State Support of Small and Medium Entrepreneurship in Kazakhstan. The Experience of Fund “Damu” 2012

Republic of Kazakhstan 2 Area: thousand km 2 Population: 16,81 million people (urban: 55%, rural: 45%), Economically active population – 8,8 million people Capital: Astana (763 thousand citizens) Financial center: Almaty thousand citizens) Administrative division: 14 regions Astana Almaty Banking system: National Bank of Kazakhstan and 38 commercial banks Overall assets of commercial banks – $90,7 billion 2 GDP 2011: $182,2 billion (goods: 43.1%, services: 56.9%) GDP per capita - $ 11,000.

Major Indicators of Kazakhstan’s SME Sector* 3 *Data as of области 4 области 2 области 4 области 119 thousand 467 thousand people $7 583 million 375 thousand thousand people $ million 60 thousand 243 thousand people $2 847 million 94 thousand 356 thousand people $3 263 million 106 thousand 374 thousand people $9 476 million Center 2 oblasts 1 city South 4 oblasts 1 city North 2 oblasts East 2 oblasts West 4 oblasts Number of Enterprises Employees Output

Kazakhstan is 47 th, according to Doing Business Country 2012 Rating Singapore1 USA4 Georgia16 Malaysia1818 Kazakhstan47 Kyrgyzstan70 Turkey71 China91 Russian Federation120 Ukraine

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 Improvement of legislative network Integration of SME with large business Development of state procurement system Protection of competition, Measures of tariff and nontariff regulation Government support of SMEs in Kazakhstan 5

Financial Agent of «Business Roadmap 2020» Program Operator of conditional allocation of funds under Stabilization Program Direct lending to small enterprises from own funds “Damu” – National Development Institute 15 financial programs 10 non-financial programs JSC “Entrepreneurship Development Fund “Damu”: Established in 1997 by the Decree of the Government of the Republic of Kazakhstan Sole shareholder – State-owned JSC “National Welfare Fund “Samruk-Kazyna” Mission: Assisting qualitative development of SME in Kazakhstan Agent: accounting and control of state budget funds on ADB and EBRD credit lines … 4 financial programs 6  16 regional branches one in each oblast (region) and in two major cities: Astana and Almaty  274 employees in head office and regional branches  As of : Assets – $1.22 bln. Equity – $0.32 bln.

Programs for increasing volumes and accessibility of financing for SMEs Stabilization program (1-3 tranches) Programs «Damu- Regions», «Damu- Regions 2» Targeted regional programs (Zhanaozen, Akmola, Almaty oblats) SME financing in small towns Micro-lending of women entrepreneurs Programs for diversification of entrepreneurship sector and its industrial- innovative development Business Roadmap 2020 (1-3 directions) Program «Damu- Ondiris», financing of leasing contracts in manufacturing Development of franchising «Senior Experts» Program Programs for developing competence of entrepreneurs Business Roadmap 2020 ( 4 direction “Enhancing entrepreneurial capabilities " ) Entrepreneurship development centers Business-portal, Call- center, information- analytical materials 7 Programs of “Damu” on Entrepreneurship Support SMEs are financed according to the general conditions Special conditions for industrial innovation projects Promotion of new business ideas and projects through training and consulting support

8 12,405 entrepreneurs were covered by financial support programs Amount- $4 304 billion; jobs created Participants 15 banks 4 leasing companies СenterSouthNorthEastWest Amount, mln $BorrowersJobs *As of

9 Program directions: 1. Support for new business initiatives 2. Business Sector Improvement 3. Currency risk reduction 4. Strengthening Entrepreneurial potential Program "Business Roadmap 2020" 1.Interest rate subsidies (7%) 2.A partial guarantee for loans (up to 70%) 3.Development of production (industrial) infrastructure 1.Interest rate subsidies (7%) 2.Granting a delay in payment of taxes (except IAS) for up to 3 years without any penalty fees 3.Other activities within the plan of financial and economic development 1.Interest rate subsidies on existing loans (8%) 1.Training for start-up businesses 2.Leadership training 3.Business service support 4.«Business connections» Project 5.Training, support for youth practice and social jobs Sustainable and balanced growth of regional entrepreneurship in non-primary (not associated with extraction of raw materials) sectors of the economy Maintaining existing and creating new permanent jobs Goal: Fund "Damu" - financial agent of interest rate subsidies and loan guarantee under the 1-3rd direction of the program and the operator of the 4-th direction

Results of "Business Roadmap 2020" Direction people Direction people Directions 1 and 3 $484 ths Directions 1 and 3 $484 ths Direction 2 $479 ths Direction 2 $479 ths Directions 1 and 3 $2,1 mln Directions 1 and 3 $2,1 mln 2 направление $657,8 тыс. 2 направление $657,8 тыс. The volume of planned subsidy on the interest rate The volume of planned tax revenues from the program participants Directions 1 and people Directions 1 and people Direction people Direction people Directions 1 and people Directions 1 and people Current jobs Jobs created Program Impact: Support instrumentContracts Amount of loans, million USD 1 direction– subsidizing ,0 1 direction – loan guarantee 5072,6 2 direction– subsidizing ,3 3 direction– subsidizing ,7 Total: ,6 Support instrument Number of participants/services Training for start-up businesses Business service support Leadership Training 420 «Business connections» Project people in Germany, 10 people in USA Results of the directions 1-3Results of the direction entrepreneurs receive support in the form of subsidized interest rates and loan guarantee More than new and existing entrepreneurs have been trained 10

New instruments of the Program 11 Interest rate subsidies on leasing agreements (7% of the maximum rate of 14%) Targeted assistance for renewal of fixed assets Interest rate subsidies on leasing agreements Individual guarantees for large borrowers - loan in the amount of $ 400 thousand to $ 5.0 million Express guarantees for existing entrepreneurs - for loans up to $ 400 thousand Express guarantees for new entrepreneurs - for loans up to $ 135 thousand New system of guaranteeing Express guarantees on loans under simplified conditions Grant financing Service Support and Training Instruments on beginning entrepreneurs support Information support for entrepreneurs and entrepreneurship promotion «Business-Nasikhat» Project

12 The aim is to ensure sustainable and balanced growth of regional entrepreneurship in non-primary sectors of the economy Programs Aimed at Diversifying Enterprise and its Industrial-Innovative Development (Actively implemented since 2011) Supported projects The total amount of credits, mln. $. The sum of the paid subsidies, mln. $. 1 track ,58,8 1 track ,814,0 3 track38 245,612,2 Subtotal ,935,0 Subsidized interest rates on г.: Issued guarantees The total amount of credits, mln. $. Guarantee amount, mln. $. 1 track1628,113,7 Guarantees for loans at : The program is implemented within the framework of the SPIIR of Kazakhstan for period.

13 Consulting Information support and feedback Support of entrepreneurs with disabilities Creation of Business Support Centers Call-center Business-portal Geographic Information System (GIS) Analytical Paper on SME Methodological manuals for entrepreneurs “Damu-Komek” Program Site : 3 issues of analytical book published (annually) Together with the Franchise Union copies were prepared Site : 3 issues of analytical book published (annually) Together with the Franchise Union copies were prepared 16 regional BSC created, 1 district in Zhanaozen Call-center was launched in March consultations monthly In a test mode 16 regional BSC created, 1 district in Zhanaozen Call-center was launched in March consultations monthly In a test mode Site : 490entrepreneurs were supported Site : 490entrepreneurs were supported Results of the Programs on Developing Competence of Entrepreneurs 4th direction Support for business start-ups Business Service support Leadership training «Business connections» program attendees (in attendees ) More than 18,000 services were provided to over 9000 SMEs 210 attendees within 7 groups 501 participants, 58 of them took an internship in Germany attendees (in attendees ) More than 18,000 services were provided to over 9000 SMEs 210 attendees within 7 groups 501 participants, 58 of them took an internship in Germany As of

Head office: 111 Gogol Street, Almaty, Tel.: +7 (727) , Tel./fax: +7 (727) Website: Thank you for you attention! 14