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.
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.
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.
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.
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.
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.
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.
World Bank's plans in Kazakhstan for the near future
"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.
He pointed out that looking forward, Wolrd Bank's 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.