen, Akmola, Almaty oblats)

SME financing in small towns

Micro-lending of women entrepreneurs

Programs for diversification of entrepreneurship sector and its industrial-innovative

development

Business Roadmap 2020 (1-3 directions)

Program «Damu-Ondiris», financing of

leasing contracts in manufacturing

Development of franchising

«Senior Experts» Program

Programs for developing competence of entrepreneurs

Business Roadmap 2020 (4 direction

“Enhancing entrepreneurial capabilities" )

Entrepreneurship development centers

Business-portal, Call-center, information-analytical materials

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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

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12,405 entrepreneurs were covered by financial support programs

Amount- $4 304 billion; jobs created - 24 324 Participants

15 banks

4 leasing companies

Сenter South North East WestAmount, mln $ Borrowers Jobs

1 000

1 334

417

602725

2 5003 365

1 4522 232 2 364

6 182

8 445

2 0083 631 3 233

0

200

400

600

800

1 000

1 200

1 400

*As of 01.06.2012

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Program directions:

1. Support for new business initiatives

2. Business Sector Improvement

3. Currency risk reduction

4. Strengthening Entrepreneurial

potential

Program "Business Roadmap 2020"

1. Interest rate subsidies (7%)

2. A partial guarantee for loans (up to 70%)

3. Development of production (industrial)  infrastructure

1. Interest rate subsidies (7%)

2. Granting a delay in payment of taxes (except IAS) for up to 3 years without any penalty fees

3. Other activities within the plan of financial and economic development

1. Interest rate subsidies on existing loans (8%)

1. Training for start-up businesses

2. Leadership training

3. Business service support

4. «Business connections» Project

5. Training,  support for youth practice and social jobs

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:

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

Results of "Business Roadmap 2020"

Direction 214 000 people

Directions 1 and 3 $484 ths

Direction 2$479 ths

Directions 1 and 3$2,1 mln

2 направление$657,8 тыс.

The volume of planned subsidy on

the interest rate

The volume of planned tax revenues from the

program participants

Directions 1 and 3 12 818 people

Direction 25 150 people

Directions 1 and 366 107 people

Current jobsJobs created

P r o g r a m I m p a c t :

Support instrument ContractsAmount of loans,

million USD1 direction– subsidizing 1 222 998,0

1 direction – loan guarantee 50 72,6

2 direction– subsidizing 174 891,3

3 direction– subsidizing 118 488,7

Total: 1564 2 450,6

Support instrumentNumber of

participants/services

Training for start-up businesses 15 645

Business service support 19 000

Leadership Training 420

«Business connections» Project 711

58 people in Germany, 10 people in USA

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

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New instruments of the Program

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• Interest rate subsidies on leasing agreements (7% of the maximum rate of 14%)

• Targeted assistance for renewal of fixed assets

Interest rate subsidies on leasing agreements

• Individual guarantees for large borrowers - loan in the amount of $ 400 thousand to $ 5.0 million

• Express guarantees for existing entrepreneurs - for loans up to $ 400 thousand

• Express guarantees for new entrepreneurs - for loans up to $ 135 thousand

New system of guaranteeing

• Express guarantees on loans under simplified conditions• Grant financing• Service Support and Training

Instruments on beginning entrepreneurs support

• Information support for entrepreneurs and entrepreneurship promotion

«Business-Nasikhat» Project

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The aim is to ensure sustainable and balanced growth of regional entrepreneurship in non-primary sectors of the economy

Programs Aimed at Diversifying Enterprise and its Industrial-Innovative Development(Actively implemented since 2011)

Supported projects

The total amount of credits, mln. $.

The sum of the paid subsidies, mln. $.

1 track 357 454,5 8,8

1 track 105 672,8 14,0

3 track 38 245,6 12,2

Subtotal 500 1 372,9 35,0

Subsidized interest rates on 26.09.2011г.:

Issued guarantees

The total amount of credits, mln. $.

Guarantee amount, mln. $.

1 track 16 28,1 13,7

Guarantees for loans at 26.09.2011:

The program is implemented within the framework of the SPIIR of Kazakhstan for 2010-2014 period.

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Consulting

Information support and feedback

Support of entrepreneurswith disabilities

Creation of Business Support Centers Call-center Business-portal

Geographic Information System (GIS) Analytical Paper on SME Methodological manuals for entrepreneurs

“Damu-Komek” Program

Site : www.gis.damu.kz 3 issues of analytical book published (annually) Together with the Franchise Union 10 000 copies

were prepared

16 regional BSC created, 1 district in Zhanaozen Call-center was launched in March 2011. 2500

consultations monthly In a test mode

Site : www.damu-komek.kz 490entrepreneurs were supported

Results of the Programs on Developing Competence of Entrepreneurs

4th direction

Support for business start-ups Business Service support Leadership training «Business connections» program

43 752 attendees (in 2011 - 15 645 attendees ) More than 18,000 services were provided to over

9000 SMEs 210 attendees within 7 groups 501 participants, 58 of them took an internship in

Germany

As of 01.06.2012

Head office:111 Gogol Street, Almaty, 050004Tel.: +7 (727) 244 55 66, 244 55 77

Tel./fax: +7 (727) 278-07-76E-mail: info@fund.kz

Website: http://www.damu.kz

Thank you for you attention!

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