Kazakhstan: MFF- Small and Medium Enterprise Investment Program

Sovereign Project | 44060-013 Status: Active

Summary

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Project Name MFF- Small and Medium Enterprise Investment Program
Project Number 44060-013
Country Kazakhstan
Project Status Active
Project Type / Modality of Assistance Loan
Source of Funding / Amount
MFF Facility Concept 0048-KAZ: MFF- Small and Medium Enterprise Investment Program
Ordinary capital resources US$ 500.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Governance and capacity development
Private sector development
Sector / Subsector

Finance - Small and medium enterprise finance and leasing

Gender Equity and Mainstreaming Effective gender mainstreaming
Description
Project Rationale and Linkage to Country/Regional Strategy
Impact

Project Outcome

Description of Outcome
Progress Toward Outcome

By the closing date of the Tranche 1 loan, September 2013, the PFIs had provided on a cumulative basis T32.3 billion of SME loans, of which 27% funded new investments, 57% financed working capital, and 16% refinanced existing loans.

In total, Damu channeled 750 billion Tenge to SMEs (as per revision in July 2013, new MFF baseline is 388 billion in 2009).

Implementation Progress
Description of Project Outputs
Status of Implementation Progress (Outputs, Activities, and Issues)

By the closing date of Tranche 1, September 2013, a total of 2,337 loans were disbursed by PFIs to 734 SME borrowers, using ADB proceeds. (for inconsistencies with Data indicators interpretation, refer to changes made to MFF DMF). The average amount lent to each SME borrower was T44 million ($290,000) and the average loan was T14 million ($90,000). Women were 30.5% of total SME borrowers.

Between 2012 and 2013 Damu approved 8 changes to its internal risk management processes and 6 changes to improve its corporate governance.

By the closing date of the Tranche 1 loan, end September 2013, 30.5% of borrowers of Damu programs were women.

Geographical Location Kazakhstan

Summary of Environmental and Social Aspects

Environmental Aspects

The facility has been categorized as FI in accordance with ADB s Safeguard Policy Statement (SPS, 2009). Safeguards due diligence has been conducted to assess potential environmental and social risks and impacts associated with qualified PFI s likely future portfolios, along with their commitment and capacity for environmental management. Tranche 1 was treated as category C for envionmental safeguard components based on ADB SPS. Tranche 2 under the MFF will be treated as Category B for environment safeguard components based on ADB s SPS. Damu and each of the PFIs will have in place or establish an ESMS to be maintained as part of its overall management system to meet Kazakhstan national laws and norms and ADB s safeguards requirements. Each PFI that receives proceeds of a loan under the Facility is required to submit to ADB: (i) a copy of its ESMS to be used in implementing this loan for ADB approval prior to submitting its first withdrawal application; and (ii) asemi-annual report on its compliance with its ESMS. The PFIs will prepare and submit semi-annual environmental monitoring reports on the implementation status of their ESMS to ADB.

To ensure compliance with ADBs safeguard policy on environment, the selection criteria for PFIs include an assessment of their internal environment and safeguard systems. Eligibility criteria for onlending will be limited to low risk SMEs whose environmental impacts are expected to be negligible and for which no environmental evaluation will be required. For the first tranche the Mission Team's assessment concluded that the financial intermediary's business activities had minimal or no adverse environmental impacts. Therefore the Project is treated as a category C project. Lessons learned on environmental management from ADBs experience with credit line through the private sector operations will be built into the Project design.

Involuntary Resettlement No social safeguards are triggered by the project. No activities are planned in disputed areas. The Project will not finance any investments involving land acquisition or involuntary resettlement of people anywhere in Kazakhstan. This FI loan is treated as category C.
Indigenous Peoples The loan covenants covering all tranches for this MFF loan will ensure that projects that will be financed will have no adverse impact on indigenous peoples. Therefore, this FI loan is treated as category C.
Stakeholder Communication, Participation, and Consultation
During Project Design The European Bank for Reconstruction and Development (EBRD) actively supports SMEs in Kazakhstan. EBRD programs fund international advisers who provide capacity building and training for SMEs and support to rural SMEs to improve their operations, enter new markets, and gain access to financing. The United States Agency for International Development has supported programs that have provided extensive training on business and consulting essentials to mostly start-up entrepreneurs and nongovernment organization business service providers. EBRD has extended several credit lines to commercial banks to fund lending to SMEs. Their projects are sometimes supported by technical assistance (TA) to help banks introduce a credit scoring methodology and improve their SME lending policies. The World Bank has provided Kazakhstan with the Second Agricultural Post-Privatization Project ($96.1 million), which has a component for promoting sustainable rural microfinance. The International Finance Corporation promotes SME development through its debt and equity investments in banks that provide loans to SMEs. ADB coordinated closely with other development partners in preparing the investment program and MFF.
During Project Implementation Consultation with business associations and development partners (EBRD, WB, IFC) takes place as part of the review missions.

Business Opportunities

Consulting Services Under TA 7634-KAZ: Improving Capacity to Support SME Development, ADB engaged a qualified team of consultants in accordance with its Guidelines on Use of Consultants by ADB and Its Borrowers (2013, as amended from time to time). Seven individual experts and 1 consulting firm were recruited to implement the TA. A firm was hired to conduct a survey to clarify ongoing constraints to SME development and help define measures that Damu can implement to more effectively address such constraints. The TA commenced on 17 November 2011 and was completed on 31 December 2013.
Procurement As this is a financial intermediation loan, there is no procurement involved in this project, other than consulting services.

Responsible Staff

Responsible ADB Officer Inmaculada Martinez Martin
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Public Management, Financial Sector and Trade Division, CWRD
Executing Agencies
DAMU Entrepreneurship Development Fund
Kanat Sultangaziev, Deputy Chairperson
Kanat.Sultangaziev@fund.kz
Gogol St., 111, Almaty Kazakhstan

Timetable

Concept Clearance 02 Jul 2010
Fact Finding 19 Jul 2010 to 30 Jul 2010
MRM 17 Aug 2010
Approval -
Last Review Mission -
PDS Creation Date 10 Aug 2010
Last PDS Update 23 Sep 2015

MFF Facility Concept 0048-KAZ

Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 700.00 Cumulative Contract Awards
ADB 500.00 - 0.00 0.00 %
Counterpart 200.00 Cumulative Disbursements
Cofinancing 0.00 - 0.00 0.00 %

Safeguard Documents See also: Safeguards

Safeguard documents provided at the time of project/facility approval may also be found in the list of linked documents provided with the Report and Recommendation of the President.

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Evaluation Documents See also: Independent Evaluation

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Related Publications

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