Development Bank of Kazakhstan updates strategy, seeks expansion of private investment

ASTANA – The Development Bank of Kazakhstan (DBK) announced Sept. 29 immediate changes to its development strategy for 2014-2023 which establish expanding private business projects and private funding sources among its key priorities along with expansion of its lending activities and development of new financial instruments, according to the bank’s press service.

Established in 2000 by the decree of Kazakh President Nursultan Nazarbayev, the DBK seeks to enhance state investment activities, support development of industrial infrastructure and manufacturing and attract foreign and domestic investments in the nation’s economy. At present, the bank’s loan portfolio includes 44 investment and 12 export operation projects.

The bank plays an important role in the nation’s economy with a total amount of investments reaching $6.9 billion as of 2016 and its strong emphasis on the regional development, where 99 percent of loan portfolio account for regional projects in the economy’s key sectors.

The changes in the bank’s development strategy are in line with Nazarbayev’s state-of-the-nation address this year that embarked the nation on the so-called third modernisation meant to enhance its global competitiveness, where the decrease of government share in the economy is one of the priorities.

The relevant changes were presented in June last year during an extended meeting of the bank’s Board of Directors and government officials, representatives of the National Bank and the National Chamber of Entrepreneurs, noted DBK Chair of the Board Bolat Zhamishev.

“Participants of the meeting approved all proposals, including increasing the share of private business funding. The implementation of the initiatives required amendments to the key documents regulating the DBK activities, including the bank’s ten-year development strategy,” added Zhamishev.

Apart from stepping up lending activities and developing new financial instruments, including a syndicated loan and project financing using public private partnerships, the updated document envisions no less than a 70 percent increase in the share of private business projects in the bank’s loan portfolio until 2023 that currently accounts for 57.4 percent.

Seeking to decrease the government share in the bank’s structure, the bank’s management agreed to expand the share of private funding sources from 58.9 percent in 2016 to at least 80 percent until 2023.

The annual volume of project and programme funding is set to increase from 426 billion tenge (US$1.23 billion) in 2016 up to 544 billion tenge (US$1.57 billion) in 2023.

Serving as the nation’s development institute, the DBK does not pursue profit maximisation as its main goal, but rather seeks to ensure a break-even of its activities. The change in the bank’s target profitability indicators from previous three percent to at least one percent is expected to allow accomplishing the objective.