EBRD talks on allocating loan to largest microfinance organization in Kazakhstan

By Trend

One of the European Bank for Reconstruction and Development’s operational objectives in Kazakhstan is the ongoing support to micro, small and medium sized enterprises, which need to play stronger role in the national economy, EBRD told Trend in an interview.

Recently Trend reported that EBRD arranged a loan of $50 million for the country’s largest micro-finance organization, KMF.

EBRD states that KMF will use the funds to increase its customer base and provide loans to clients across Kazakhstan. Up to $10 million will be contributed by the EBRD while the remaining $40 million will be syndicated to microfinance investment funds via Hedged Loan Participation (HLP).

The bank noted that it will use HLP, a syndication product allowing the Bank to sell U.S. dollar participation in a local currency-denominated loan, to provide KMF with local currency financing that will protect KMF, its clients and the participating investment funds from currency risk.

"Also under the new loan KMF will continue benefit from the EU-funded Regional Small Business Program for Central Asia managed by the EBRD. It will receive access to know-how in MSME (Ministry of Micro, Small & Medium Enterprises) finance as well as training on a variety of topics relevant for financial institutions providing services to micro, small and medium-sized enterprises".

The EBRD is supporting development of competitive, resilient and green Kazakhstan through investment in infrastructure, including in the regions, energy, with focus on renewable energy projects, the development of the financial and small business sectors, and the stimulation of entrepreneurship.

The EBRD had another strong year in Kazakhstan in 2018, committing $541 million to the country in 26 transactions.

Investments were made in a wide range of private and public sector projects and the Bank supported Kazakhstan’s drive to secure its position as a regional renewable energy leader by channeling funds to a number of projects.

Answering Trend’s question on Kazakh attractiveness for foreign investments, EBRD underlined that Kazakhstan has achieved notable success in creating attractive investment environment.

"Just using one indicator, the country is currently at #28 in the "Doing Business" rating, ahead of the likes of Russia, Turkey and Belarus from our region of operations. The debate is increasingly shifting from questions about investment climate to questions about investment opportunities, and how they can be enhanced through for example increasing connectivity within Central Asia as well as with Europe, Asia and Africa".

EBRD notes that they see interest to invest in Kazakhstan from international investors from Europe and China, for example. The renewables sector seems to attract a lot of attention from international developers.

The latest EBRD Regional Economic Prospects states that real GDP growth in Kazakhstan accelerated to 4.1 percent both in 2017 and in 2018.

The economy grew strongly due to the increased oil production and favorable oil prices; oil output expanded by 10.5 percent in 2017 and by 6.6 percent in 2018.

Moreover, EBRD stressed that banking sector imbalances in Kazakhstan crystalized as the National Bank withdrew licenses of three smaller banks and provided liquidity support to the second largest bank in September 2018. These steps taken are part of regulatory approach of the National Bank, which will help facilitate strengthening of the banking sector in the country.