ASTANA – Kazakhstan needs to continue the liberalization of economy to preserve and increase the inflow of foreign investment, said Afzal Amin, CEO of London Expertise, in an interview with The Astana Times on the sidelines of the Kazakhstan Global Investment Roundtable (KGIR) 2023 two weeks ago.
Afzal Amin. Photo credit: theguardian.com.
“So far, we have invested more than $1 million,” said Amin, speaking about his eight-year work experience in Kazakhstan in water management, exploration, and mining.
London Expertise, which collaborates on infrastructure projects in frontier markets, provides specialized consultancy services in water infrastructure, exploration, mining, electricity generation, and affordable housing.
Apart from Kazakhstan, Amin’s personal practical experience in infrastructure and minerals development spans Mauritania, Somalia, Iraq, Afghanistan, and Bangladesh since 2013. The expert is also a former British Army officer.
Investor’s perspective on Kazakhstan
“The people who have built Kazakhstan since its independence, were all trained by the Soviet system. Yet, despite that, they made massive changes in the economy’s work. They were able to bring in foreign investors, particularly to the oil and gas sector, as well as to liberalize it. A very good progress has been made,” he said.
Amin commended the Kazakh government’s work in this direction. The accomplishments, in his opinion, “let the country earn billions of dollars of annual revenue for the good of its nation.”
At the same time, when asked about challenges in investment activities in Kazakhstan, the expert said there are “some barriers that prevent the country’s potential from being realized fully.”
One of those barriers, according to him, is the high turnover of government officials at the ministry level.
“During the work on the infrastructure project, which lasts approximately 30 years, a company might work with 15 ministers. Every few years, with each minister, you start from scratch informing about the project, team, financing, implementation, or the timelines. This is probably the biggest thing holding Kazakhstan back,” he said.
For the continued growth of the economy, Amin underscored the need to introduce new developments.
“The next round of changes, I think, need to be focused on non-oil and gas sectors, especially those, which generate sustainable long-term growth,” he said.
Critical role of minerals and agriculture
According to Amin, there are two sectors of particular focus – minerals and agriculture.
“Kazakhstan has tremendous potential. The majority of new discoveries are made by junior companies, not by government entities,” he said, referring to the importance of market-driven initiatives.
Minerals of strategic importance, that is, critical minerals, have carved a prioritized niche in Kazakhstan’s economy. The country produces bismuth, gallium, rare earth elements, silicon, vanadium, tungsten, tin, tantalum, niobium, magnesium, lithium, indium, graphite, and cobalt among other minerals.
“The period from the initial idea to its production is usually 10 years. It should be economically feasible to physically get to the destination with roads and rail lines, take the equipment, people, materials, such as diesel or acids, and run operations,” said Amin.
“At the end you should have more value than you put in at the beginning. If you make mistakes along the way, you reduce the value. So many projects fail because the economic value cannot be realized,” he noted.
Kazakhstan, the ninth largest country in terms of landmass with 74% of its territory suitable for agriculture, aims to increase the productivity of the agri-food sector by three times and to double its exports. This was announced by Kazakh President Kassym-Jomart Tokayev at the Nov. 1 Kazakhstan-France Business Forum.
Over the past few years, the water supply issue for agricultural needs in Central Asia has become acute. International experts rank climate change, depreciation of infrastructure, irrational and inefficient use of water resources as the primary factors causing the water crisis in the region.
“I could be wrong. However, as I understand it, there’s no water scarcity. Instead, there is a water management issue. We have water, but we don’t have enough systems to capture it, store it, and then move it to where it’s needed,” he said.
During the KGIR panel discussion last month, the expert suggested Kazakh authorities to shift focus from innovations and legislation to talent attraction. The forum was focused on the promotion of sustainable regional growth.
