Technical Assistance Consultant’s Report Project Number: 52312-001 November 2019 Kazakhstan: Scoping the Green Investments Finance Program Prepared by Janna Forthman Frankfurt School of Finance and Management Frankfurt, Germany For DAMU Entrepreneurship Development Fund This consultant’s report does not necessarily reflect the views of ADB or the Government concerned, and ADB and the Government cannot be held liable for its contents. (For project preparatory technical assistance: All the views expressed herein may not be incorporated into the proposed project’s design. ASIAN DEVELOPMENT BANK (ADB) TA-9667 KAZ: SCOPING THE GREEN INVESTMENTS FINANCE PROGRAM - INTERNATIONAL FIRM (52312-001) SCOPING STUDY - FINAL 22 NOVEMBER 2019 Prepared by Janna Fortmann Reviewed by Mert Dedebas Frankfurt School of Finance & Management Adickesallee 32-34 60322 Frankfurt am Main Tel. +49-69-154008-634 http://www.frankfurt-school.de [email protected] TABLE OF CONTENTS 1 Executive Summary .............................................................................................. 1 1.1. Overview of Summary Results............................................................... 1 1.1.1. There is an opportunity for a green technology credit line: .................................. 1 1.1.2. The M/SME Sector in Kazakhstan: ...................................................................... 2 1.1.3. The Banking Sector in Kazakhstan ..................................................................... 3 1.1.4. The Leasing Sector in Kazakhstan ...................................................................... 5 1.2. Conclusions and Recommendations ...................................................... 7 1.2.1. Opportunity for a Green Investments Credit Line in Kazakhstan .......................... 7 1.2.2. Product Features ............................................................................................... 7 1.2.3. Product Positioning and Promotion .................................................................... 8 1.2.4. Partner Banks – the Key to Success .................................................................... 9 1.2.5. Requirements regarding Technologies ................................................................ 9 1.5.1. The Role of DAMU ........................................................................................... 10 ONTENT 2 The Banking Sector in Kazakhstan ..................................................................... 12 C 2.1. Overview ............................................................................................. 12 2.1.1. Profitability and Risks ...................................................................................... 13 2.1.2. Credit Loan portfolio and PAR ......................................................................... 14 2.2. Review of individual Banks ................................................................. 17 ABLE OF T 2.2.1. Bank CenterCredit (BCC) ................................................................................. 17 2.2.2. ForteBank ....................................................................................................... 20 2.2.3. Shinhan Bank Kazakhstan................................................................................ 22 2.3. Micro-finance sector in Kazakhstan .................................................... 24 2.3.1. MFO KMF ........................................................................................................ 25 2.3.2. Fund of Financial Support of Agriculture........................................................... 28 2.4. Leasing sector in Kazakhstan .............................................................. 30 2.4.1. KazAgroFinance .............................................................................................. 32 2.4.2. TechnoLeasing ................................................................................................ 33 2.5. The Insurance Sector in Kazakhstan .................................................... 35 3 The SME and MSME Sectors in Kazakhstan ....................................................... 36 3.1. General Overview ................................................................................ 36 3.2. Challenges faced by SME/MSMEs in Kazakhstan ................................ 39 Page 3.2.1. Access to Finance ............................................................................................ 40 i 3.3. Governmental M/SME support institutions ......................................... 43 ADB Kazakhstan: Scoping the Green Investments Finance Program - Scoping Study - Final 3.3.1. Baiterek holding .............................................................................................. 43 3.3.2. DAMU Entrepreneurship Development Fund fund ............................................. 43 3.3.3. KazAgro holding .............................................................................................. 44 3.3.4. Association and National Chamber of Entrepreneurs Atameken ........................ 45 3.4. Governmental M/SME Sector Programs .............................................. 45 3.4.1. The Business Roadmap Program ...................................................................... 46 3.4.2. Economics of Simple Things ............................................................................. 47 3.4.3. Employment Roadmap program ....................................................................... 48 4 Opportunities for Green Investments in Kazakhstan’s M/SME Sectors .............. 49 4.1. Methodology ....................................................................................... 49 4.2. Summary Results of the Sector Analysis ............................................. 49 4.2.1. A very promising main result ............................................................................ 49 4.2.2. Market Sector Survey ....................................................................................... 50 4.2.3. Priority Sectors for Green Investments .............................................................. 55 4.2.4. Obstacles to be overcome ................................................................................ 59 5 Review of Green Technologies in Kazakhstan ................................................... 60 ONTENT 5.1. Summary Results ................................................................................. 60 C 5.2. Recommendations ............................................................................... 62 6 Review of the legislation for environment and green technologies in Kazakhstan – Summary Results .......................................................................... 64 ABLE OF Annexes ................................................................................................................. 68 T Annex 0: Characteristics of current M/SME loan products ................................. 69 Annex 1 List of stakeholders interviewed .......................................................... 74 Annex 2: Discussion guides for interviews with stakeholders ........................... 75 Annex 3: Online survey of SMEs ......................................................................... 76 Annex 4: The Markets for Green Technologies in Kazakhstan .......................... 85 Methodology ................................................................................................................... 85 Windows and Doors ........................................................................................................ 86 Insulation ....................................................................................................................... 87 Boilers ....................................................................................................................... 89 Heat Pumps ..................................................................................................................... 92 Power and Co-generation ................................................................................................ 94 Industrial Cooling (Chillers) .............................................................................................. 96 Commercial Cooling ........................................................................................................ 98 Page Motors and Pumps ........................................................................................................ 100 ii Lighting 105 ADB Kazakhstan: Scoping the Green Investments Finance Program - Scoping Study - Final Water Saving Technologies ............................................................................................ 107 Transport 108 Process Technolgies ....................................................................................................... 111 Annex 5: Legislation, Policy, Public Strategy and Standards for Green Economy / Technologies in Kazakhstan ............................................. 120 Annex 6: Green Bridge Programme................................................................. 201 LIST OF TABLES Table 1 an overview of the key factors that determine the viability of a green investments finance programme from the perspective of M/SMEs: .................................................................................................2 Table 2 Banks in Kazakhstan. .......................................................................................................................3 Table