National Small and Medium Business Development Institution of Kazakhstan

Presentation Plan Overview of Kazakhstan’s small business sector Overview of microfinance sector General information about the Fund History of the Fund Contemporary functions of the Fund Cooperation with Partners in Korea

According to legislation of the Republic of Kazakhstan: Small enterprises are individual entrepreneurs who employ not more than 50 people and legal entities that employ not more than 50 people and have total amount of assets not more than $600 000 Medium enterprises are individual entrepreneurs who employ more than 50 people and legal entities that employ from 50 to 250 people and have total amount of assets not more than $3 200 000 Microcredit organizations provide credits up to $78 000

Indicators of growth in quantity of small enterprises 1. Overview of Kazakhstan’s small business sector Indicators of growth in quantity of small enterprises

Quantity of people employed by small enterprises 1. Overview of Kazakhstan’s small business sector Quantity of people employed by small enterprises

Contribution of small business in GDP 1. Overview of Kazakhstan’s small business sector Contribution of small business in GDP

Contribution of small business in incomes of government budget (taxes) 1. Overview of Kazakhstan’s small business sector Contribution of small business in incomes of government budget (taxes)

Credits of banks to economy and small business 1. Overview of Kazakhstan’s small business sector Credits of banks to economy and small business

2. Overview of Kazakhstan’s microfinance sector Dynamics of growth in quantity of microcredit organizations since 2004

Total amounts of microcredits provided 2. Overview of Kazakhstan’s microfinance sector Total amounts of microcredits provided

Average interest rates on microcredits 2. Overview of Kazakhstan’s microfinance sector Average interest rates on microcredits 2007 2006 2005 2004

Governmental support of entrepreneurship 3. General Information about the Fund Governmental support of entrepreneurship “DAMU” Fund Financial support Entrepreneurship Development of infrastructure Administrative support Fiscal support Information support

3. General Information about the Fund Established: According to the resolution of the Government of the Republic of Kazakhstan of 26 April 1997 #665 “On creation of small entrepreneurship development fund” as a non-bank financial institution in form of joint-stock corporation Objectives: - Stimulate the development and economic growth of small enterprises in Kazakhstan - Increase the efficiency of use of government funds that are allocated for small business support

3. General Information about the Fund Mission: To assist qualitative development of small and medium businesses as well as microfinance organizations of Kazakhstan in the role of integrator and operator of financial and consulting services Strategic goals: Ensuring accessibility of national financing to all creditworthy SMEs Improvement of resource support for microfinance sector of the state

3. General Information about the Fund The Fund employs 290 people operating in its headquarters in Almaty and in 16 branches throughout Kazakhstan As of 01.01.2008: Assets – $715 mln. Stockholder’s Equity – $270 mln. Liabilities – $445 mln.

4. History of the Fund IV stage: since 2008 I stage: 1997-2002 II stage: 2002-2005 III stage: 2005-2007 Unitary Integrator of services of national development institutions and private businesses, Operator of financial programs of the Government and international organizations in Kazakhstan Programs of project financing, microlending, guaranteeing,consulting, creation of representatives’ network Direct lending to small enterprises, Creation of branch network, Conferment of financial agency status Agency functions (Programs of EBRD, ADB)

Main tasks and results of development I stage (agency functions) – 1997-2002 Activity Amount for small enterprises, mln. $ Effect Program of Kazakhstan’s small business of the European Bank for Reconstruction and Development 2 216 237 000 projects through 7 banks Program loan of the Asian Development Bank 54,6 95 projects / 4719 workplaces Program of actions on support of local producers by the means of state budget 22,7 14 projects / 5 537 workplaces Total:  2 293 ,3

Financial resources allocated from state budget in 2002-2007 Activity Year Amount, mln. $ Project financing and leasing 2002 - 2006 77,4 Program of small towns development for 2004-2006 2004 - 2005 12,5 Lending of small enterprises (including women-entrepreneurs) by the means of state budget* 2002 2,5 Development of microlending system in Kazakhstan 2005 - 2007 91,7 Guaranteeing of credits provided by commercial banks to small enterprises 121,7 Total:   305,8 * Funds on this program were not directed on capitalization of the Fund

IV stage of development – Contemporary functions of the Fund In the end of 2007 a number of conceptual changes were made in the Funds operations: The Fund started supporting not only small but also medium-sized enterprises The Fund transformed from financial institution to managing operator of the funds provided by the government for business support The Fund started developing and realizing new ways of operations on financial and consulting support of small and medium-sized enterprises (Program of distribution of the funds in commercial banks for further lending to SMEs)

Projects financed in 2007 in sectorial view 5. Contemporary Functions of the Fund Projects financed in 2007 in sectorial view Financial services (MCO) 21% Agriculture 5% Industry (Production sector) 28% Other services 28% Transport and communication 15% Construction 3%

5. Contemporary Functions of the Fund Program of distribution of the state budget funds in commercial banks During the first quarter of 2008 400 million dollars were distributed The Fund is cooperating with 7 banks: Bank TuranAlem Kazkommertsbank Bank CenterCredit Caspian Bank Alliance Bank Eurasian Bank Tsesna Bank Terms of the program (for SMEs): Loan size – up ot $1 mln Loan term – up to 7 years As of 1 May 2008 2 185 projects of SMEs have been financed for total amount $399,5 mln.

12% 14% Instruments of Fund “Damu” on financial support of SMEs (Proposed variant for further realization) Program of co-financing with banks 417 Fund + 417 Banks $ mln. Program of co-financing “Damu-Regions” 230 mln. $ + 230 mln. $ Program of direct financing “Damu - Koldau” 80 mln. $ Regional authorities Fund 12% 14% 10,5% Goal: diversification of SMEs’ sectors Object: profitable investment projects of SMEs in real sector of economy Goal: SME support Objects: All SME projects without limitations but with regulation of interest rates Goal: sustainable financing of small businesses with regional priorities Objects: projects of small business in economy sectors that match regional priorities

Cooperation with Partners in Korea DAMU is interested to establish contacts with partners in Corea, special interest is in cooperation with Small and Medium Business Corporation (SBC) Interest of DAMU is connected with successful experience in implementation of finance programs (Industrial Restructuring) and non-finance (information services, programs of marketing assistance, surveys, trainings) and activity of overseas offices

Thank you for your attention! Head office 050004, Kazakhstan, Almaty, Gogol st., 111 Phone: (727) 244-55-66, 244-55-77 Fax: (727) 244-83-41 E-mail: frmp@fund.kz Web-site: http://www.fund-damu.kz