30 000 burgeoning entrepreneurs to be trained in 2018 – MNE RK
In fulfillment of the President’s Five Social Initiatives, 20 billion tenge have been allocated for the microcredit development.
“Last year, about 40 billion tenge was spent. This year, we should bring the execution amount to 62 billion tenge. On average, the microcredit market takes 171 billion tenge, that is, commercial microfinance organizations execute this amount of money annually. 62 billion tenge is almost half of the funds that the market executes, that is, it is a very good support for the lending market on the part of the state,” Chingis Akhmetov said.
2017 became a pilot for the implementation of the Program for the Development of Productive Employment and Mass Entrepreneurship.
“We saw that starting entrepreneurs from different sectors are ready to participate in this program. These are mainly trade, manufacturing, retail services. The first year of the implementation of this Program has shown the need for its improvement,” Ch. Akhmetov explained.
So, in 2017, in order to increase the coverage of the Program by borrowers, the following changes have been made to it.
According to the Deputy Director of the Entrepreneurship Development Department, there was a direct ban on the purchase of non-commercial real estate at the expense of state support funds for businesses. In other words, it was forbidden to change the purpose of the real estate: to buy apartments on the ground floors, land plots for I?? (individual housing construction) with subsequent commercialization.
Taking into account that for burgeoning entrepreneurs commercial objects are often inaccessible due to their high cost, changes have been made, according to which it is allowed to buy non-commercial property objects at the expense of budgetary money with the subsequent mandatory change of the purpose for one year.
“That is, the beginning business is given the opportunity to buy the same apartments, equip them for business within a year, and only then work as a commercial facility,” Ch. Akhmetov said.
The main operators of the Program for the Development of Productive Employment and Mass Entrepreneurship in the cities are second-tier banks and microfinance organizations.
“All the large banks that operate in the country are members of the Program. Placement of money through second-tier banks allows us to solve one of the main problems. After all, the main goal in itself is not to give out money, but to get a positive effect in the form of jobs, increasing employment, reducing unemployment. To give an opportunity to beginning startuppers to get financing,” the deputy director of the department said.
The infrastructure of second-tier banks is used to make a qualitative selection of projects. To this end, the system of bank financing is applied. In cases where the money will be irrevocable, the banks will be obliged to repay the money from their own funds in accordance with the signed loan agreements.
Chingis Akhmetov also spoke about innovations in the guaranteeing.
“Guaranteeing is a very important tool for this category of citizens. The self-employed and the unemployed are often beyond the red line that the banks have outlined for themselves. That is, this category of citizens often does not have apartments, movable, liquid collateral,” he said.
To solve this problem, a microcredit guarantee instrument was initiated for the first time last year. Previously, such a tool hasn’t been applied on microcredits. The basic conditions are as follows: for a beginning entrepreneur, 85% of the size of a microcredit, 50% � for a working business. The guarantor in the cities is the Damu foundation, in the countryside � KazAgroGarant. The basic conditions are very simple. The only restriction is that the entity that receives the guarantee from the state makes commitments that during the period of the guarantees and the repayment of credits it will not take additional credit from other sources of financing.
At the same time, Ch. Akhmetov noted that last year the money was placed in such banks as Nurbank, Bank CenterCredit, ATF, Sberbank, Halyk Bank, Forte Bank, Eurasian Bank, and two microfinance organizations � Yrys and Kyzylorda RIC. The average sales receipt for the previous period was 10.5 million tenge, the average loan term is 51 months. In general, the self-employed and the unemployed are interested in the sectors of trade, transport, housing and food services and manufacturing.
“Due to the fact that we have additional limits this year, we have prepared a number of amendments to the Program. The main amendments are related to the orientation of this money to smaller projects. Because 10.5 million tenge in the cities is a significant amount,” said Chingis Akhmetov.
Since this year, after adoption of the amendments to the Program, self-employed persons, whose business has been operating for less than three years, can participate. Individual entrepreneurs with experience of more than three years will not be able to participate in the Program.
In addition, the control on educational programs has been strengthened.
“We are asking all of our final borrowers to receive basic courses on Basics of Doing Business before receiving loans and micro-loans. It is very important. Because often in practice we receive complaints from entrepreneurs. Ignorance of basic principles and business skills leads to very disastrous consequences for the business itself. And there are a lot of such examples,” Chingis Akhmetov said.
There are two-day, seven-day and month courses. For the rural category there is a requirement for compulsory passage of the courses under the Bastau Business program. Last year 15 thousand people were trained in this program. Of these, 8 000 people have defended business plans.
Another requirement is to pass the test before training.
“This is the Juicy method, which is actively used in world practice. Basic ideology says: it is important to understand that not everyone can do business. In the process of testing, it turns out whether it is worthwhile for this person to do business or go to improve his qualifications and work as a wage worker,” the MNE RK representative said.
For example, last year 23 thousand people came to such testing. Of these, 15 thousand were recommended to engage in business, the rest � in the first direction of the Program for Productive Employment and Mass Entrepreneurship, to pass qualification improvement and find a job as a wage worker.
In the current year, the Program aims to encompass not only the education of the rural population, but also of the city. In total, 30 thousand burgeoning entrepreneurs will be trained, which in the future will be supported and funded by the Atameken NCE.
Source: The Prime Minister of Kazakhstan