Visa’s Strategy in Kazakhstan Confirms Foreign Interests in the Local SMEs
Geopolitical Report ISSN 2785-2598 Volume 34 Issue 2
Author: Silvia Boltuc
The “Business Springboard” competition, which has been organised by Visa, demonstrates the significant interest foreign entities hold for the small SMEs sector in Kazakhstan. It unequivocally signifies their commitment to solidifying their footprint in the local market and forging enduring relationships with the burgeoning community of small and medium enterprises.
In an interview for Forbes Kazakhstan, Kristina Dorosh, Vice President, Regional Manager of Visa in Central Asia and Azerbaijan, spoke about the competition “Business Springboard” which attracted over 600 small and medium enterprises in Kazakhstan.
Dorosh confirmed Visa’s interests in the Kazakh business entrepreneurial environment and stressed that support for SMEs is a strategically important area for the US multinational financial service corporation headquartered in San Francisco.
By fostering an environment that nurtures innovation and entrepreneurship, Visa underscores not only its dedication to Kazakhstan’s economic development but also its aspiration to play an instrumental role in empowering local businesses.
This competition serves as a poignant example of how global leaders in the digital payments industry are actively engaging with the Kazakhstan business landscape, aligning their goals with the growth and prosperity of the nation’s entrepreneurial ventures.
Kazakhstan between geopolitical interests and business opportunities
Central Asia’s largest economy, since the fall of the Soviet Union, Kazakhstan has attracted foreign investment and entrepreneurs because of its natural resources, including abundant minerals, hydrocarbons, and rare earth metals.
Currently, this Central Asian republic has become more important if we consider the current situation in the international arena characterised by the clash between Russia and the West because of the Ukraine conflict, Washington-Beijing’s competition over the Asia-Pacific region, and the affirmation of a changing multipolar world. Indeed, thanks to its geographical location, Kazakhstan might be considered a logistic hub which connects Europe and Asia and a profitable market for its oil and natural gas resources.
Kazakhstan is part of Beijing’s Belt and Road Initiative and Moscow’s Eurasian Economic Union, an organisation which represents a market of more than 180 million consumers. According to data provided by the Kazakh Ministry of National Economy, since 1991 Kazakhstan has attracted 411 billion dollars of foreign investments (FDIs), especially from the Netherlands (90.3 billion), the United States (42.3 billion), Switzerland (30.7 billion), China (19.9 billion) and Russia (15.8 billion) followed by France, Belgium, United Kingdom, South Korea and Japan.
The volume of FDIs attested from 2016 to 2023 between 17 and 24 billion a year has made Kazakhstan the Central Asian republic that has received the most investments, demonstrating the attractiveness and possibilities that the Kazakh territory offers.
Kazakhstan with 79.6 points ranked 25th in the World Bank’s Doing Business 2020, with very positive performances in terms of the ease of opening a business (94.4 points) or for the protection and guarantees of minor investors (84 points and 7th position in the world). Data which is supported by Kazakhstan’s 43rd position in the World Competitiveness Index (1st position among the members of the Commonwealth of Independent States), 28th position in the Global E-Government Development Index and the first position according to the United Nations Conference on Trade and Development (UNCTAD) regarding the growth of FDI between transition economies and continental countries (data for 2021).
The Sector of SMEs in Kazakhstan
SMEs play a pivotal role in employment generation, especially in emerging economies, such as Kazakhstan. As of October 2022, SMEs provided jobs to approximately 3.9 million people, with the highest employment figures recorded in Almaty (799,153) and Astana (457,479).
According to the latest data from the Bureau of National Statistics, Kazakhstan hosts 2,097,519 SMEs, out of which 1,904,656 are actively operating. Among these, 1,839,108 are categorised as small businesses, with 1,653,680 being active.
There are 2,992 medium-sized enterprises, of which 2,910 are operational. The classification of businesses into small, medium, and large entities is determined by criteria such as the average annual number of employees, with state statistics primarily depending on this factor.
Astana has established high aspirations for its SME sector, with the aim of elevating its contribution to the GDP to 35% by 2025, as delineated in the national initiative for entrepreneurship advancement. According to present indicators, there is a significant probability of achieving this target ahead of schedule. At the end of 2021, SMEs already contributed 33.5 % of the nation’s GDP, with small businesses playing a pivotal role, contributing 26.8%.
As per government reports from December 29th, 2022, SMEs further expanded their share in the GDP, reaching 35.7% by the second quarter of 2022. During the year 2021, small and medium-sized enterprises demonstrated a remarkable upsurge in labour productivity, with a growth rate of 2%, culminating in a figure of 8 million tenge ($17,917) per person.
Women’s entrepreneurship is thriving in Kazakhstan, with women leading 44.6 % of active SMEs, numbering 638,089. The total number of individuals employed by these enterprises exceeds one million, making up one-third of the SME workforce. The sector of wholesale and retail trade is still the most favoured by male and female executives, with 252,230 businesses headed by women and 206,312 managed by men.
Individuals under 30 years of age led nearly 400,000 businesses in Kazakhstan as of the end of 2022. Among these, the trade sector accounted for 41.9%, signifying the enthusiasm of young entrepreneurs in contributing to the nation’s economic growth and dynamism.
Conclusion:
Why does Visa’s Interest in Kazakhstan Matter?
The competition organised by Visa serves as a testament to the vital role played by micro and small businesses in national economic prosperity. In an era marked by global economic uncertainties and challenges, nurturing the entrepreneurial spirit at the grassroots level becomes paramount.
Visa’s commitment to supporting such businesses aligns with broader trends seen in various countries worldwide. It confirms the interests that foreign companies have in playing a significant role in the Kazakh market, considering the potentiality that this Central Asian republic has.
Bearing in mind the emerging and increasingly prominent role that Kazakhstan occupies within Central Asia because of its robust internal market, foreign investments, and strategically advantageous location, Visa has made a deliberate and strategic effort to establish itself as a major player in the SMEs sector within the country.
Therefore, the US company’s involvement in initiatives such as the “Business Springboard” competition serves as a testament to its commitment to becoming an integral part of Kazakhstan’s economic landscape.
Through activities like promoting entrepreneurial competitions, Visa not only seeks to enhance its brand recognition among a new customer base, but also underscores its dedication to aligning with the goals and aspirations of the Kazakh government.
This alignment with the government’s vision, as articulated by President Kassym-Jomart Tokayev, emphasises the significance of SMEs in driving the nation’s economic growth and employment prospects.
Looking at the broader picture, the dynamics of Kazakh SMEs and Visa’s active support for their expansion indicate the positive economic trends that the Central Asian republic has experienced. These trends encompass not only economic growth but also enhanced investment opportunities and an improved business environment. Visa’s strategic interest in the SME sector in Kazakhstan further underscores the attractiveness of the country as a destination for foreign investment.
Additionally, the expansion of the SME sector has the potential not only to attract other foreign companies, following Visa’s lead, but also to provide a substantial economic stimulus to the national economy. The growth of SMEs generates employment opportunities, fosters innovation, and contributes to overall economic resilience.
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