ASTANA – The Islamic Development Bank (IsDB) has provided a $40 million loan to Kazakhstan’s Damu Entrepreneurship Development Fund, said fund Deputy Chairperson Daulet Abilkairov at the Central Communications Services Jan. 11 press conference. The loan will be given to businesses corresponding to the requirements of Islamic finances.
“These funds will be used to develop Islamic finance and provide small and medium-sized entrepreneurs (SME) with alternative sources of financing. There are no industry restrictions. Given that the money is specific to the development of Islamic finance, we will work with those organisations, leasing companies and the Al Hilal Islamic Bank, that comply with Islamic finance legislation. But we want to note that the funds are without restrictions on the business area and they are for all regions of the country,” he said, as reported by abctv.kz.
The IsDB is providing the seven-year loan under guarantee of the Damu Fund.
“These funds will be mixed with our own funds. That is, we will reduce their cost for entrepreneurs. We attract the funds in tenge, which means there is no currency load and they are for a long period. Funds for seven years are hard to find on the market now,” he noted.
“The basic rate will be 14 percent (per annum); we will not subsidise all that is higher. If a financial institution issues them at 14 percent, then an entrepreneur can still receive a subsidy,” he added.
Abilkairov noted only those organisations that have received Islamic council approval in Malaysia, Qatar or other countries will be eligible for the funds. Damu is currently conducting internal procedures to obtain the loan.
“They [IsDB] confirmed that they allocated $40 million to Kazakhstan in tenge. We are now conducting internal procedures, agreeing on draft agreements between us and other financial institutions [such as]… Islamic leasing companies, Al Hilal Bank and Kazakhstan Development Bank Leasing. We are also working out the legal subtleties. We plan to make the fund available on the Kazakh market in January or the beginning of February,” he said.
The Damu Fund is a financial agent implementing and monitoring financial support to SMEs and providing guarantees to banks on entrepreneurs’ loans as part of Business Road Map 2020.
The fund’s branches operate in all regions of Kazakhstan working with local businesses, public organisations and local executive authorities.