ADBI Working Paper 904
Y. Dosmagambet et al.
5
Source: Damu (2017).
Regarding the number of entities, number of employees, production output, and share
of SMEs active in the service, trade, transport and
communication, and construction
sectors in the total SMEs, they grew during the period 2010–2015: (a) the number
of entities from 71% to 79%; (b) the number of population members employed from 67%
to 77%; and (c) the production output from 70% to 72%. However, the
share of corporate
income tax (CIT) collected from this sector in the total CIT that all SMEs paid reduced
from 70% to 63% and that for the loan portfolio fell from 86% to 80%. Secondly, the
agricultural sector has experienced a downturn, and its share in the number of
enterprises, employment, and loan portfolios decreased but its output share remained
unchanged. With respect to the SMEs in the industry sector during the period 2010–
2015, the share of the number of enterprises in the total number of SMEs and the share
of the number of employed population members in the total population employed in
SMEs remained
unchanged; however, the production output share reduced from 22% to
20%, the CIT increased from 29% to 36%, and the loan portfolio increased from 9% to
16%; see Figure 1 (Damu 2017).
2.2 Historical Trend and Current Status of the SME CGS
in Kazakhstan
The Entrepreneurship Development Fund “Damu” JSC (hereinafter “Damu” Fund)
established the basis for the CGS in Kazakhstan in 1997 based on a Decree of the
Government of the Republic of Kazakhstan. The mission of the “Damu Fund” is to foster
quality SME development in Kazakhstan through
comprehensive support, including a
wide range of financial instruments and programs for the development
of competences.
Until 2001, the “Damu” Fund mainly functioned as a loan facility of the EBRD (European
Bank for Reconstruction and Development) and the ADB (Asian Development Bank). In
2002, it began implementing the “Lending Program for Small Businesses from the
National Budget” and the “Small Towns’ Development Program for 2004–2006” by
lending to small businesses directly. Over the period 2005–2007, the “Damu” Fund
implemented project financing and leasing programs and developed a program for
microlending in Kazakhstan and guarantee programs for SME loans received in second-
tier banks. Currently, the Ministry of Regional Development of the Republic of
Kazakhstan operates the “Damu” Fund, and the “Baiterek NMH” JSC is its sole
shareholder. The “Damu” Fund has over 20 years’ experience in supporting SMEs. Most
of the participants in the “Damu” Fund’s programs delivered financial support under the
program of Conditional Placement of Funds in Second-Tier Banks until 2010. The
implementation of the Conditional Placement of Funds program played
an important role
in cutting the overall level of interest charges on loans granted to SMEs. In addition to
being a financial agent for the subsidization of interest rates on loans to businesses and
providing banks with guarantees for entrepreneurs’ loans, the “Damu” Fund acts as an
operator of training and consulting programs as part of the “Business Road Map 2020”
government program in all the regions of Kazakhstan. In its updated development
strategy through 2023, it committed to the expansion of micro business crediting and the
development and implementation of instruments to support micro finance institutions and
credit cooperatives, particularly loans/micro credit guarantees in
the framework of mass
entrepreneurship, among others.
ADBI Working Paper 904
Y. Dosmagambet et al.
6
According to the “Damu” Fund, the share of funds under its programs in the total amount
of credit (including subsidies, conditional loans, and guarantees) averaged 15% in
priority sectors
6
of the economy and 22% in the processing industry during the years
2014–2016.
7
The share of “Damu” Fund credit in priority industries have been steadily
increasing over the years to KZT574 bln in 2016 or 17% of the total credit (Figure 3).
Meanwhile, in the processing industry, the share of credit under “Damu” Fund programs
in the total amount of credit of second-tier banks in 2016 reached 25% in 2016 and
amounted to KZT374 bln. Among the private business borrowers of second-tier banks,
the share of clients of the “Damu” Fund amounted to 14% in 2016 and has been steady
over the years.
