Kazakhstan: Joint Government of Kazakhstan and the Asian Development Bank Knowledge and Experience Exchange Program, Phase 1

Sovereign Project | 47110-001

Summary

The value of innovative strategic knowledge solutions and global best practices are accepted as critical factors for socioeconomic advancement. For Kazakhstan, this is underscored in the country's Strategy 2030 and Vision 2050. The country partnership strategy (CPS), 2012-2016 of the Asian Development Bank (ADB) establishes demand-based knowledge products and services as important tools with which ADB can add value to Kazakhstan's development. These strategy documents highlight the need for Kazakhstan to effectively apply knowledge solutions and adopt global best practices so as to become a more diversified, competitive, and inclusive economy and go beyond the middle-income-country stage.

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Project Name Joint Government of Kazakhstan and the Asian Development Bank Knowledge and Experience Exchange Program, Phase 1
Project Number 47110-001
Country Kazakhstan
Project Status Approved
Project Type / Modality of Assistance Technical Assistance
Source of Funding / Amount
TA 8414-KAZ: Joint Government of Kazakhstan and the Asian Development Bank Knowledge and Experience Exchange Program, Phase 1
Technical Assistance Special Fund US$ 500,000.00
Strategic Agendas Inclusive economic growth
Regional integration
Drivers of Change Governance and capacity development
Private sector development
Sector / Subsector Public sector management - Economic affairs management - Public administration
Gender Equity and Mainstreaming
Description

The value of innovative strategic knowledge solutions and global best practices are accepted as critical factors for socioeconomic advancement. For Kazakhstan, this is underscored in the country's Strategy 2030 and Vision 2050. The country partnership strategy (CPS), 2012-2016 of the Asian Development Bank (ADB) establishes demand-based knowledge products and services as important tools with which ADB can add value to Kazakhstan's development. These strategy documents highlight the need for Kazakhstan to effectively apply knowledge solutions and adopt global best practices so as to become a more diversified, competitive, and inclusive economy and go beyond the middle-income-country stage.

Against this background, and recognizing ADB's role as a knowledge management leader in Asia and the Pacific and for Kazakhstan to share its own impressive development experience with other developing countries, the government and ADB agreed to establish the joint Knowledge and Experience Exchange Program (KEEP) in 2013. The KEEP is designed to facilitate a range of strategic knowledge options and global best practices that will enable Kazakhstan to respond to current and emerging development opportunities and challenges in a well-informed and timely manner.

The KEEP is defined in a memorandum of understanding (MOU) between the government and ADB. The MOU provides the framework (outlining the objective and scope, areas of focus, implementation arrangements, and monitoring and evaluation measures) and commits the parties to share the cost of a range of knowledge and experience-sharing activities during 2013-2015 with total financing of $2.5 million. The

ADB's participation in the KEEP will be through three technical assistance (TA) operations. ADB financing in each of these TA operations will complement 50% of the government's cost share. It will commence with Phase 1 in 2013 with an estimated cost of $500,000. Financing of the KEEP will increase to $1.0 million per annum during 2014-2015 with ADB providing $500,000 and the government providing the other $500,000 annually.

This proposed policy and advisory TA will finance Phase 1 of the KEEP in 2013.

The impact of this TA will be enhanced policy formulation capacity of the government to support its medium and long-term development strategies. The expected outcome will be strengthened government capacity and awareness of best practices in the selected areas.

As part of the KEEP, this TA will support subprojects at the macro, sector, and thematic level that facilitate or promote knowledge solutions, capacity development, and exchange of global best practices. Because of the dynamic and unforeseeable nature of government demand for knowledge products and advisory services, the subprojects of the TA and the implementation approach will be flexible in order for the TA to effectively respond to the country's urgent requirements in a timely manner.

The subprojects to be financed will therefore remain tentative to accommodate that flexibility to provide the scope for adjustment and allow for quick response. While some of the subprojects have been discussed between the Ministry of Economy and Budget Planning (MEBP) and ADB during the KEEP preparation, other subprojects will be firmed up during TA implementation.

The criteria for selecting a subproject would be that it (i) supports priority government policy reforms and is consistent with the CPS; (ii) is related to implementation of the government development strategy; (iii) is considered as an emerging, urgent, and high-priority area where ADB can add value; (iv) shows evidence of strong government ownership; and (v) complements or synergizes the knowledge support of ADB and other development partners.

The main outputs of the TA will be under the categories of policy advisory and capacity development and include (i) submission of analytical reports to the government, and (ii) completion of a capacity development program.

Effective coordination of the executing agency with stakeholders is important for successful implementation of the TA. It is assumed that there will be (i) consistent government demand for ADB's knowledge products and services, (ii) effective coordination by the MEBP in leading the subproject selection and review process, (iii) strong collaboration and support from all relevant stakeholders, and (iv) reliable and accurate data and information are made available. The potential risks are that (i) lack of coordination between development partners may lead to duplication of activities, and (ii) frequent changes in government priorities may result in ineffective use of policy recommendations.

Project Rationale and Linkage to Country/Regional Strategy

Since 1991, Kazakhstan has transitioned rapidly from a low-income country into an upper-middle-income country and has rated highly in many socioeconomic indicators. Building on its impressive socioeconomic performance, the rapid transformation and acceleration into being among the top 30 most progressive countries by 2050 entails new opportunities as well as challenges. Innovative strategic knowledge options and global best practices are called for to help the country (i) become a more inclusive and diversified economy, (ii) develop better institutional and policy mechanisms, (iii) integrate and cooperate better with other countries in the region, and (iv) enhance the competitiveness and efficiency of the economy.

Despite impressive socioeconomic performance, Kazakhstan faces a number of development challenges. These include

(i) a narrow economic base, mainly concentrated on the extractive industries, calling for diversification;

(ii) an aging and limited infrastructure network requiring significant improvement;

(iii) a vulnerable finance sector needing innovative approaches to reform;

(iv) gaps in institutional and policy development performance requiring reforms and capacity strengthening to enhance efficiency;

(v) an expanding disparity gap demanding growth to be more inclusive;

(vi) limited competition in the economy demanding urgent private sector development to enhance competitiveness; and

(vii) rapid expansion in regional and global integration, calling for better-informed responses to maximize gains.

While capital investments are important to address these and related development issues, a combination approach or the effective use of innovative strategic knowledge solutions and global best practices is critical for optimal outcomes. The government recognizes the value-addition for Kazakhstan's socioeconomic advancement and has integrated knowledge solutions into its Strategy 2030 and Vision 2050. These two key development directives highlight Kazakhstan's demand for knowledge solutions and use of global best practices for it to become a more diversified, competitive, and inclusive economy. ADB and other development partners have been requested by the government to facilitate knowledge and global best-practice sharing in a concerted and timely manner.

Impact Enhanced policy formulation capacity of the government to support its medium and longer term development strategies
Project Outcome
Description of Outcome Strengthened government capacity and awareness of best practices in the selected areas
Progress Toward Outcome

As of March 2015, four studies have been supported under KEEP.

(i) Study on Development of a Methodology for Evaluation of Economic Costs of Road Traffic Accidents and Calculation of Economic Costs of Road Traffic Accidents in Kazakhstan. Expected outcome is the government's increased capacity to make cost-efficient investments and better-informed policy decisions in the area of road safety.

(ii) Study on International Good Practices to Assess Market Concentration and Competition. The study's outcome is the government's increased capacity to assess completion development in Kazakhstan on the basis of the review of relevant international experience and best practices in measuring regional and national competition.

(iii) Extended study on Diversification of Kazakhstan's Economy and New Sources of Economic Growth on the basis of Asian Countries' Experience: Services Sector (comprising several components). The study is envisaged to assist the government in designing and implementing large-scale reforms in the services sector.

(iv) Study on Review of Advanced Asian Countries' Success Stories and Experience in Economic Development. Expected outcome is the government's increased capacity to design new economic policies.

Implementation Progress
Description of Project Outputs

Policy advisory reports submitted to the government

Capacity building program completed

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

- The study on Development of a Methodology for Evaluation of Economic Costs of Road Traffic Accidents and Calculation of Economic Costs of Road Traffic Accidents in Kazakhstan has been completed. The study's results were presented to the government in June 2014. The study's outputs are the methodology with estimates of economic costs of road traffic accidents in Kazakhstan in 2012 and relevant reports. The government has cleared the results of the study.

- The study on Study on International Good Practices to Assess Market Concentration and Competition has been completed. The study's results were submitted to the government in September 2014. Its main output is a report on review of international best practices in the area of assessment of the level of completion development. Currently the report is used by the Committee for Regulation of Natural Monopolies and Competition Protection.

- The study on Diversification of Kazakhstan's Economy and New Sources of Economic Growth on the basis of Asian Countries' Experience: Services Sector comprises of several components, and implementation of the first three components is at the final stage. These are Role of the Services Sector in Kazakhstan's Economy: An Overview , Measurement of Services Sector: Statistical Issues and International Experience on Services Sector Development . Implementation of remaining components of the study will commence soon. Main outputs of this study are analytical reports with policy recommendations and workshops with participation of experienced experts.

- The study on Review of Advanced Asian Countries' Success Stories and Experience in Economic Development is currently finalized. This assignment includes preparation of an analytical report on review of economic policies and experiences of selected advanced Asian countries.

Geographical Location
Summary of Environmental and Social Aspects
Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design

The PATA was conceptualized during CPS consultation with government. The KEEP/PATA was designed based on discussions with the Deputy Prime Minister and Vice Minister of MNE. The KEEP MoU was discussed several times with the key government agencies including the ministries of justice, foreign affairs and MNE.

The government's willingness to cost-share the KEEP with a 50% reimbursement arrangement demonstrates its very strong ownership while at the same time demanding from ADB to deliver high quality KPS in a timely manner. In addition, the subprojects identified are highly demand driven as they are initiated by the government agencies.

During Project Implementation

The Ministry of National Economy, through the Investment Policy Department, is the executing agency, which is responsible for supervising and monitoring TA activities. Implementing agencies are ministries or agencies responsible for initiating specific subprojects.

The KEEP Coordinating Committee (KCC), comprising of representatives from the MNE and ADB, is set up to oversee implementation and provide guidance and direction to stakeholders. The KCC has periodic meetings to update and adjust the list of subprojects and core outputs. The two parties record agreements reached during meetings and attach an updated subproject list with detailed project outline and specific terms of reference for additional subprojects. The vice-minister of the MNE and the country director of ADB's Kazakhstan Resident Mission review and endorse the subprojects and proposed financing plan.

The KCC Secretariat supports the KCC's work in ensuring smooth functioning of the committee and supervising and coordinating day-to-day TA activities, including monitoring progress, resolving issues, arranging meetings, and liaising with concerned agencies.

Responsible ADB Officer Asel Chyngysheva
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Kazakhstan Resident Mission
Executing Agencies
Dept. for Budget Inv't &PPP Devt,Min of Nat'l Econ010000, Astana, Kazakhstan, 8, Orynbor
Street, Kazakhstan
Timetable
Concept Clearance 05 Apr 2013
Fact Finding -
MRM -
Approval 29 Jul 2013
Last Review Mission -
Last PDS Update 18 Mar 2015

TA 8414-KAZ

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
29 Jul 2013 23 Aug 2013 23 Aug 2013 31 Jul 2014 31 Jul 2016 -
Financing Plan/TA Utilization Cumulative Disbursements
ADB Cofinancing Counterpart Total Date Amount
Gov Beneficiaries Project Sponsor Others
500,000.00 0.00 0.00 0.00 0.00 0.00 500,000.00 29 Jul 2013 147,775.80
Title Document Type Document Date
Knowledge and Experience Exchange Program - Phase 1 Technical Assistance Reports Jul 2013

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