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EBRD gives boost to the small/medium sized business in Kazakhstan
The emerging private small and medium sized enterprise sector in Kazakhstan will get a major boost due to an ECU 100 million loan from the European Bank for Reconstruction and Development. The loan, signed today, is to be provided in the form of an "apex" credit line to the National Bank of Kazakhstan (NBK) and will help transform the current banking system towards a market-oriented one by encouraging competition and by creating incentives for local banks to improve their efficiency.
In the apex structure, the NBK will lend the funds to local banks who will, in turn, lend to emerging private sector companies in the export sector. The loan will be supplemented by an assistance package which will enable the companies to cope with the major constraints associated with an emerging private sector such as business plan preparation and start-up capital.
Ron Freeman, First Vice President at the EBRD, said "With the Kazakh Government's commitment to privatisation this facility can provide a real impetus to the development of an export-oriented private SME sector. It also supports the Government's financial sector reforms."
Mr Freeman added "Encouraging the growth of SME's means that an indigenous entrepreneurial atmosphere is nourished. A burgeoning SME sector contributes to a more stable economy, job creation and foreign exchange earnings."
Uraz A Dzhandosov, Chairman of the Kazakh National Agency for Foreign Investments, commented "This is a very important transaction for Kazakhstan as it provides real impetus for the banking system, and more fundamentally, for the budding small and medium sized businesses."
An apex-type credit line means that the extensive branch networks of existing commercial banks are fully utilised, more SMEs are reached and their needs are dealt with more effectively. The funds will be made available on a "first-come first-served" basis, promoting competition among the eligible banks and enabling quick disbursement. Three banks have been initially identified as possible channels for the proceeds and 25 projects have been identified as potential investment targets, representing one third of the loan during its first year.
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