fbpx 44060-025: MFF Small and Medium Enterprise Investment Program Tranche 3 | Asian Development Bank

Kazakhstan: MFF Small and Medium Enterprise Investment Program Tranche 3

Sovereign (Public) Project | 44060-025 Status: Closed

The Asian Development Bank is helping Kazakhstan develop SMEs through program loan assistance to JSC Damu Entrepreneurship Development Fund. Damu provides loan monies to commercial banks for onlending to SMEs, who need capital to grow. SMEs are a key driver of growth and employment in Kazakhstan and the program prioritizes support for businesses outside the main centers, including those run by women.

Project Details

Project Officer
Song, Dai Chang Central and West Asia Department Request for information
Country
  • Kazakhstan
Modality
  • Loan
Sector
  • Finance
 
Project Name MFF Small and Medium Enterprise Investment Program Tranche 3
Project Number 44060-025
Country Kazakhstan
Project Status Closed
Project Type / Modality of Assistance Loan
Source of Funding / Amount
Loan 3231-KAZ: MFF Small and Medium Enterprise Investment Program Tranche 3
Ordinary capital resources US$ 130.00 million
Loan 3261-KAZ: SME Development Project T3 (Additional Financing)
Ordinary capital resources US$ 98.00 million
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Private sector development
Sector / Subsector

Finance / Small and medium enterprise finance and leasing

Gender Equity and Mainstreaming Effective gender mainstreaming
Description Tranche 3 will help Damu continue with the implementation of the government's Action Plan to increase access to medium term finance for SMEs. The funds will be relent in local currency (tenge) fixed-interest loans to qualified participating financial institutions (PFIs) to fund their respective market-based loans, leases and other financial products to small and medium-sized enterprises (SMEs).
Project Rationale and Linkage to Country/Regional Strategy Access to finance is one of the main impediments to business development, especially for SMEs in Kazakhstan. Most SME investment is financed by internal resources. SMEs contributed 17.3% to GDP in 2012, while the SME loans to GDP ratio was only 4.7%. Lending to SMEs dropped from over 22% of total bank loans in 2008 to less than 15% in 2011. Partly as a result of stimulus packages from government and development partners SME lending is gradually picking up, although it still remains below pre-crisis levels. The key constraint being addressed through this project is the PFIs' limited ability to provide medium-term local currency funding for SME clients, in particular outside the bigger cities and to women borrowers. This gap is due to banking sector vulnerabilities, tenge liquidity unpredictability, and high foreign currency risk, with SME borrowers preferring tenge borrowing to match the currency of their revenue streams.
Impact sustained job creation and economic growth.
Project Outcome
Description of Outcome SMEs have increased access to medium term credit on a sustainable basis.
Progress Toward Outcome Performance target and indicator: Under Damu programs, SME lending increased to T1,060 billion (baseline: T750 billion in 2013). Status: As of 01 August 2017, Damu's SME lending portfolio amounted to Tenge 1,564.6 billion.
Implementation Progress
Description of Project Outputs

1. Medium-term financing to SMEs

2. Improved financial sector outreach, with a focus on women entrepreneurs and lending outside of the bigger cities

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

Loan closing date has been extended by one year until 10 November 2017. A special loan administration mission was conducted by the Project team last 12 to 22 July 2017 in order to address portfolio issues of CWPF programs in the context of the banking crisis and the weak economic growth.

As of 1 August 2017 total funded projects - 395 in the amount of Tenge 79,837 million, including the regions (except the cities of Almaty and Astana) - 325 projects totaling T60,180 million. The share by number of projects - 82%.

As of 01 August 2017 in the framework of educational programs the share of women is as follows: the project " _SMEs top management training" 42.7%.

Geographical Location Nation-wide
Safeguard Categories
Environment FI
Involuntary Resettlement FI-C
Indigenous Peoples FI-C
Summary of Environmental and Social Aspects
Environmental Aspects The tranche is categorized as FI for environment and FI (treated as C) for IR and IP. A safeguard due diligence was conducted in October 2014 and gaps in PFIs ESMSs identified. The safeguard assurances were prepared and included in the PFR. The EARF was updated, coordinated with DAMU and disclosed on ADB's website on 10 November 2014.
Involuntary Resettlement The tranche is categorized as FI for environment and FI (treated as C) for IR and IP.
Indigenous Peoples The tranche is categorized as FI for environment and FI (treated as C) for IR and IP.
Stakeholder Communication, Participation, and Consultation
During Project Design

During project design the team held regular consultations with development partners involved in SME and private sector development.

The European Bank for Reconstruction and Development, International Finance Corporation, United States Agency for International Development and the World Bank have supported SME development in Kazakhstan through (i) training to nongovernment organization business service providers; (ii) technical assistance to help banks introduce credit scoring and improve SME lending policies; and (iii) FILs to and equity investments in banks that provide loans to SMEs. ADB has worked closely with these partners, mindful of lessons on the need to mitigate foreign exchange and tenor mismatch risk, the importance of developing the local bond markets, and governance issues related to PFIs.

Consultations have also taken place with business associations and representatives of the private sector.

During Project Implementation It is expected that consultation with business associations and development partners (EBRD, WB, IFC) will continue to take place regularly, as part of the review missions. From the Executing Agency side, Damu's interaction with the broad audience and the beneficiaries are done through the Entrepreneurs Service Centers where they can receive free consultations. Information of Damu's programs are available on their website and the second-tier banks. Direct contact with the SMEs are made through the monitoring of the SMEs.
Business Opportunities
Consulting Services No consultants are envisaged under Tranche 3.
Procurement The goods, works and consulting services to be financed out of the proceeds of the Loan shall be procured in accordance with the ADB procurement policy. Given the existing trade flows in the country, since SMEs will be importing goods, works and consulting services from or are engaged in trade with both ADB and non-ADB member countries, including the Russian Federation, the ADB Board approved a waiver to allow procurement by SME borrowers from non-ADB member countries using loan proceeds. This request reflects the market-based nature of the investment program, trade agreements and SME demand and procurement history.
Responsible ADB Officer Song, Dai Chang
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
[email protected]
Gogol St., 111, Almaty
Kazakhstan
Timetable
Concept Clearance -
Fact Finding -
MRM 12 Nov 2014
Approval 15 Dec 2014
Last Review Mission -
Last PDS Update 26 Sep 2017

Loan 3231-KAZ

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
15 Dec 2014 11 Sep 2015 09 Oct 2015 10 Nov 2016 10 Nov 2017 08 Dec 2017
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 162.50 Cumulative Contract Awards
ADB 130.00 15 Dec 2014 0.00 0.00 0%
Counterpart 32.50 Cumulative Disbursements
Cofinancing 0.00 15 Dec 2014 130.00 0.00 100%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory - Satisfactory - Satisfactory

Loan 3261-KAZ

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
24 Jun 2015 11 Sep 2015 09 Oct 2015 10 Nov 2016 10 Nov 2017 08 Dec 2017
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 122.50 Cumulative Contract Awards
ADB 98.00 24 Jun 2015 0.00 0.00 0%
Counterpart 24.50 Cumulative Disbursements
Cofinancing 0.00 24 Jun 2015 98.00 0.00 100%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory - Satisfactory - Satisfactory

Project Data Sheets (PDS) contain summary information on the project or program. Because the PDS is a work in progress, some information may not be included in its initial version but will be added as it becomes available. Information about proposed projects is tentative and indicative.

The Public Communications Policy (PCP) recognizes that transparency and accountability are essential to development effectiveness. It establishes the disclosure requirements for documents and information ADB produces or requires to be produced.

The Accountability Mechanism provides a forum where people adversely affected by ADB-assisted projects can voice and seek solutions to their problems and report alleged noncompliance of ADB's operational policies and procedures.

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Title Document Type Document Date
Small and Medium Enterprise Investment Program – Tranche 3: Tsesnabank Audited Project Financial Statements (January-December 2017) Audited Project Financial Statements Jun 2018
Small and Medium Enterprise Investment Program - Tranche 3: Kazkommertsbank Audited Project Financial Statements (21 September-31 December 2015) Audited Project Financial Statements Jan 2018
Termination of Project Agreement for Loans 3231-KAZ and 3261-KAZ(AF): Small and Medium Enterprise Investment Program, Tranche 3 Project/Program Agreements Oct 2017
Small and Medium Enterprises Investment Program - Tranche 3: Tsesnabank Audited Project Financial Statements (January-December 2016) Audited Project Financial Statements Jun 2017
MFF Small and Medium Enterprise Investment Program Tranche 3: Audited Project Financial Statements (January-December 2016) Audited Project Financial Statements Jun 2017
Small and Medium Enterprises Investment Program - Tranche 3: JSC Delta Bank Audited Project Financial Statements (9 October-31 December 2015) Audited Project Financial Statements Mar 2017
Small and Medium Enterprises Investment Program - Tranche 3: Tsesnabank Audited Project Financial Statements (9 October-31 December 2015) Audited Project Financial Statements Dec 2016
Small and Medium Enterprises Investment Program - Tranche 3: KazInvestBank Audited Project Financial Statements (9 October-31 December 2015) Audited Project Financial Statements Dec 2016
Small and Medium Enterprises Investment Program - Tranche 3: Damu Audited Project Financial Statements (11 September-31 December 2015) Audited Project Financial Statements Jul 2016
Project Agreement for Small and Medium Enterprise Investment Program - Tranche 3 (JSC "Delta Bank") Project/Program Agreements Sep 2015
Project Agreement for Small and Medium Enterprise Investment Program - Tranche 3 (JSC Kazkommertsbank) Project/Program Agreements Sep 2015
Guarantee Agreement for Small and Medium Enterprise Investment Program - Tranche 3 Guarantee Agreements Sep 2015
Project Agreement for Small and Medium Enterprise Investment Program - Tranche 3 (JSC "Kazinvestbank") Project/Program Agreements Sep 2015
Loan Agreement for Small and Medium Enterprise Investment Program - Tranche 3 Loan Agreement (Ordinary Resources) Sep 2015
Project Agreement for Small and Medium Enterprise Investment Program - Tranche 3 (Tsesnabank Joint Stock Company) Project/Program Agreements Sep 2015
Small and Medium Enterprise Investment Program - Tranche 3: Project Administration Manual Project/Program Administration Manual Sep 2015
Small and Medium Enterprise Investment Program Tranche 3 (Additional Financing): Periodic Financing Request Report Periodic Financing Request Reports Jun 2015

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.


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Requests for information may also be directed to the InfoUnit.

Tenders

No tenders for this project were found.

Contracts Awarded

No contracts awarded for this project were found

Procurement Plan

None currently available.