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

Sovereign Project | 47110-001 Status: Active

Summary

The value of innovative strategic knowledge solutions and global best practices are accepted as crucial factors for socioeconomic advancement. For Kazakhstan, this is underscored in the country's Kazakhstan-2030 and Kazakhstan-2050 strategies. 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 strategic documents highlight the need for Kazakhstan to effectively apply knowledge solutions and 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 Active
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 crucial factors for socioeconomic advancement. For Kazakhstan, this is underscored in the country's Kazakhstan-2030 and Kazakhstan-2050 strategies. 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 strategic documents highlight the need for Kazakhstan to effectively apply knowledge solutions and 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 extensive experience in knowledge management across Asia and the Pacific, the Government of Kazakhstan (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 solutions and global best practices that will enable Kazakhstan to respond to current and future 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; the total budget of the KEEP is $2.5 million. The ADB's participation in the KEEP is through three technical assistance (TA) operations. ADB financing in each of these TA operations complements 50% of the government's cost share. Phase 1 with an approved budget of $500,000 commenced in June 2013 after the signing of the MOU by the Minister of Economy and Budget Planning and ADB Vice-President. During implementation of subsequent Phases 2 and 3 financing of the KEEP increases up to $1.0 million per Phase.

This policy and advisory TA finances Phase 1 of the KEEP in 2013-2016.

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 selected areas.

As part of the KEEP, this TA supports subprojects at the macro, sector, and thematic levels that facilitate and promote knowledge solutions, capacity development, and exchange of global best practices. Due to a dynamic and unforeseeable nature of the government's demand for knowledge products and advisory services, the government and ADB agreed that a list of subprojects under the TA and the implementation approach will be flexible in order to allow the TA to effectively respond to the government's urgent requests in a timely manner.

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

The main outputs of the TA are under the categories of policy advisory and capacity development and include (i) analytical reports with policy recommendations for the government, and (ii) capacity development activities.

Effective coordination of the TA by the executing agency and beneficiaries is important for successful implementation of the current and subsequent TAs under the KEEP. It is assumed that there will be (i) consistent government demand for ADB's knowledge products and services, (ii) effective coordination by the executing agency in leading selection of potential subprojects and re

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, a transformation into being among the top 30 most developed countries by 2050 entails new opportunities as well as challenges. Innovative strategic knowledge solutions 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 the world, and (iv) enhance the competitiveness and efficiency of the economy.

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

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

(ii) poor infrastructure requiring significant improvement;

(iii) vulnerable financial sector requiring innovative approaches to reform;

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

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

(vi) limited competition in the economy that impedes private sector development; and

(vii) current regional and global integration processes, calling for better-informed decision-making mechanisms.

While capital investments are important to address these and related development issues, innovative strategic knowledge solutions and global best practices are also required to ensure an effective achievement of planned outcomes. Recognizing importance of knowledge solutions for Kazakhstan's socioeconomic development, the government emphasized the country's demand for knowledge products and global best practices in its Kazakhstan-2030 and Kazakhstan-2050 strategies. ADB and other development partners were requested by the government to facilitate knowledge and global best practices 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 July 2016, six 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 that contributed to enhancement of the government's 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 that increased the government's capacity to assess the level of competition development in Kazakhstan on the basis of a review of relevant international experience and best practices;

(iii) study on the topic of Diversification of Kazakhstan's Economy and New Sources of Economic Growth on the basis of Asian Countries' Experience: Services Sector is a large study that is envisaged to assist the government in designing and implementing national reforms in the services sector;

(iv) study on review of advanced Asian countries' success stories and experience in economic development that increased the government's awareness of successful economic policies of selected Asian economies;

(v) study on preparation of initial economic analysis of introduction of performance-based road maintenance services in Kazakhstan that allowed the government to gain more knowledge of main features of performance-based road maintenance services and their applicability in Kazakhstan;

(vi) study on certification of state auditors that helped the government develop the national system of certification of state auditors in compliance with international practices.

In addition to analytical studies, three capacity building events have been completed: a Forum on Small and Medium Enterprises Financing with the aim to improve the government's awareness of major barriers to SME financing in Kazakhstan and two study visits related to the reforms on introduction of accrual budgeting and state audit in Kazakhstan.

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)

(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 has been completed. The study's main outputs are a report on methodology development with estimates of economic costs of road traffic accidents in Kazakhstan and five supporting reports, which were submitted to the Ministry of National Economy (beneficiary) in June 2014.

(ii) Study on international good practices to assess market concentration and competition has been completed: a report was submitted to the former Agency for Competition Protection (beneficiary) in September 2014.

(iii) Study on the topic of Diversification of Kazakhstan's Economy and New Sources of Economic Growth on the basis of Asian Countries' Experience: Services Sector comprises of several chapters. Implementation of four chapters has been completed. These are Role of the Services Sector in Kazakhstan's Economy: An Overview , Measurement of Services Sector: Statistical Issues , International Experience on Services Sector Development and Backward and Forward Linkages and Key Sectors in Kazakhstan's Economy . Implementation of the remaining two chapters will be financed under the KEEP Phase 2. The main beneficiary of the study is the Ministry of National Economy.

(iv) Study on review of advanced Asian countries' success stories and experiences in economic development was initiated in response to the Ministry of National Economy s urgent request. An analytical report on review of economic policies and experiences of selected advanced Asian countries (incl. Singapore, Malaysia and South Korea) was submitted to the Ministry of National Economy (beneficiary) in November 2014. The study has been completed.

(v) Study on a preliminary economic analysis of introduction of performance-based road maintenance services in Kazakhstan has been completed. The report was submitted to the Committee of Roads under the Ministry of Investments and Development (beneficiary) in November 2015.

(vi) Study on certification of state auditors was implemented as part of KEEP's support to reforms on introduction of state audit; the beneficiary of the study is the Accounts Committee. Under the study, a report on assessment of draft documentation on certification of state auditors and a report on review of successful experiences of advanced countries' supreme audit institutions in introducing a system of certification of state auditors were prepared. The study is at the final stage.

(vii) In consultation with the Ministry of National Economy (beneficiary), a Small and Medium-sized Enterprises (SME) Financing Forum was arranged in Almaty in June 2015. On the basis of consultations with SMEs and commercial banks participating in ADB's SME Investment Program, an analytical report on SME financing and its major barriers in Kazakhstan was prepared. The findings with recommendations were presented during the forum. The forum was attended by participants from Damu, National Bank of Kazakhstan, commercial banks, media, etc.

(viii) As part of KEEP's support to reforms on introduction of accrual budgeting in Kazakhstan, study visits to Treasury departments of Australia and New Zealand for the Ministry of Finance (beneficiary) and Ministry of National Economy were arranged on 13 - 22 February 2016. The purpose of the study visits was to learn experiences of Treasury Departments of Australia and New Zealand in introducing and implementing accrual budgeting. After the study visits, the Ministry of Finance submitted a report on the study visits' findings and lessons learnt.

(ix) As part of KEEP's support to reforms on introduction of state audit in Kazakhstan, study visits to supreme audit institutions of Japan and Sweden for the Accounts Committee (beneficiary) were arranged on 25-29 April and 8-11 May 2016 respectively. The purpose of the study visits was to learn experiences of Japan and Sweden's supreme audit institutions in state audit. After the study visits, the Accounts Committee submitted a report on the study visits' findings with recommendation on a possible application of lessons learnt in Kazakhstan.

Geographical Location

Summary of Environmental and Social Aspects

Environmental Aspects
Involuntary Resettlement
Indigenous Peoples
Stakeholder Communication, Participation, and Consultation
During Project Design

The KEEP, incl. this TA, was conceptualized during CPS consultations with the government. The KEEP framework (outlining the objective and scope, areas of focus, implementation arrangements, and monitoring and evaluation measures) is defined in a memorandum of understanding, which was jointly developed and then signed by the government and ADB.

The government's willingness to cost-share the KEEP with a 50% reimbursement arrangement demonstrates its strong ownership as well as requires from ADB delivery of high quality knowledge products and services in a timely manner.

During Project Implementation

The Ministry of National Economy, through the Department for Budget Investments and PPP Development, is the executing agency, which is responsible for supervising and monitoring PATA activities. Implementing agencies are ministries or agencies responsible for initiating specific subprojects.

The KEEP Coordinating Committee (KCC), comprising of representatives of the Ministry of National Economy and ADB, is set up to oversee TA 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 KCC Secretariat supports the KCC's work by ensuring smooth functioning of the Committee and supervising and coordinating day-to-day TA activities, including monitoring TA implementation, resolving issues, arranging meetings, and liaising with concerned government agencies.

Responsible Staff

Responsible ADB Officer Assemgul Kaliyeva
Responsible ADB Department Central and West Asia Department
Responsible ADB Division Kazakhstan Resident Mission
Executing Agencies
Department for Budget Investments and PPP Development under the Ministry of National Economy
010000, 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 09 Aug 2016

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 Dec 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 443,276.65
Title Document Type Document Date
Knowledge and Experience Exchange Program - Phase 1 Technical Assistance Reports Jul 2013

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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