(MENAFN- Trend News Agency)
BAKU, Azerbaijan, August 8. The World bank (WB)
Group is gearing up to put together a brand new Country Partnership
Framework for Kazakhstan for the next five years, Andrei Mikhnev,
World Bank Country Manager for Kazakhstan and Turkmenistan, said in
an exclusive interview with Trend .
"The World Bank's strategy for Kazakhstan is to reduce regional
disparities by expanding social infrastructure and transport
infrastructure. We are focused on the improvement of logistics and
the development of multimodal transport to facilitate commerce. We
are dedicated to the advancement of effective governance, climate
resilience, and safety in the transportation sector, ensuring that
infrastructure projects are beneficial to communities, particularly
those in remote areas," he said.
As Mikhnev pointed out, shifting from old-school contracts to
contracts that are based on results and performance is a top
priority to enhance cost effectiveness and risk control, in line
with our objective of establishing long-lasting resilience and
financial stability in the transport sector.
"The World Bank Group employs the 'cascade' approach, aiming to
leverage significant private sector financing in priority areas.
Recognizing that the investment needs of Kazakhstan exceed the
capacity of the government and international financial institutions
alone, we are working to create an environment that attracts
private investment by ensuring fair competition and removing market
distortions. Currently, we are preparing a new Country Partnership
Framework for the upcoming five-year period, and of course we will
do it in consultation with all the counterparts, both from the
government and non-government sectors," the country manager
said.
Mikhnev highlighted that the World Bank aims to assist
Kazakhstan in reaching high-income status through a model of
sustainable and equitable growth, with a particular emphasis on
decarbonization and extensive benefits for the people.
"Looking forward, our commitment is to develop innovative
projects that incorporate global best practices. We envision a
Kazakhstan where we empower individuals to take risks, start
businesses, invest in promising ventures, and seek opportunities to
enhance their skills and employment prospects. We anticipate that
this dynamic environment will stimulate innovation and productivity
in emerging economic sectors. We are looking to support a public
sector that fosters ownership and performance, where public
servants can exercise discretion and take risks without excessive
bureaucracy while maintaining robust, risk-based checks and
balances. We see Kazakhstan as a regional and global leader,
forging new economic linkages and playing a central role in a
cooperative Central Asia. This involves collaborative efforts to
enhance connectivity and align regulations, making the region
attractive to major investors and establishing dynamic economies of
scale and value chains," Mikhnev noted.
Takeaways of 30-year partnership
"The WBG's partnership in Kazakhstan spans more than 30 years
and is guided by the Kazakhstan Country Partnership Framework (CPF)
2020–2025. The WBG includes the International Bank for
Reconstruction and Development (IBRD), the International Finance
Corporation (IFC) and the Multilateral Investments Guarantee Agency
(MIGA). Our support and interventions are informed by the
government's priorities and our analytical work, including through
our Joint Economic Research Program (JERP), which informs the
government's economic and social development reform agenda, and has
been in place for over 20 years," he said.
The country manager pointed out that ever since getting involved
in Kazakhstan, IBRD has been backing more than 50 projects with a
whopping sum of over US$8 billion.
"Today, we have eight active projects focused on areas such as
connectivity, water systems, innovation and technology, landscape
management and restoration, and education modernization. These
projects are already showing tangible results. Some highlights
include the 1,900 km of road constructed along an International
Transit Corridor from Western Europe to Western China to facilitate
trade and logistics, which has also strengthened local connectivity
and, most importantly, improved the lives of local residents.
Agricultural investments have resulted in the improvement of 76,000
hectares of irrigation and drainage services, as well as the
development of 700 kilometers of lined canals. Our new project, the
Digital Acceleration for an Inclusive Economy Project (DARE), aims
to support equitable access to high-quality, affordable broadband
infrastructure in remote areas and help to accelerate economic
diversification and improved access to services," Andrei Mikhnev
said.
The country manager observed that the IBRD and the IFC had
provided assistance to around 250,000 small and medium firms in
implementing cutting-edge technologies.
"Other projects included institutional support for tax
administration and the justice sector. IFC's focus on private
sector solutions to address development challenges has seen a
portfolio of over $257 million. Examples of partnerships include
assisting the government in forming a public-private partnership to
develop the Almaty Ring Road (BAKAD) and constructing a new
terminal at Almaty Airport. Meanwhile, MIGA's focus on providing
guarantees has been instrumental in facilitating private investment
in rail. In 2023, MIGA issued a guarantee of more than $500 million
to the National Railway Company Kazakhstan Temir Zholy JSC (KTZ) to
help access long-term international commercial financing at
favorable terms, which is expected to increase the reliability of
railway services and track networks and improve safety," he
said.
As he noted, the World Bank Group intends to continue supporting
the ambitious reform agenda in Kazakhstan.
"The World Bank Group's contributions are not just about
financing; we are, importantly, a "knowledge bank". We have and
will continue to leverage our deep global experience and long
presence in Kazakhstan to provide policy-relevant analysis and
ideas and engage in dialogue to support a successful and ambitious
reform agenda in Kazakhstan. For example, our Country Climate and
Development Report, issued in 2022, supported the government's
preparation of the Low Emissions Development Strategy in
Kazakhstan, while our Country Economic Memorandum: Dependence,
Distance, and Dispersion mapped out a chart for feasible economic
development. Joint Economic Research Program analysis has supported
the drafting of a new Investment Policy Concept, the Concept of
Local Self-Governance, a new Law on the Development of
Agglomerations, and a new methodology for setting the minimum wage,
to name just a few," he said.
WB support to advance Kazakhstan's decarbonization
agenda
The dedication of WBG to renewable energy in Kazakhstan is
complex, covering both the theoretical and practical dimensions, as
Andrei Mikhnev pointed out.
"Our Country Climate and Development Report (CCDR), released in
2022, delves into decarbonization pathways and their economic
implications. Currently, we are offering technical assistance to
develop sectoral roadmaps aligned with Kazakhstan's Low Emissions
Development Strategy. As you may know, Kazakhstan's municipal
buildings are among the most energy-intensive globally, per unit
area. The Kazakhstan energy efficiency project, which concluded in
2021, demonstrated success in reducing energy consumption and could
be expanded nationally to align with Kazakhstan's strategic goals,"
he said.
Mikhnev noted that the World Bank provides sectoral programmatic
technical assistance to improve energy efficiency, promote
small-scale solar projects, integrate renewable energy to stabilize
grids, and modernize hydropower plants.
"Looking ahead, we are poised to equip the government of
Kazakhstan with the necessary tools to move the decarbonization
agenda forward. This includes our recent Partnership for Market
Implementation (PMI) grant agreement aimed at improving
Kazakhstan's Emissions Trading Scheme and broadening carbon pricing
mechanisms. We remain committed to supporting energy sector
advancements, including investments in transmission and
distribution infrastructure, new green energy generation, and
fostering regional cooperation and energy trade," he added.
Study to enhance Kazakhstan's logistics hub
status
As the country manager pointed out, the World Bank acknowledges
that Kazakhstan plays a crucial role as a bridge between China,
Europe, and the Middle East.
"To capitalize on this strategic position and address the
challenges of connectivity that have historically limited the
country's development, we have focused our efforts on enhancing
transport links. This initiative aims to bridge regional
disparities and improve access to employment, education,
healthcare, and social services. Our current investment in
Kazakhstan's transport infrastructure includes three major
projects: the South-West Roads Project, the East-West Roads
Project, and technical assistance for the development of the Aktau
port. The road projects have successfully financed the construction
of over 1,900 kilometers of roads, significantly improving trade
routes to the Chinese border and linking economically disadvantaged
regions with the country's industrial hubs. These projects have had
a transformative impact on the lives of approximately 5.5 million
people residing along the Western Europe–Western China corridor,"
he said.
He spelled it out that, on top of road construction, the World
Bank is lending a hand to beef up the resilience of the Caspian
Sea's port infrastructure, shipping, and logistics networks.
"The government of Kazakhstan is particularly concerned about
mitigating climate-related risks like the fluctuating water levels
of the Caspian Sea. The outcomes of this study are anticipated to
be available by summer 2025, offering strategic insights to fortify
Kazakhstan's position as a key logistics hub in the region,"
Mikhnev concluded.
Pulling out all the stops to develop the Middle
Corridor
The country manager pointed out that the geopolitical landscape
has been turned upside down, with the war in Ukraine and sanctions
against Russia throwing a spanner in the works. However, these
challenges have also opened doors for Kazakhstan, making it a key
player in the Middle Corridor and boosting its position as a bridge
between Asia and Europe.
"Kazakhstan can capitalize on such an opportunity by
diversifying trade routes and reducing its reliance on a limited
number of partners like Russia and China. The Middle Corridor
offers a strategic alternative for trade, potentially increasing
the resilience of Kazakhstan's trade and opening up access to new
markets in Europe, the Middle East, North Africa, and parts of
Asia," he said.
Andrei Mikhnev pointed out that the World Bank recognizes the
transformative potential of the Middle Corridor for Kazakhstan,
Azerbaijan, and Georgia.
"By fostering production agglomerations, these countries can not
only increase their export volumes by an estimated 90 million tons
by 2030 (with 70 million tons accounting for additional exports
from Kazakhstan) but also enhance the value of their exports. This
shift towards more complex products and integrated logistics
solutions is expected to drive economic development and create
higher-value industries," he said.
In his view, to fulfill this potential, it is essential for the
countries along the Middle Corridor to continue investing in
infrastructure improvements and equipment upgrades.
"A Roadmap has been adopted to guide the expansion of capacity
along the corridor. The World Bank has contributed to this effort
by producing a report titled“Unlocking the Potential of the Middle
Corridor” with recommendations on enhancing port and railway
connectivity, increasing operational efficiency, and adapting to
environmental challenges like the falling level of the Caspian Sea.
We are actively engaged in discussions with the government of
Kazakhstan to determine how best to support the ongoing development
of the Middle Corridor," the country manager said.
World Bank's future involvement in Kazakhstan's
agricultural sector
As he noted, the World Bank is actively engaged in a policy
dialogue with the government of Kazakhstan to enhance the
agricultural sector's productivity and competitiveness.
"Recognizing the need for more effective public support, we are
advising on the reform of state support mechanisms. Our
recommendations, detailed in a policy note completed last fiscal
year, suggest a shift from output subsidies to soft lending and
matching grants that encourage the adoption of innovative and
climate-adaptive technologies. Climate change poses a significant
risk to agriculture in Kazakhstan, particularly due to the
anticipated increase in temperatures and potential water scarcity.
To address this, we have compiled a comprehensive report titled
'Climate Adaptation Options and Opportunities in the Agriculture
Sector, which presents viable technologies and agronomic practices
that could be adopted with government support," Mikhnev said.
The country manager noted that the World Bank's future
involvement in Kazakhstan's agricultural sector, including the
possibility of financing investment projects, will align with the
government's priorities and external borrowing policies. The World
Bank is committed to continuing our technical support and policy
advice to advance agricultural development in the country.
MSMEs' role in Kazakhstan's economic growth
"The World Bank is keenly aware of the rapid development of
small and medium-sized enterprises (SMEs) in Kazakhstan, which are
essential for economic diversification and job creation. Despite a
7 percent increase in the number of MSMEs in 2023, the sector still
grapples with challenges such as low labor productivity and limited
workforce expansion. Furthermore, MSMEs in Kazakhstan, 77 percent
of which are individual entrepreneurs, are primarily concentrated
in the trade and services sectors (69 percent) and construction (10
percent). These enterprises often lack the managerial,
technological, and human capital that are more prevalent in peer
countries," he said.
The country manager pointed out that to support the development
of MSMEs, the Bank is partnering with the government of Kazakhstan
on several initiatives.
"We have conducted a comprehensive analytical assessment to
identify the barriers to productivity growth at the micro-level,
providing the government with evidence-based policy recommendations
to enhance productivity. Additionally, our Fostering Productive
Innovations Project is designed to bolster high-quality research
and the commercialization of technologies. This project supports a
range of activities, including grant programs for researchers, the
development of an Early-stage Venture fund, and the creation of a
technology brokerage ecosystem to help local startups reach
international markets. We remain committed to supporting projects
that stimulate the MSME sector, fostering an environment where
businesses can thrive and contribute to Kazakhstan's economic
growth," Mikhnev noted.
Promotion of female-owned businesses in
Kazakhstan
Andrei Mikhnev noted that the World Bank is committed to
advancing women's entrepreneurship in Kazakhstan as part of our
broader efforts to close gender gaps in education, employment, and
business.
"Our Gender Strategy 2024–30 outlines an ambitious plan to
promote gender equality as a means to end poverty and ensure
sustainable development. This is reflected in our Corporate
Scorecard, which emphasizes gender equality as a critical
objective. In collaboration with the government of Kazakhstan, we
are implementing strategies to address gender disparities in the
business sector. This includes analytical work to pinpoint barriers
women face in business, which will be a key aspect of the second
part of our Public Finance Review. Moreover, we have launched a
technical assistance project under the World Bank Women
Entrepreneurs Finance Initiative (We-Fi) to enhance early-stage
financing for women-owned small and medium enterprises (SMEs) in
Kazakhstan," he said.
He brought up an important point: this project is about
collaborating with local investors to figure out how to fund small
and medium-sized enterprises (SMEs) run by women. That means making
changes to investment procedures and offering training to reduce
unconscious bias.
"These initiatives are part of a comprehensive approach
involving both public and private stakeholders to build an
inclusive business environment that empowers women and contributes
to Kazakhstan's economic growth," the country manager
concluded.
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