Non-Resource Economy: How Development Institutions Shape Kazakhstan's New Growth

On the Talday Talks podcast, Rustam Karagoishin, Chairman of the Management Board of National Investment Holding Baiterek JSC, discussed how Kazakhstan’s development institutions operate amidst intensifying global competition for investment.

Rustam Karagoishin believes that development institutions in Kazakhstan perform the key tasks of diversifying the economy, supporting small and medium-sized businesses (SMEs), ensuring economic growth, and participating in infrastructure projects. Additional priorities include housing construction and agriculture.

According to him, Kazakhstan is already demonstrating the first results of diversification: while the export structure was predominantly resource-based a few years ago, by the end of 2025, industrial exports began to approach resource exports in terms of revenue. In his estimation, this is a fundamental shift for an economy that has long been dominated by oil and metals.

"We see that industry is gradually catching up with resource exports. Yes, industrial goods include products from the mining and metallurgical complex, but this is already a higher stage of processing—with greater added value... The effect of this support is the creation of new jobs, tax revenues, and so on. Last year, the economy grew by 6.5%, of which, according to the Ministry of National Economy, up to 1% was contributed by Baiterek’s funds," Karagoishin noted.

He believes that efficiency is also rising: despite a reduction in direct budget support, the Holding's performance has significantly improved.

"Until 2024, we received up to 800–900 billion tenge from the republican budget for various programs; in 2025, this volume was approximately 500 billion tenge. At the same time, lending volumes increased substantially: while it was around 3–4 trillion tenge in 2023, it is now about 8 trillion. In effect, we are delivering a significantly greater economic impact with a smaller amount of budget funds," the head of the Holding emphasized.

In a regional context, Kazakhstan has already surpassed many Central Asian countries in terms of institutional support and the depth of industrial processing, moving toward higher-value manufacturing.

However, Karagoishin noted that global competition for investment is only intensifying. In this environment, development institutions play a major role as a key mechanism for attracting capital and launching complex projects. He cited examples such as Temasek Holdings in Singapore and ADQ in the UAE. Both models rely on the concentration of resources and engagement with "proximal" investors—those ready to enter projects quickly based on logistics and regional advantages. Kazakhstan is following a similar path by strengthening the role of umbrella structures.

"There is, essentially, a global competition for investment. To compete with other countries, consolidation is necessary—consolidation both for balance and for a broader toolkit within specific umbrella development institutions. This is exactly what Baiterek is," the head of the Holding stressed.

Kazakhstan is gradually building its own model of institutional development, adapting international experience to the national economy. The strengthening role of Baiterek Holding reflects a transition from point-of-sale support for individual projects to the formation of a more systemic investment architecture focused on sector priorities and long-term economic effects.

Saken Zhumashev, Managing Partner and CEO of KPMG Caucasus and Central Asia, is convinced that "a strong Kazakhstan cannot be built without development institutions," because "development institutions today step in where the private sector is not ready to take on high risks."

"If Baiterek stops helping SMEs tomorrow, our economy will immediately stagnate. Secondly, complex projects will not develop, and our entire economy will revolve around raw materials—oil, metal, and grain. Related fields like artificial intelligence and complex processing will not progress... Development institutions direct funds to sectors and projects that will help us 'break away' from selling commodities and form new, leading industries," he said.

Saken Zhumashev specifically pointed to the role of the Damu Fund, through which SMEs currently receive preferential lending.

"This is, of course, a great help, considering that commercial bank rates exceed 20%. Our economy is generally built around large projects, and any such project—for example, the construction of a plant—forms an ecosystem of SMEs that serve the people building that plant. In this regard, while the Development Bank of Kazakhstan invests in strategically important, long-term projects, Damu provides support for businesses here and now," the expert explained.

Economist Kuanysh Zhaikov added that development institutions "solve the task of accelerating economic growth."

"For many large, backbone projects and infrastructure projects, development institutions played a positive role. It cannot be discounted," he emphasized.

Baiterek Holding, Karagoishin stated, is currently undergoing a large-scale transformation and restructuring of its business processes.

"We are moving into sectors that currently do not meet the criteria for commercial banks to fully service them. We have adopted a policy where, since the end of 2025—starting in December and continuing with tranches in January and February—we have transferred projects worth $650 million to commercial banks without a commission. These are projects that have completed their four-year investment phase. They are stable borrowers already generating steady cash flow. We are discussing the transfer of up to 7–15 billion tenge entirely to commercial banks, excluding the agricultural sector. We try to hand over products that can already be serviced by the market. We are conducting such auctions. Parallel to this, we are developing co-financing products, the so-called 'syndicate'," he reported.

This includes the launch of fertilizer production in Kazakhstan. The total investment is estimated at $1.5 billion. Karagoishin emphasized that, in addition to the Development Bank of Kazakhstan, two more commercial banks are planned to be involved in the lending.

"This is the proactive role of the investment holding—the balance sheet we have accumulated allows us to make such systemic decisions without significant risks," the head of Baiterek indicated.

It should be noted that the Holding is also actively assisting farmers: whereas loans were previously issued to agrarians in February–March, since 2025, preferential funds have been distributed in December—allowing farmers to better prepare for the sowing season. The approach is planned to be further refined—issuing loans to farmers in southern regions as early as September, which will significantly increase their productivity.

"Interest in the agro-industrial complex is growing—our investment climate plus subsidies increase business interest. Entrepreneurs are interested in developing the industry and are already negotiating with the state—this is a very good signal and a trend showing the sector has great potential," Saken Zhumashev said.

One of the key changes in Baiterek’s operations has been the shift from a reactive model (waiting for applications) to a proactive one. Today, the Holding analyzes a data set of more than 2.7 million active business entities in the country to identify promising areas. While a pool of over 1,500 projects has been formed nationwide in cooperation with regions and ministries, 277 of them are concentrated within Baiterek. The focus is on implementing "national projects" in the agricultural sector, mechanical engineering, and the manufacturing industry. Today, the Holding faces ambitious goals.

"Through the Damu line, we plan to provide preferential loans totaling approximately 500 billion tenge under the 'Orleu' program. Through the Agrarian Credit Corporation, we want to establish a separate guarantee fund specifically for the agricultural sector—directing around 500 billion tenge to various projects. This is all for small and medium-sized businesses, not large corporations. Through the Industrial Development Fund (IDF), we plan to provide loans of approximately 700 billion tenge in tenge equivalent and around 300 billion in foreign currency equivalent—totaling one trillion tenge to support mechanical engineering. Additionally, we have launched a program for SMEs—up to 300 million tenge—for equipment upgrades through leasing," said Rustam Karagoishin.

Experts emphasize that development institutions in Kazakhstan today effectively serve as "assembly points" for the economy, through which capital is redistributed into more priority and strategically significant directions. Maulen Ashimbayev, Speaker of the Senate and host of the podcast, summarized what the work of Baiterek JSC should be focused on.

"A new stage of the Holding's activity has begun, and it has received an updated status. Development institutions should be oriented toward achieving the strategic goals set by the Head of State: economic diversification, ensuring qualitative and sustainable growth, supporting new enterprises, creating high-tech industries, and expanding Kazakhstan's exports—both in terms of range and geography," Maulen Ashimbayev concluded.

Today, the Holding's subsidiaries include the Development Bank of Kazakhstan, the Export Credit Agency of Kazakhstan, and Qazaqstan Investment Corporation. They provide support tools such as debt and equity financing, export transaction insurance, and leasing, overall supporting non-resource exporters. Support for micro, small, and medium-sized businesses is provided by the Damu Entrepreneurship Development Fund. A key subsidiary focused on financing the manufacturing industry and infrastructure projects is the Industrial Development Fund (IDF). Meanwhile, the Agrarian Credit Corporation, which includes KazAgroFinance, promotes the sustainable development and technical equipment of the country's agro-industrial complex by providing financial support to large, medium, and small enterprises in rural areas.

On March 10, Usen Galym, Deputy Chairman of the Management Board of Baiterek JSC, announced that for 2026, the Holding has a pipeline of 449 projects worth 3.4 trillion tenge. The plan for financing the real sector is 8 trillion tenge, with the group's capitalization at 1 trillion tenge.