Economy of simple things

Economy of simple things

Strategic objectives:

  • to boost the production in the manufacturing industry and the agro-industrial complex;
  • to saturate the domestic market with goods and services of domestic manufacturers.

Goals:

  • by 2022, to decrease the import of goods used by consumers on a daily basis by 20% compared to 2018;
  • by 2022, to increase the production of goods used by consumers on a daily basis by 20% compared to 2018.

Conditions:

Conditions for providing money to second-tier banks and the Agrarian Credit Corporation:

The National Bank of the Republic of Kazakhstan, using its own money and money placed under its management, will purchase bonds of second-tier banks and the Agrarian Credit Corporation (hereinafter – the ACC) worth up to 1 trillion tenge with a loan maturity of up to 10 years at a final rate of return of up to 11% per annum.

The attracted and owned money of second-tier banks, leasing companies, and the ACC should be used to finance priority projects in the following areas:

1) processing in the agro-industrial complex (up to 300 billion tenge);

2) production in the agro-industrial complex (up to 300 billion tenge);

3) manufacturing industry and services (up to 400 billion tenge).

Second-tier banks, leasing companies, and the ACC are financing priority projects for the production and processing in the agro-industrial complex. Along with direct crediting, the ACC has the right to fund credit partnerships for issuing credits to agricultural manufacturers.

Second-tier banks and the ACC provide loans for subjects of private entrepreneurship only at their own expense and also issue bonds to ensure or restore funding for loans.

The Development Bank of Kazakhstan (hereinafter – the DBK), the Industrial Development Fund (hereinafter – the IDF), and leasing companies issue loans only at their own expense (market funding).

The DBK provides loans to significant projects aimed at infrastructure development and reducing import dependence.

The DBK issues loans to projects recommended by the State Commission for the Modernization of the Economy.

The IDF subsidizes projects recommended the State Commission for the Modernization of the Economy. Projects are financed for not more than 5 billion tenge and the financing period should not exceed 5 years.

The money provided will be spent on credits to private entrepreneurship companies operating in the manufacturing industry and the agro-industrial complex. The money should be used for investment and replenishment of working capital. Replenishment of working capital on a renewable basis is allowed.

For replenishing the working capital, second-tier banks, leasing companies, and the ACC can provide no more than 50% of credit money given for one project. This restriction does not apply to financing and finance leasing of projects for the production and processing in the agro-industrial complex, which are carried out at the expense of second-tier banks, the DBK, the IDF, leasing companies, and the ACC. This restriction also does not apply to projects for spring field and/or harvesting works, or for production in the agro-industrial complex, regardless of the source of financing the loan. Spring field and harvesting works in the agro-industrial complex are financed for a period not exceeding 1 year.

Damu Entrepreneurship Development Fund and its territorial subdivisions will be responsible for this process. The Fund now financially supports private sector entrepreneurship.

Terms of financing of the private sector:

The private sector comprises effective entrepreneurs and subjects of industrial and innovative activities, defined in the Business Roadmap-2025 State Business Support and Development Program, approved by the Decree of the Government of the Republic of Kazakhstan #968 dated December 24, 2019. Effective entrepreneurs and subjects of industrial and innovative activities implement projects in priority sectors of the economy. They should manufacture products from the list of goods eligible for crediting and finance leasing for priority projects (hereinafter – the List), in accordance with the appendix to this document. To confirm the eligibility of a project, it is necessary to produce at least one type of product from the List. A product must belong to an industry listed in the Nationwide Classification of Economic Activity (hereinafter – OKED). As for the service sector, projects belonging to any type of OKED are eligible.

  • If a project requires a loan of over 10 billion tenge, a positive conclusion of the relevant sectoral central authorized body is required;

  • the nominal rate of remuneration for private entrepreneurs is not more than 15% per annum;
  • crediting currency for the private sector is tenge;
  • The term of crediting, finance leasing, funding, and guaranteeing does not exceed 10 years. Second-tier banks, the IDF, leasing companies, and the ACC can postpone the payment of the non-subsidized part of the interest rate and/or postpone the repayment of the principal debt for a period not more than one-third of the duration of the loan or finance lease.

If a private interpreter is in dire straits, the payment of the unsubsidized part of the interest rate and repayment of the principal debt may be postponed for a period not exceeding half of the loan term. The occurrence of difficult circumstances must be confirmed by the relevant decisions of the President and the Government of the Republic of Kazakhstan and/or other authorized bodies.

Conditions for subsidizing of the private sector:

Conditions for subsidizing private entrepreneurs in the manufacturing industry, services and processing in the agro-industrial complex:

  • Subsidizing projects in the manufacturing industry and services is carried out by loans/leasing transactions with a nominal interest rate not exceeding 15% per annum, of which 6% will be paid by an entrepreneur, and the rest will be subsidized by the government.
  • Subsidizing projects for processing in the agro-industrial complex is carried out by loans/leasing transactions with a nominal interest rate not exceeding 15% per annum, of which 5% will be paid by an entrepreneur, and the rest will be subsidized by the government.
  • The term for subsidizing investment loans is no more than 10 years without the right to extend the subsidy term.
  • The term for subsidizing loans and financial leasing aimed at replenishing working capital is no more than 3 years without the right to extend the subsidy term.
  • The conditions and the procedure of subsidizing and monitoring of projects are regulated by the Rules for Subsidizing a Part of the Remuneration Rate under the Business Roadmap-2025 State Business Support and Development Program.

Conditions for guaranteeing projects of the private sector:

  • Credits issued by second-tier banks or leasing companies with a nominal interest rate not exceeding 15% per annum are subject to guaranteeing. The amount of the guarantee of one project cannot exceed 50% of the loan/financial lease worth up to 1 billion tenge.

  • The guarantee period cannot exceed the loan term.

  • The difference in security for the loan (collateral value) is paid by an entrepreneur.

  • As for financial leasing, an interpreter uses its own money in the amount of at least 20% of the value of the leased asset.

  • It is allowed to use real estate and/or other property as additional security, as well as guarantees of founders, participants, shareholders and/or third parties.

The conditions and the procedure of guaranteeing and monitoring of projects are governed by the Rules for Guaranteeing Loans under the Business Roadmap-2025 State Business Support and Development Program, approved by the Resolution of the Government of the Republic of Kazakhstan #1060 dated December 31, 2019.

Program implementation

Information on signed subsidy projects by region as of April 01, 2022:

Region

Number of projects

Loan amount, million tenge

Akmola region

66

26 809

Aktobe region

65

23 963

Alma-Ata's region

65

92 735

Atyrau region

29

12 530

East Kazakhstan region

51

35 653

Almaty city

107

163 293

Nur-Sultan

65

77 883

Shymkent

74

73 961

Jambyl Region

41

48 013

West-Kazakhstan region

44

21 239

Karaganda region

44

52 206

Kostanay region

65

29 809

Kyzylorda Region

33

3 969

Mangistau region

53

17 927

Pavlodar region

39

11 071

North-Kazakhstan region

46

33 660

Turkestan region

47

25 222

Total:

934

749 942

More detailed information on the results of granting subsidies within the framework of the program can be obtained on the Damu website. https://damu.kz/poleznaya-informatsiya/reports/seconomy/spredictive/

Information on signed guarantee projects by regions as of April 01, 2022:

Region

Number of projects

Loan amount, million tenge

Guarantee amount million tenge

Nur-Sultan

37

11 854

5 285

Almaty city

21

12 174

4 509

Akmola region

27

9 117

4 146

Aktobe region

37

11 486

5 215

Alma-Ata's region

21

12 028

5 742

Atyrau region

11

2 776

1 021

East Kazakhstan region

18

1 857

818

Jambyl Region

20

3 040

1 257

West-Kazakhstan region

11

887

421

Karaganda region

19

2 183

1 038

Kostanay region

38

7 461

3 300

Kyzylorda Region

17

2 074

854

Mangistau region

32

3 864

1 686

Pavlodar region

26

7 387

2 902

North-Kazakhstan region

27

6 102

2 858

Turkestan region

13

5 146

2 184

Shymkent

17

4 921

1 978

Total:

394

104 399

45 231

More detailed information on the results of providing guarantees as part of the implementation of the program can be obtained on the Damu website. https://damu.kz/poleznaya-informatsiya/reports/seconomy/guarantee/

Normative legal acts

Rules for guaranteeing loans under the State Program for Business Support and Development "Business Roadmap-2025", approved by the Decree of the Government of the Republic of Kazakhstan dated December 31, 2019 No. 1060.

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