Government support of small and medium business in Kazakhstan

676 thous.

2 522 thous.

$46 262 mln.

Lending by banks in 2010

(18% in total lending

$4 663 mln.

(93% of all enterprises)

(31% of total employment)

(28% of GDP)

Number of active SMEs

People employed

Production in 2010

Distinctive features of SMEof Kazakhstan

dynamically developing sector

institutional scale: more than 93% of all enterprises

Sector and regional disproportion

Sectoral structure of SME

Regional structure of SME (thous.)

Kazakhstan’s SME Sector

Source: Kazakhstan’s Agency of statistics (www.stat.kz), National Bank of Kazakhstan (www.nationalbank.kz) as of 1 January 20112

25% 21% 24% 20%

23% 27% 16%

6%

3%5%

10%

11%

4% 6% 15%

18%

37% 35% 28%41%

8% 6% 7% 4%

0%

20%

40%

60%

80%

100%

Number of entities

Number of employed

Production Lending by banks

Transport & Communication

Retail & Wholesale

Construction

Manufacturing

Agriculture

Other

151719192124242727

3737

4464

69108

124

0 20 40 60 80 100 120 140

Kyzylorda obl.Mangistau obl.

Atyrau obl.West-Kazakshtan obl.North-Kazakhstan obl.

Aktobe obl.Pavlodar obl.

Akmola obl.Astana city

Kostanay obl.Zhambayl obl.

Karaganda obl.Almaty city

East-Kazakhstan obl.Almaty obl.

South-Kazakhstan obl.

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Comparison of conditions of doing business in Kazakhstan and other countries

The position of Kazakhstan in World Bank’s «Doing Business 2010» ranking on the ease of doing business*

Kazakhstan is the most improved economy in 2011During 2007-2011 Kazakhstan improved its position from 80 to 59 place

Country

Ease of Doing

Business Rank

Starting a Business

Getting Credit

Protecting Investors

Paying TaxesTrading Across Borders

Enforcing Contracts

Singapore 1 4 6 2 4 1 13

USA 5 9 6 5 62 20 8

Kazakhstan 59 47 72 44 39 181 36

Russia 123 108 89 93 105 162 18

Uzbekistan 150 106 138 132 154 169 44

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

Integration of SME with large business

Development of state procurement system

Protection of competition,Measures of tariff and

nontariff regulation

Government support of SMEs

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JSC “Entrepreneurship Development Fund ‘DAMU’”: JSC “Entrepreneurship Development Fund ‘DAMU’”:

Established in 1997 by the Decree of the Government of RK

Sole shareholder – national managing company JSC “National Welfare Fund ‘Samruk-Kazyna’”

“Damu” – National Development Institute

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

270 employeesin head office and regional branches

As of 01-01-2011:Assets – $1 472 mln. Equity – $291 mln.

Mission:Assisting qualitative development of SME in Kazakhstan

Mission:Assisting qualitative development of SME in Kazakhstan

Strategic goals:Integration of government measures of entrepreneurship support To provide wide range of financial and non-financial instruments to support SMEInstitutional development of business environment

Strategic goals:Integration of government measures of entrepreneurship support To provide wide range of financial and non-financial instruments to support SMEInstitutional development of business environment

Vision:Damu – national institute, major operator and integrator of entrepreneurship support measures in Kazakhstan

Vision:Damu – national institute, major operator and integrator of entrepreneurship support measures in Kazakhstan

Fund’s programs for 2010-2020

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Results of SME Financial Support Programsas of 1 January 2011

Distribution by banks Distribution by sectors

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46% 25%

16%5%5%

3%

Retail & Wholesale ServicesManufacturing ConstructionAgriculture Transport & communication

25%

13%

13%

10%9%

7%6%

17%

BTA Bank ATF BankBank CenterCredit Eurasian BankKazkommertsbank Alliance BankKaspi Bank Nurbank

№ Program Amount, mln.$ SMEs Jobs1 Stabilization program – 1st tranche 580 2 782 3 0492 Stabilization program – 2nd tranche 1 067 2 914 4 2193 Stabilization program – 3rd tranche 1 272 2 911 3 8474 Damu-Regions 311 1 346 2 2305 Damu-Regions 2 22 52 5206 Damu-Ondiris (Manufacturing) 234 207 48297 Financing of MFOs 9 9 -8 Program of female entrepreneurship development 8 337 889 Program of SME financing in Zhanaozen 1 11 8

10 Financing of leasing operations 7 35 94411 Targeted programs of financing in regions 5 12 79  Total 3 516 10 616 19 813

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“Business-Adviser” Program Creation of Business Support Centers Call-center Business-portal

Geographic Information System (GIS) Analytical Paper on SME “My Business. Kazakhstan” Magazine SME Round tables and Forums

“Damu-Komek” Program Television broadcast «Together»

Results of SME Non-Financial Support Programsas of 1 January 2011

Site: www.gis.damu.kz 2 issues of analytical book published 13 issues of magazine (monthly) Open-house days of National

development institutions in regions

28 000 attendees (209 districts of Kazakhstan)

2 district and 5 regional BDCs created

91 entrepreneurs supported 24 entrepreneurs were featured on TV

Fund started the implementation of non-financial support programs in 2009

Implementation of non-financial programs revealed a high demand from target audience

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Promote growth of regional businesses in the priority sectors of economy

Maintain existing and create new permanent jobsGoal:

“Business Roadmap 2020” Program

Financial instruments:

1.Interest rate subsidies (up to 7-9 %)

2.Loan guarantees

3.Deferral of tax payment up to 3 years

SME Support Instruments:

1st direction: 115 contracts for subsidies, 11 contracts for guaranteeing

2nd direction: 42 contracts for subsidies

3rd direction: 24 contracts for subsidies

Current status:

Stages of creation of BDCs in regions:

SERVICES:

Business Development Centers (BDCs)

Programs in terms of international cooperation

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consulting, service support (outsourcing of services)Maintaining databases on suppliers and customers

Marketing researchesTraining courses, seminars

Raising funds from Asian Development Bank

Goal: To raise long-term funds for conditional placement in banks for the following lending to SMEs

Terms of loan:Amount – $500MInterest rate – Currency Swap + 0.3%Tenor – up to 7 yearsPurpose of loan – financing of new SME projects Backed by the guarantee of Ministry of Finance

Emphasis:

1. First large loan to Kazakhstan development institute from foreign institution in post-crisis period

2. An alternative to the usage of state budget funds – the realization of loan agreement is strategically important for Damu in the way to self-financing

3. Opportunity to provide SMEs with long-term financing (for modernization and acquisition of new resources)

Board of Directors of ADB approved loan provision The expected date of loan disbursement (1st tranche) – 2011

Current status:

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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