“Business Roadmap 2025” State Program for Entrepreneurs Support

“Business Roadmap 2025” State Program for Entrepreneurs Support

Approved by the Decree of the Government of the Republic of Kazakhstan #968 on December 24, 2019

The program information

The legal basis for implementation

The Decree of the President of the Republic of Kazakhstan #772 dated October 12, 2018 “On measures to implement the President’s Message to the People of Kazakhstan entitled “Increasing income and quality of life of Kazakhstan Citizens” dated October 5, 2018

State body responsible for the program implementation

Ministry of National Economy of the Republic of Kazakhstan

Purpose of the program

To ensure sustainable and balanced development of regional entrepreneurship; to create new jobs and maintain existing ones

Objectives

1.                  To make financing more accessible for small and microbusinesses

2.                  To increase the productivity of the manufacturing industry

3.                  To create new competitive industries

4.                  To provide information and analytical support to entrepreneurs.

5.                  To increase the competence of entrepreneurs.

6.                  To strengthen business ties.

Terms of implementation

2020 – 2024

Goals

By fulfilling the objectives, the following goals are expected to be achieved by 2025:

1. To increase the share of small and medium-sized businesses in GDP to at least 33.8%.

2. To boost tax revenues from the program participants by 2 times in comparison with 2017.

3. To help the program participants create 30 thousand jobs.

4. To increase the share of the manufacturing industry in GDP to at least 13.4%.

5. To increase the share of medium-sized businesses in the economy to at least 13.7%.

Damu Entrepreneurship Development Fund, a subsidiary of Baiterek Holding, implements the Business Road Map-2025 State Program (hereinafter – the Program) and supports businesses by subsidizing interest rates on loans, financial leasing agreements, and microcredits received from second-tier banks, the development bank, leasing companies, and microfinance organizations. The Fund also issues partial guarantees for loans and microcredits received from second-tier banks, the development bank, and microfinance organizations. The program has two phases:

1. Supporting small and microbusinesses;

2. Supporting entrepreneurs and subjects of industrial and innovative activities.

Conditions for participation in the Business Road Map-2025 State Program

The 1st phase: Supporting small and microbusinesses

During its first phase, the program will provide the following financial support to entrepreneurs:

1. subsidizing a part of the interest rate and partial guaranteeing for loans and microcredits;

2. subsidizing a part of the profit margin and a part of the lease payment that make up the income of Islamic banks.

The program’s first phase covers small and microbusinesses.

The conditions and procedure are regulated by the Rules for subsidizing a part of the interest rate and partial guaranteeing for loans and microcredits of small and microbusinesses (https://adilet.zan.kz/rus/docs/P1900001060#z2902).

Subsidizing a part of the profit margin and a part of the lease payment that make up the income of Islamic banks is carried out for loans, microcredits, or financing issued for investment purposes and replenishment of working capital without industry restrictions. This does not apply to pawnshops, microfinance organizations, and leasing companies.

The maximum amount of a loan, microcredit, or financing issued for investment purposes and for which a part of the interest rate or profit margin that constitutes the income of an Islamic bank is subsidized, cannot exceed 20 (twenty) million tenge; for replenishment of working capital – not more than 5 (five) million tenge. Loans and microcredits for working capital replenishment must be renewable and/or non-renewable.

Subsidizing a part of the interest rate or profit margin that constitutes the income of an Islamic bank is carried out only for loans/financing with a nominal interest rate/profit margin not exceeding the rate of interest established by the National Bank of the Republic of Kazakhstan and increased by 8.5%, of which 6% is paid by an entrepreneur, and the rest is subsidized by the state.

Subsidizing a part of the interest rate and partial guaranteeing are carried out only for microloans issued by microfinance organizations with a nominal interest rate not exceeding 28% per annum, of which 50% is compensated by the state.

Subsidizing a part of the remuneration rate and partial guaranteeing are carried out for microloans issued by microfinance organizations for projects in priority sectors of the economy in accordance with Appendix 2 to this document.

The amount of the partial guarantee for small and microbusinesses is up to 85% of the loan, microcredit, or financing amount. The remaining loan amount is paid by an entrepreneur at the discretion of a bank.

The term of subsidizing a part of the interest rate or profit margin that constitutes the income of an Islamic bank from microcredits or financing and intended for investment purposes is 3 years; for working capital replenishment – 2 years without the right to prolong the subsidy period.

The term of the provided partial guarantee cannot exceed the term of the loan, microcredit, or financing amount.

The 2nd phase: Providing support for entrepreneurs and subjects of industrial and innovative activities

During its second phase, the program will provide the following financial support to entrepreneurs and subjects of industrial and innovative activity:

1. subsidizing the interest rate on loans, financial leasing agreements, mezzanine loans, and (or) loans from banks, the development bank, private equity funds, or leasing companies;

2. subsidizing the interest rate on loans from banks or the development bank issued to businesses to implement green projects;

3. subsidizing a part of the profit margin and a part of the lease payment that make up the income of Islamic banks;

4. subsidizing the interest rate on loans issued to ensure long-term tenge liquidity to solve the problem of affordable credits in the manufacturing industry and services, and for processing in the agro-industrial complex;

5. subsidizing the coupon rate on bonds issued by businesses;

6. subsidizing the coupon rate on climate bonds included in the official list of the stock exchange, and (or) climate bonds issued in accordance with the acts of the AIFC and included in the list of the AIFC stock exchange;

7. partial guaranteeing for loans issued by banks and the development bank;

8. partial guaranteeing on loans issued by banks to ensure long-term tenge liquidity to solve the problem of affordable credits in the manufacturing industry and services, and processing in the agro-industrial complex.

The participants in the program’s second phase are effective entrepreneurs or subjects of industrial and innovative activities who implement and (or) plan to implement their own projects without industry restrictions, except for:

1. projects in the field of trading activities (except for loans not exceeding 100 million tenge received to replenish working capital);

2. projects of entrepreneurs and subjects of industrial and innovative activities that are specified in paragraph 4 of Article 24 of the Entrepreneurial Code of the Republic of Kazakhstan (this subparagraph applies to projects that were registered starting from April 20, 2020);

3. the activities of pawnshops, microfinance organizations, and leasing companies.

The participants in the program’s second phase are also entrepreneurs and subjects of industrial and innovative activities who are implementing and (or) planning to implement green projects, developed by the authorized body in the field of environmental protection and approved by the Government of the Republic Kazakhstan, in accordance with the environmental laws of the Republic of Kazakhstan.

Follow the link to view the conditions for granting subsidies under the second phase:

Part of the interest rate is subsidized for new loans, financial leasing agreements, mezzanine loans, and (or) loans issued for the implementation of new effective investment projects, as well as projects aimed at modernization, increasing the productivity, replenishment of working capital, and franchising.

The amount of a loan or a financial lease agreement, taking into account all existing loans, for which a part of the interest rate is subsidized, cannot exceed 7 (seven) billion tenge for one entrepreneur.

The subsidy period for loans and financial leasing agreements, including loans issued for the implementation of green projects aimed at investments, is 5 (five) years without the right to extend the subsidy period. The term for subsidizing loans aimed at replenishing working capital is 3 (three) years without the right to extend the subsidy term.

Subsidizing is carried out for loans, financial leasing agreements, and loans issued for the implementation of green projects, with a nominal interest rate not exceeding the interest rate established by the National Bank of the Republic of Kazakhstan and increased by 5%, of which 6% is paid by an entrepreneur, and the rest is subsidized by the state.

If an entrepreneur receives a loan exceeding 180 (one hundred and eighty) million tenge, including loans issued for the implementation of green projects, must invest his/her own money (or other movable or immovable assets) in the project, including assets of third parties, provided as security not lower than 10% of the total cost of the project.

Follow the link to view the conditions for guaranteeing under the second phase: 

The guarantee is provided for loans issued by banks for the implementation of effective investment projects, as well as projects aimed at modernizing, increasing productivity, or refinancing.

The guarantee is also provided for loans issued for franchising and/or following public-private partnership agreements without industry restrictions. This does not apply to projects of entrepreneurs and subjects of industrial and innovative activities specified in paragraph 4 of Article 24 Entrepreneurial Code of the Republic of Kazakhstan.

Guaranteeing can be carried out only on bank loans with a nominal interest rate not exceeding the base interest rate of the National Bank of the Republic of Kazakhstan, increased by 5% as of the date the bank decides on the project of an entrepreneur and a development bank with an interest rate of no more than 15% per annum.

Guaranteeing conditions for entrepreneurs:

1. the loan(s) amount cannot exceed 1 (one) billion tenge for bank loans.

The total amount of loans and financial leasing agreements of individual businesses cannot exceed 100 (one hundred) billion tenge;

2. the amount of the guarantee cannot be more than 50% of the loan amount, while the entrepreneur provides security for the loan with a pledge value of at least 50% of the loan amount (when calculating the sufficiency of security, the pledge of the right of claim and the pledge of business partnerships’ shares in the authorized capital are not taken into account);

3. the term of the guarantee cannot exceed the term of the loan;

4. loan currency is tenge.

For loans exceeding 180 (one hundred and eighty) million tenge, the entrepreneur must provide his/her own money or movable/immovable property in the amount of at least 10% of the total cost of the project.

Implementation of the Business Road Map-2025 State Program

Subsidizing projects in all areas for the period from 01.01.2021 to 01.11.2021

REGIONS

DKB 2 direction

DKB portfolio subsidy

DKB affected SE

affected sectors of the economy wave 2

affected sectors of the economy wave 3

TOTAL

Akmola region

176

382

4

130

320

1012

Aktobe region

338

993

13

48

208

1600

Almaty region

266

782

35

143

16

1242

Atyrau region

323

568

33

98

293

1315

East Kazakhstan region

416

645

57

118

130

1366

Almaty

597

793

160

221

504

2275

 Nur-Sultan

553

913

18

189

544

2217

Shymkent

292

797

19

70

103

1281

Zhambyl region

329

931

30

17

195

1502

West Kazakhstan region

277

521

7

186

813

1804

Karaganda region

247

477

7

239

658

1628

Kostanay region

282

410

1

27

92

812

Kyzylorda region

380

882

40

124

242

1668

Mangystau region

314

779

35

155

322

1605

Pavlodar region

371

402

4

39

236

1052

North Kazakhstan region

235

292

4

215

99

845

Turkestan region

154

913

21

25

1113

Total

5550

11480

467

2040

4800

24337

 

Guaranteeing projects for the period from 01.01.2021 to 01.11.2021

Region

Number of signed guarantees

Total sum, tenge

Total amount of guarantees, tenge

Aktobe region

1187

15,900,611,856

9,494,230,762

Zhambyl region

1053

13,050,209,911

7,202,370,904

Nur-Sultan

1030

24,516,546,908

11,822,477,399

Almaty region

925

16,179,006,241

8,264,900,445

Turkestan region

905

6,393,261,334

3,870,631,193

Shymkent

900

11,268,602,660

5,858,927,194

Almaty

880

22,069,949,502

9,887,237,807

Kyzylorda region

827

11,633,221,912

5,473,019,040

Mangystau region

735

11,443,512,260

6,481,110,651

Atyrau region

680

10,157,248,163

4,852,516,687

EKR

595

10,980,291,562

5,633,178,440

Pavlodar region

592

17,221,350,864

7,815,478,803

WKO

544

9,154,060,545

4,142,414,146

Karaganda region

527

10,870,271,744

4,917,420,593

Kostanay region

507

9,980,443,845

4,660,946,225

SKR

412

12,713,638,417

5,779,583,092

Akmola region

357

7,075,244,675

3,692,452,928

Total

12656

220,607,472,398

109,848,896,309

Follow the link for more information on the results of the program implementation.

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