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The 5th Business Forum of Conference on Interaction and Confidence Building Measures in Asia (CICA), 10-11 of November 2016, Astana, Kazakhstan

Fund “Damu” has announced results for 2015

January 18, 2016 7:06 pm

At the briefing in the Central Communications Service under the President of the Republic of Kazakhstan, the chairperson of the Board of JSC «Entrepreneurship Development Fund "Damu"» Lyazzat Ibragimova announced the main results achieved by the Fund during 2015. According to her presentation, a total of 1,516 borrowers were financed for a total amount of 192.1 billion tenge. On the back of the support provided through the Unified Program of Support and Business Development "Business Road Map - 2020"», participants of the program have managed to achieve revenue of 1.6 billion tenge, pay taxes in the amount of 115 billion tenge, maintain 19 thousand work places and create 7.9 thousand new work places during 2015.

The interest rate subsidizing instrument

In 2015 1,595 contracts for a total loan amount of 260.1 billion tenge have been subsidized under the Unified Program. The total sum of provided subsidies reached 26.06 billion tenge.

In 2015 a number of important steps in improving the subsidy instrument were reached:

1. The interest rate limit for subsidy instrument has been incerased from 14% to 16% per annum under the new Government Resolution. 7% of the interest rate is subsidized by the Government and the rest is paid by an entrepreneur.

2. The National Fund of Kazakhstan has allocated additional funds in the amount of 7.2 billion tenge for subsidies of loans taken to finance working capital.

3. 28.2 billion tenge were allocated from the 2016 republican budget for the implementation of «The Unified Program of Support and Business Development" Business Road Map - 2020"» it was allocated from the republican budget for 2016.

4. In 2015, the Fund launched an Internet portal for entrepreneurs who participate in the Unified Program. Now participants have real-time online access to receive necessary information related to subsidies. The participants receive SMS-confirmations on whether the Fund has transferred scheduled subsidies in a bank for write-offs for the benefit of the enterpreneurs. More than 5 thousand participants of the Unified Program have already registered on the Internet portal.

The loan guarantees instrument

The Fund approved 1,082 projects for the loan guarantee instrument in the amount of over 11 billion tenge and signed 941 contracts in 2015. The total amount of loans that banks issued with guarantees of the Fund "Damu" reached 27 billion tenge. 173 start-up projects were supported in 2015.

1. In 2015 the fund started development of the "Damu Micro" technology for micro and small business support. The goal of this technology is to provide loans with amount of up to 30 million tenge within 15 days, reducing the time of loan approval to 5-7 days through unification of standards of financial requirements and documentation packages. This will allow to solve the problem of time-consuming project inspection at the banks. Earlier this year, the Fund "Damu" in association with JSC “Bank KassaNova” and JSC SB "Alfa-Bank" has introduced this technology in a pilot project in Almaty city and Almaty region.

2. In 2015, the Fund "Damu" completed automated processing that enables to file applications from entrepreneurs for the loan guarantee instrument via the E-gov portal. In the future, this process will be implemented for all instruments of the government support, and even the regional coordinating council at regional administrations will be held online.

Disbursement of resources of the National Fund of RK

By December of 2015 the Fund "Damu" has used all proceeds of the second tranche in the amount of 50 billion tenge that were allocated for manufacturing industry in 2014. As a result total of 270 projects were financed in the amount of 50 billion tenge including 131 projects in working capital financing worth of 21.4 billion tenge.

In March of 2015 the Fund "Damu" received the third tranche from the National Fund of RK in the amount of 50 billion tenge from the previously allocated 200 billion tenge. As of today, approximately 86.5% of these funds have been utilized. By the end of March of 2016, the third tranche will be fully allocated. We currently started the revolving financing from the funds returned from the first two tranches. Thus, as of 01/12/2015, the amount of allocated funds by second tier banks including the revolving financing from the first tranche of the National Fund (100 billion tenge) totaled 114.3 billion tenge or 114.3% of the original amount.

The funds financed from the National Fund in 2015 allowed to increase sales up to 207 billion tenge, pay taxes in the amount of 26 billion tenge and create about 9 thousand work places.

Regional programs of the “Damu” fund

1. Administration of Astana city allocated 300 million tenge for financing young entrepreneurs and 500 million tenge to finance SME business. The fund “Damu” on the co-financing basis allocated 300 million tenge for financing of young start-up entrepreneurs and one billion tenge for financing of SMEs. 11 entrepreneurs were supported in the amount of 742 million tenge.

2. Administration of Almaty city allocated 2 billion tenge for financing of SME business in the trade and service sectors. The fund on the co-financing basis allocated 2 billion tenge through the program "Zhibek Zholy". A total of 46 entrepreneurs were supported in the amount of 1.9 billion tenge.

3. In November of 2015 the Fund "Damu" and the administration of Aktobe region signed a memorandum worth of 900 million tenge. According to the Memorandum, the administration of Aktobe region will provide 100 million tenge while the Damu fund will provide 200 million tenge to finance young entrepreneurs’ start-up projects in the region. Funding will be allocated through the banks. The program has no sectoral restrictions. The maximum loan amount is 15 million tenge per project; interest rate is 10% per annum; the loan length varies depending on the aims of financing: for the purchase and modernization of fixed assets the duration is capped at 7 years, for working capital financing the limit is 3 years. Another document signed between the administration of Aktobe region and the fund is Memorandum of support small and medium-sized businesses in rural areas. The total amount of the memorandum is 600 million tenge. Administration of the Aktobe region will provide 200 million tenge and the Fund "Damu" - 400 million tenge. The program will be targeted on the projects of entrepreneurs who work in the rural areas and will be financed through the local banks. The document states that the program has no sectoral limits, the maximum loan amount is 10 million tenge at the interest rate of 10% per annum, the length of credit for working capital financing is up to 3 years, the length of credit for the fixed assets purchasing and modernization is up to 7 years.

“Damu” fund plans to sign the same agreements with administrations of the South Kazakhstan and the Kyzylorda regions.

Funding from International Financial Organizations

In 2015 the fund "Damu" completed fundraising under the third tranche of the loan from the Asian Development Bank in the amount of 500 million US dollars against Kazakh sovereign guarantees. In October of 2015, the funds were allocated in the amount of $ 228 million or 62.8 billion tenge in the second-tier banks. A defining feature of this program is that it has no sectoral restrictions; interest rate is in the range of 14-16%.

In September of 2015 the European Bank of Reconstruction and Development (EBRD) provided a loan to the bank “Center Credit”, backed bu the guaratees of the fund Damu, in the anount of 3,7 billion tenge for the “Women in the business” program.

An agreement was signed between the fund and the EBRD in December of 2015 in London. Under its conditions the EBRD provides funding to Kazakhstan domestic banks against corporate guarantees of the fund “Damu” without the Kazakh government participation. Bank “CenterCredit” has already received funding in the amount of 18.5 billion tenge.

As of 01/01/2016 a total of 367 borrowers were financed in the amount of 12.6 billion tenge from the funds of the international financial organizations.

Non-Financial Services of the “Damu” fund

In 2015, the Centers of Entrepreneurs Service (CES) of the fund "Damu" served 57.5 thousand entrepreneurs who received 111,167 consultations and services. This constitutes a 30% growth compared to levels of 2014. 60% of applicants were men, 40% were women. Almost half of serviced clients were in age between 30 to 49 years old. Moreover, there is growing popularity of the CES services among the young entrepreneurs: 35% of those who applied for the assistance were younger than 29 years. This is a positive trend as the future of SME business in Kazakhstan lies with young people and students. Mobile CES in the regions served 11,279 customers and provided about 17,000 consultations.

The Unified Program for Improving the Competence of Entrepreneurs for the period of 2016-2018 was approved in 2015. According to its framework new conceptions in training of entrepreneurs were approved. The main focus for 2016 will be placed on startup training and anyone from the age of 18 y.o. who has a business idea can apply for the training of the “Damu” fund. These trainings will not only have theoretical value but also will include practical tasks that will help entrepreneurs to realize their business ideas already start making profit during the traning.