Harnessing Innovation for Kazakhstan's Sustainable Growth

Feature | 24 February 2014

As Kazakhstan endeavors to diversify its economy and avoid falling into the middle-income trap, ADB is helping the Central Asian country harness innovation to achieve sustainable growth. Matthew Westfall, ADB's Country Director for Kazakhstan, shares his insights on this evolving partnership.

How has Kazakhstan evolved as a country since becoming independent in 1991?

Kazakhstan has made rapid strides over the last two decades, transitioning from a developing to a middle-income country. Despite impressive socioeconomic performance, however, it still faces a number of challenges. Economic diversification is perhaps the greatest of these, along with avoiding the so-called middle-income trap. To support Kazakhstan as it tackles these challenges, ADB is drawing on its vast experience across Asia to deliver strategic knowledge and global best practice.

What form has ADB's support to Kazakhstan taken over time?

ADB's partnership with Kazakhstan began after the collapse of the Soviet Union. At the time, ADB provided much-needed support in agriculture, education, finance, and delivery of social services to help the country transition from a centrally-planned economy to a free market system.

In 2004, ADB's public sector lending activities paused as oil revenues filled the government's coffers and the need for external finance declined. However, the global economic crisis in 2007 prompted the government to once again access external concessional resources. ADB responded with a $500 million counter cyclical loan, followed by support for operations in road transport, small and medium-sized enterprise development, and the private sector.

"More recently, ADB and Kazakhstan jointly launched an innovative knowledge and experience exchange program, which aims to help the country diversify its economy and achieve more equitable and sustainable growth."

- Matthew Westfall, ADB's Country Director for Kazakhstan

More recently, ADB and Kazakhstan jointly launched an innovative knowledge and experience exchange program, which aims to help the country diversify its economy and achieve more equitable and sustainable growth.

What are the financial dimensions of this partnership?

Since 1994, ADB has provided Kazakhstan with about $3 billion in development assistance. Looking ahead, on the public sector side of our operations from 2014-2016, we are programmed to lend a total of around $955 million to the country. Notably, in 2012, Kazakhstan strengthened its relationship with ADB by becoming a donor with a $5.49 million contribution to ADB's Asian Development Fund.

How do you foresee ADB's operations in the country growing over the medium term?

Our country partnership strategy for 2012-2016 has been designed to help make the economy more competitive and diverse in order to sustain growth and create jobs, defining a new development partnership that is relevant and responsive to Kazakhstan's goal of transitioning to a high-income country.

Our public sector lending operations are increasingly selective, focusing on modernizing infrastructure and utilities and improving access to finance for small and medium-sized enterprises. Our private sector operations, on the other hand, target trade finance, transport, energy, and agribusiness, as well as opportunities for selected equity investments in banks and equity and debt financing of investment funds.

Over time, as Kazakhstan continues on its impressive development trajectory, our growing knowledge partnership will take a more prominent role, and will increasingly define our relationship in the years ahead.

What is Kazakhstan's role in the Central Asia region?

Kazakhstan is transforming itself from a landlocked country to a country connected with its neighbors and beyond, with regional cooperation playing a crucial role. ADB is supporting Kazakhstan in this process. For example, we're helping the country upgrade its transport network along the Central Asia Regional Economic Cooperation (CAREC) transport corridors and strengthen its regional trade and transport links. ADB's knowledge in areas of trade facilitation and logistics development has helped to promote Kazakhstan's competitiveness and strengthen its linkages in the region.

ADB's 47th Annual Meeting is due to be held in Astana from 2 to 5 May 2014. What is the event's theme?

The meeting will look at connecting Asia to the rest of the world, an idea inspired by the famous Silk Road, which for centuries was one of the world's most important trade routes. Today, growing international trade in an increasingly globalized world means that a new Silk Road connecting Europe and Asia is a reality once again. This is an exciting opportunity for Kazakhstan and the rest of Central Asia.