Kazakhstani businessmen received more than half a trillion tenge of concessional loans under the “Economy of Simple Things” program.
The program was launched on behalf of Nursultan Nazarbayev, the First President of Kazakhstan, in order to support Kazakhstani entrepreneurs working in the manufacturing industry and the agro-industrial complex.
This program is being implemented by the Damu Entrepreneurship Development Fund (a subsidiary of the Baiterek Holding) through second-tier banks, and the Agrarian Credit Corporation (ACC, a subsidiary of the KazAgro Holding).
As for 2018-2020, the total amount financed by the National Bank of the Republic of Kazakhstan will be up to 1 trillion tenge. The allocated funds should be targeted at priority projects of the agro-industrial complex (up to 600 billion), and manufacturing industry (up to 400 billion). These industries include enterprises producing 1,029 varieties of goods and foodstuffs.
The program provides for long-term funding and subsidies from the state for a period of up to 10 years, while clients receive a preferential rate of 6% for the long term. Entrepreneurs can also get working capital loans for a period of up to 3 years. The remuneration rate is 15%, 9% of which is subsidized by the state, allowing reducing the final rate for the client to 6%.
As for February 5, 2021, 1404 applications for a total amount of 1 082,5 billion tenge were submitted to second-tier banks by businesses. So far 970 applications for 802.9 billion tenge were approved.
Furthermore, 686 applications for the amount of 474 billion tenge were submitted to the Damu Fund by businesses seeking to receive subsidized interest rates on loans. All applications have been approved.
In addition, the Damu Fund acts as an operator providing loan guarantees to Kazakhstani entrepreneurs. The fund has approved 222 guarantee agreements for the amount of 23.5 billion tenge and a total loan portfolio of 54.6 billion tenge.
In general, loans for 574.86 billion tenge out of the allocated 1 trillion tenge were granted by the Damu Fund and the ACC.
Since its launch, the process of concessional lending under the “Economy of Simple Things” program has been largely improved and has now become substantial. The changes, made in seven steps, include an increase in the number of manufacturers who could receive support. Also, the funds were redistributed, rates were reduced, the amount of financing was increased, and the time of subsidization was extended.
The Development Bank of Kazakhstan, another subsidiary of the Baiterek Holding, also acted as an operator providing loan guarantees. However, the bank finances only infrastructure and import substitution projects, recommended by the State Commission. The projects are financed only from own funds in an amount not exceeding 200 billion tenge
Due to this, more local manufacturers were involved in the “economy of simple things”, solving difficult, but important tasks for strengthening the foundations of the national economy.