fbpx 49076-005: Supporting Resilience of Micro, Small, and Medium-Sized Enterprises Finance Project | Asian Development Bank

Kazakhstan: Supporting Resilience of Micro, Small, and Medium-Sized Enterprises Finance Project

Sovereign (Public) Project | 49076-005 Status: Active

The Asian Development Bank is working with Kazakhstan to provide much-needed financing in local currency to micro, small- and medium-sized enterprises. The project is helping finance working capital and productive investments is increasing lending to women entrepreneurs, especially in regions outside Astana and Almaty.

Project Details

Project Officer
Song, Dai Chang Central and West Asia Department Request for information
Country
  • Kazakhstan
Modality
  • Loan
  • Technical Assistance
Sector
  • Finance
 
Project Name Supporting Resilience of Micro, Small, and Medium-Sized Enterprises Finance Project
Project Number 49076-005
Country Kazakhstan
Project Status Active
Project Type / Modality of Assistance Loan
Technical Assistance
Source of Funding / Amount
Loan 3447-KAZ: Supporting Resilience of Micro, Small and Medium-Sized Enterprise Finance Project
Ordinary capital resources US$ 200.00 million
TA 9214-KAZ: Strengthening Micro, Small and Medium-Sized Enterprise Finance
Financial Sector Development Partnership Special Fund US$ 500,000.00
Strategic Agendas Inclusive economic growth
Drivers of Change Gender Equity and Mainstreaming
Governance and capacity development
Partnerships
Private sector development
Sector / Subsector

Finance / Small and medium enterprise finance and leasing

Gender Equity and Mainstreaming Effective gender mainstreaming
Description

The proposed financial intermediation loan to the Republic of Kazakhstan for the Supporting Resilience of Micro, Small, and Medium-Sized Enterprises (MSMEs) Finance Project will provide local currency credit to sustain operations of and employment by MSMEs during the current economic slowdown. The technical assistance attached to the loan will strengthen credit origination and management of selected participating financial institutions to better serve MSMEs.

Despite robust economic growth in the recent past, Kazakhstan''s economy remains vulnerable to external shocks because of its limited and declining economic diversification. The economy is highly dependent on extractive industries. Sustained and balanced growth will depend on economic diversification into higher productivity and value-added activities, and this is at the top of the government's agenda. MSMEs are seen as key actors in these transformation efforts.

Project Rationale and Linkage to Country/Regional Strategy

Currently, MSMEs play only a minor role in Kazakhstan''s economy. In 2013 the output of registered MSMEs represented 26% of gross domestic product (GDP) and employed 32% of the workforce, well below its peer countries. Due to small scale, lack of experience and coordination failures, MSMEs make less use of business support services, which are important to improve firms' productivity and competitiveness. MSME clusters or networks facilitate access to these support services, but public-private coordination is still crucial. Although Kazakhstan''s competitiveness is ranked 50 (out of 144 countries), indicators on business networks quality and supporting industries are particularly weak. Incentives are often needed to encourage collective investments to internalize the positive spillovers of cluster linkages.

Country SME demand for medium-term credit alone over the next three years is estimated at over $5 billion, and access to finance is ranked as one of the main impediments to business development. SME loans-to-GDP ratio were 8.1% in 2014, down from 10.0% in 2009. Lending to SMEs dropped from over 21% of total bank loans in 2008 to less than 13% in 2014. Increased deposit dollarization and weak performance of the interbank market makes medium-term tenge refinancing expensive. A large portfolio of non-performing loans accentuates the risk aversion of banks, on top of the traditional scale and information asymmetries that drive up the cost for SME lending. Of Kazakhstan's 17 million people, 46% live in rural areas and depend to a large degree on agriculture. This segment is traditionally served by microfinance organizations (MFOs). MFOs serve less than 9% of households, well below international comparison countries, and their total lending was equivalent to 1.2% of total commercial bank lending.

Impact The impact will be a sustained contribution of MSMEs to Kazakhstan's GDP, which is aligned with the government's objectives of supporting entrepreneurship and the contribution of MSMEs to the non-oil economy and employment under a challenging macro environment
Project Outcome
Description of Outcome Sustainable provision of loans to MSMEs maintained
Progress Toward Outcome The outcome indicators referring to the PFIs overall portfolios, not just those funded by ADB loan proceeds, have exceeded the target of potential increase of 20% in terms of outstanding MSME loans, those disbursed outside Almaty and Astana and increase in the number of MSME borrowers. The piggy-backed KSTA 9214 completion date has been extended from May 2019 to May 2020. The TA has provided funding for the holding of regional workshops for MSME women entrepreneurs with our TA implementing partner - Atameken (National Chamber of Entrepreneurs). Also the TA has funded the internal field staff training requirements of Arnur Credit, a microfinance organization based in South Kazakhstan last June to July 2019.
Implementation Progress
Description of Project Outputs

Financial inclusion sustained

Efficiency of PFIs' lending to MSMEs improved

Status of Implementation Progress (Outputs, Activities, and Issues) The PFIs to-date are in compliance with the performance targets regarding their financial stability. Ongoing are the PFIs' action plans on meeting the indicators on gender monitoring. Partial loan cancellation was processed during the last quarter of FY 2019 due to the slowing down of the economy and the short-term nature of the loan tenure.
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 project has been categorized as financial intermediary (FI) with respect to environment safeguards.
Involuntary Resettlement The project has been categorized as FI (treated as C) in relation to involuntary resettlement.
Indigenous Peoples The project has been categorized as FI (treated as C) in relation to indigenous peoples.
Stakeholder Communication, Participation, and Consultation
During Project Design Main stakeholders include the business community and they will be consulted, through focus groups and through the representative business associations, through project design.
During Project Implementation The project will support the institutionalization of consultation mechanisms with the private sector, that will ensure participation of those at higher risk of exclusion such as informal businesses and women owned or managed MSMEs.
Business Opportunities
Consulting Services Consultants under the technical assistance attached to the loan will be engaged by ADB in accordance with the Guidelines on the Use of Consultants (2013, as amended from time to time). An estimated 12 person-months of international consultants and 20 person-months of national consultants will be required. For the current year of implementation, a minor change has been approved to include the engagement of a National Expert to finalize a diagnostic study of the microfinance financial institutions in Kazakhstan.
Procurement Not applicable.
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 01 Jul 2015
Fact Finding 26 Jan 2016 to 03 Feb 2016
MRM 15 Jul 2016
Approval 27 Oct 2016
Last Review Mission -
Last PDS Update 25 Mar 2020

Loan 3447-KAZ

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
27 Oct 2016 13 Oct 2017 20 Nov 2017 20 May 2020 - 20 May 2020
Financing Plan Loan Utilization
Total (Amount in US$ million) Date ADB Others Net Percentage
Project Cost 240.00 Cumulative Contract Awards
ADB 200.00 27 Oct 2016 0.00 0.00 0%
Counterpart 40.00 Cumulative Disbursements
Cofinancing 0.00 27 Oct 2016 152.01 0.00 100%
Status of Covenants
Category Sector Safeguards Social Financial Economic Others
Rating - Satisfactory - Satisfactory - Satisfactory

TA 9214-KAZ

Milestones
Approval Signing Date Effectivity Date Closing
Original Revised Actual
27 Oct 2016 17 Nov 2016 17 Nov 2016 18 May 2019 16 May 2021 -
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 27 Oct 2016 173,025.50
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 Access to Information Policy (AIP) 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.

In preparing any country program or strategy, financing any project, or by making any designation of, or reference to, a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Title Document Type Document Date
Supporting Resilience of Micro, Small and Medium-Sized Enterprises Finance Project: Entrepreneurship Development Fund – Damu JSC Audited Project Financial Statements (January-December 2019) Audited Project Financial Statements Jun 2020
Project Agreement for Loan 3447-KAZ: Supporting Resilience of Micro, Small and Medium-Sized Enterprise Finance Project (Microfinance Organization "Arnur Credit" LLP) Project/Program Agreements Oct 2019
Supporting Resilience of Micro, Small and Medium-Sized Enterprises Finance Project: Bank CenterCredit JSC Audited Project Financial Statements (January-December 2018) Audited Project Financial Statements Sep 2019
Supporting Resilience of Micro, Small and Medium-Sized Enterprises Finance Project: Bank Kassa Nova Audited Project Financial Statements (2 August-31 December 2018) Audited Project Financial Statements Aug 2019
Supporting Resilience of Micro, Small and Medium-Sized Enterprises Finance Project: Nurbank Audited Project Financial Statements (July-December 2018) Audited Project Financial Statements Aug 2019
Supporting Resilience of Micro, Small and Medium-Sized Enterprises Finance Project: KMF LLC Audited Project Financial Statements (22 February-31 December 2018) Audited Project Financial Statements Jul 2019
Supporting Resilience of Micro, Small and Medium-Sized Enterprises Finance Project: Entrepreneurship Development Fund - Damu JSC Audited Project Financial Statements (January-December 2018) Audited Project Financial Statements Jun 2019
Project Agreement for Loan 3447-KAZ: Supporting Resilience of Micro, Small and Medium-Sized Enterprise Finance Project (Fortebank Joint-Stock Company) Project/Program Agreements Mar 2019
Project Agreement for Loan 3447-KAZ: Supporting Resilience of Micro, Small and Medium-Sized Enterprise Finance Project (JSC "Bank Kassa Nova") Project/Program Agreements Aug 2018
Supporting Resilience of Micro, Small and Medium-Sized Enterprises Finance Project: Audited Project Financial Statements (January-December 2017) Audited Project Financial Statements Jul 2018
Project Agreement for Loan 3447-KAZ: Supporting Resilience of Micro, Small and Medium-Sized Enterprise Finance Project (Microfinance Organization "KMF" LLC) Project/Program Agreements Feb 2018
Project Agreement for Loan 3447-KAZ: Supporting Resilience of Micro, Small and Medium-Sized Enterprise Finance Project (JSC Nurbank) Project/Program Agreements Nov 2017
Project Agreement for Loan 3447-KAZ: Supporting Resilience of Micro, Small and Medium-Sized Enterprise Finance Project (JSC Bank Centercredit) Project/Program Agreements Oct 2017
Guarantee Agreement for Loan 3447-KAZ: Supporting Resilience of Micro, Small and Medium-Sized Enterprise Finance Project Agreements Oct 2017
Loan Agreement (Ordinary Operations) for Loan 3447-KAZ: Supporting Resilience of Micro, Small and Medium-Sized Enterprise Finance Project Agreements Oct 2017
Supporting Resilience of Micro, Small, and Medium-Sized Enterprises Finance Project: Gender Action Plan Gender Action Plans Oct 2016
Supporting Resilience of Micro, Small, and Medium-Sized Enterprises Finance Project: Project Administration Manual Project/Program Administration Manual Oct 2016
Supporting Resilience of Micro, Small, and Medium-Sized Enterprises Finance Project: Report and Recommendation of the President Reports and Recommendations of the President Oct 2016
Проект финансирования поддержки устойчивости микро-, малых и средних предприятий : Информационный бюллетень о проекте Translated PDS Jul 2015
микро-, кіші және орта кәсіпорындардың дамуы : Жоба туралы ақпараттық бюллетень Translated PDS Jul 2015
Micro, Small and Medium-Sized Enterprise Development: Initial Poverty and Social Analysis Initial Poverty and Social Analysis Jul 2015

Evaluation Documents See also: Independent Evaluation

None currently available.

Related Publications

None currently available.


The Access to Information Policy (AIP) establishes the disclosure requirements for documents and information ADB produces or requires to be produced in its operations to facilitate stakeholder participation in ADB's decision-making. For more information, refer to the Safeguard Policy Statement, Operations Manual F1, and Operations Manual L3.

Requests for information may also be directed to the InfoUnit.

Tenders

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Contracts Awarded

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Procurement Plan

None currently available.