In 2022, SMEs made up 96.9% of all businesses in Kazakhstan. The share of people employed by SMEs was 45.8% of the total employed population. SMEs contributed 36.5% to the country’s GDP that same year.
SME lending was on the rise in Kazakhstan since 2014 up to 2017. In 2017-2019 the SME loan portfolio was showing a negative trend. In 2022 the SME loan portfolio increased by 20.1%. At the same time, new lending to SMEs increased by 16.4% over the last year. Due to the fact that the portfolio of loans to SMEs increased, the share of loans to SMEs in the total portfolio of business loans also grew to 34.1%. The increase in lending dynamics is largely due to a significant improvement in the operating environment, relaxed quarantine restrictions, the offer of new products, and the development of digital channels and ecosystems.
Interest rates for SMEs have fluctuated over the last years, growing steadily from a record low of 11.5% in 2014 to 14% in 2016. In 2022, the rate was 17.2%, while that of large enterprises was 15.9%. This growth is due to the increase in the base rate by the National Bank of the Republic of Kazakhstan.
Among non-bank sources of finance, leasing has the largest market and is steadily growing. In 2021, leasing and hire purchases were almost 8 times higher than their 2010 level. The development of leasing and the growth of its indicators is due to several reasons. Firstly, there is a growing need for industrial, transport and agricultural enterprises to update and expand the fleet of machinery and equipment. Secondly, many enterprises have problems providing collateral for loans from STB, while leasing companies are more flexible in their collateral policy. Thirdly, the procedure for making lease payments is one of the biggest advantages of leasing. The agreement may optimally take into account the interests of all parties, since the size and period of payments are determined on the basis of a joint agreement.
Non-performing loans (NPL) with arrears of more than 90 days in banks’ portfolio among both total loans and SME loans slightly increased in 2022 from 3.3% to 3.4%. Commercial banks fulfil requirements of the National Bank of Kazakhstan concerning maximum appropriate NPL level of no more than 10% of the total loan portfolio.
An important role in maintaining SMEs’ access to lending is played by the state, which places funds in commercial banks to provide concessional lending to SMEs during shortages of liquidity in the market. The largest placement of state funds for SME lending took place in 2018. The main part of loans was allocated in 2014-2016 to support SMEs in the manufacturing industry at a rate of 6% per annum, which are issued by banks on a revolving basis.
Since 2010, the government, through “Damu” Entrepreneurship Development Fund, has provided subsidizing of interest rate expense and loan guarantees for SMEs under the “Business Roadmap” Programme. A new financial instrument in Kazakhstan, loan guarantees are becoming popular very quickly, escalating from just three guarantees in 2010 to 50 789 guarantees at the end of 2022.