Unlocking access to finance is critical to
private sector development in Kazakhstan.
Limited access to finance is one of the major challenges facing companies in Kazakhstan today. Difficulty in obtaining necessary credit constrains firm development, undermines competitiveness and lessens attractiveness to potential investors. Indeed, 56% of firms in Kazakhstan cite access to finance as a “moderate to severe” obstacle to their growth (European Bank for Reconstruction and Development and the World Bank in 2010).
A key factor hampering credit access is an underperforming financial sector that insufficiently responds to the needs of the private sector, especially for small and medium-sized enterprises (SMEs) in remote areas. The 2011 World Economic Forum’s (WEF) Global Competitiveness Report ranked Kazakhstan’s financial market development 121st out of 126 economies, the country’s lowest ranking across all competitiveness pillars. Executives of local and international companies operating in Kazakhstan surveyed by the WEF confirmed that the access and cost of loans – with interest rates reaching as high as 14.3% – are two of the most important barriers to doing business in Kazakhstan.
The OECD (Organisation for Economic Co-operation and Development) Eurasia Competitiveness Programme has been supporting the Government of Kazakhstan to diversify its economy through its Sector Competitiveness Strategy project since 2009. This handbook is the final deliverable of the second phase of the project and includes recommendations to overcome policy barriers to access finance, particularly in the agribusiness sector. It builds on Phase I of the project, which identified improved access to finance as a priority for enhancing competitiveness in Kazakhstan.
Since the inception of this project, the OECD has involved the Government of Kazakhstan, international and local private sector companies, business associations, international organisations and civil society organisations, to identify the main policy barriers, prioritise the most relevant policy options, and design recommendations and an implementation plan.
The project is conducted in collaboration with the Government of Kazakhstan, including the ministry of Agriculture, and is co-financed by the European Union.
This handbook is the outcome of work conducted by the OECD Eurasia Competitiveness Programme under the authority of the Central Asia Initiative Steering Committee, in consultation with the Government of Kazakhstan and with participation of the private sector in Kazakhstan.
Representatives from the Prime Minister’s office, the Deputy Prime Minister’s office, several ministries, government agencies, private sector associations and private sector companies in Kazakhstan contributed to this report.