ADB experts make recommendations for SME development in Kazakh regions

ADB experts make recommendations for SME development in Kazakh regions
The experts of the Asian Development Bank studied what can help to increase the share of the small and medium-sized enterprises in the regions of Kazakhstan. They analyzed the data on the example of the Kostanai region.
Low business concentration

Only less than half of the nearly 14,000 registered SMEs in the region are active. According to the survey of the entrepreneurs, most businesspeople sell their products and services within one settlement. Only one out of 10 works in other regions of the country. Less than seven percent of the businesspeople in the region export their products to Russia, and not more than one percent abroad. Majority of the SMEs in the region are engaged in trade, while others are in construction, education, public administration, agriculture and other fields.
Sectoral composition of the SMEs (legal entities) in Kostanai region in 2019:
Mining and metallurgy industry 1%
Water supply, utilities 1.0%
Services for accommodation and meals 0.9%
Art, leisure and recreation 1%
Healthcare and social services 1.7%
Communication services 1.7 %
Financial services 2.2%
Administration services 3.4%
Transportation and storage 5.2%
Real estate services 4.4%
Professional services 4.7%
Manufacturing industry 5.5%
Public administration and defence 7.2%
Agriculture, fisheries, forestry 7%
Education 8.8%
Construction 9.1%
Trade 28.3%
Other services 7.1%
Access to long-term financing

According to the survey conducted by the ADB experts, only every 10th entrepreneur in the Kostanai region is engaged in business expansion, while others justify the failure in achieving development by the lack of their own financial resources and external funding. However, only 15.7 percent of the respondents have active loans. These businesspeople use the loan money not to develop their companies, but to sustain current operations and replenish working capital.
Population exodus

The ADB experts say that the outflow of people affects the competitiveness of the enterprises of the Kostanai region. 178,408 people left the region within the last five years. 87 percent of these people moved to other regions of Kazakhstan, 13 percent – emigrated abroad.
Based on the conducted study, the ADB experts made a number of recommendations on the development of SMEs in the regions of Kazakhstan.
Regional authorities need to increase the level of connection between large cities and villages. The development of the region is impossible without the development of the villages. It is also important to expand access to finance, human resources and information. The simplified provision of public services will significantly facilitate the work of the business sector. It is especially true for issuing permits for land use, construction and the connection of the enterprises to the public utility services. The public procurement procedures require the separate consideration. It is also recommended to develop the business sector by introducing the local entrepreneurs to the best practices that are applied outside the region and country. In addition, the large technology companies should be involved in the region by establishing cooperation with the local educational centers.