The state is very active in investment financing, with the various programs being implemented by Bayterek Holding (the Kazakh ‘Norwegian Fund’) and its specialized agencies. Venture capital is also available, but long term loans can be obtained if at least 20%-25% of the equity is invested in the project. There are interest rate subsidy schemes, which reflect some sectoral or geographical preference. In terms of project finance, political and financial preferences meet in the institutions of the Investment Agreement (large projects, state-level sponsorship, 62+m USD) and the Investment Contract (‘akimat’ – county-level sponsorship). All this is done in a relatively transparent way, the process itself is fully public and the methodology of accountability is infinitely simple: what is committed in the contract must be fulfilled, otherwise, all support must be returned (but don’t think that anyone can walk in off the street, this is Asia, networking is important, the otherwise clear process cannot start without the right connections…)

Commercial banks, on the other hand, operate in a fully European way, with all services available (electronic banking, leasing, treasury, WC financing) – but they are expensive. Interest margins are usually 5%, which, given the current interbank refinancing rate, means a double-digit cost of funds for any source of funds, starting with 2 (Kazakhstan is also struggling with inflation…)

ERP infrastructure – 99% of Kazakh companies use a local system called “1C”. This software, which is also Russian made, provides a relatively modern environment, integrated with banking software and tax systems. The advantage of a unified system environment from a tax administration point of view is undeniable: taxpayers in Kazakhstan are already recording transactions in a single system, decades ahead of Europe and North America, I believe. Tax audits are also efficient, with auditors requesting specific menus and accessing the system to get information very quickly and easily. From here it is only a small step to ensure that the state is continuously connected to these systems… The system is said to be equipped with all the functions needed for reporting, I will report on this separately when we get there.

If you liked the article, feel free to read my previous posts on Kazakhstan – and if you are working in Central Asia, please contact me privately, it’s good to know each other!