ADBI Working Paper 904
Y. Dosmagambet et al.
4
However, the SME sector in Kazakhstan remains immature and highly concentrated in
specific sectors. Kazakhstan has more than 1.1 million
registered SMEs that employ
more than 3 million people and produce about 27% of the GNP in the current period
(in 2016; refer to Table 1). The World Bank (2015) documented that approximately 30%
of registered SMEs are not active. The country lags behind the global benchmarks in
terms of SME development and contribution (World Bank 2015). For instance, the SME
share in the GDP was 20% in 2015, which is more than twofold lower than the global
average. Kazakhstan is lagging behind most leading economies in
terms of
the SME share in employment (Figure 1).
SMEs are a major driver of economic growth and an important source of employment
generation; thus, they are a key element of welfare and prosperity. In addition,
SME development could contribute to reducing the dependence of Kazakhstan on oil
extractive industries and the country’s risk of declining commodity prices, hence making
the economy more resilient to the natural resource curse. SMEs also have the potential
to intensify the innovation process in production and exports, providing higher added-
value activities and creating more and better jobs. As for their number, 80%
of SMEs concentrate in the trade, construction, and
service sectors, since these sectors
represent low risk and modest start-up capital. The remaining SMEs operate in the
agriculture sector (17%) and industry (3%). A high concentration of SMEs in only
a few sectors is an indicator of limited support for SMEs to
operate in adjacent sectors
and limited opportunities to diversify the economy. Interestingly, the interest rate
that commercial banks charge to the trade and service sector, including wholesale
and
retail trade, car and motorcycle repair, transportation, communication, and
construction, is higher than the rate that they charge to other sectors (average 17.2%
in 2018).
