The Kazakh government has brought in the
EBRD to transform its economy, the first time the multilateral has been chosen
to spearhead the industrial revolution of a leading recipient country.
Kazakhstans government is handing billions
of dollars of annual state revenues to a handful of multilaterals, led by the
EBRD, as it strives to revolutionise its energy and metals-heavy economy and to
generate greater returns from domestic assets.
The Kazakh governments reformist agenda
will see the state divert $5bn into new industries such as renewables,
transport and power transmission. At least $2.75bn will be channelled through
three multilaterals including the EBRD which will absorb the lions share of
the new investment capital as well as the European Investment Bank and Asian
Development Bank. That number is set to rise if plans to revolutionise
Kazakhstans economy work.
The EBRDs leadership was clearly delighted
at being chosen to spearhead the industrial revolution of a major recipient economy.
Its the first time weve ever done this, said Olivier Deschamps, managing
director for Turkey, eastern Europe, Caucasus and central Asia. Kazakhstan has
contributed to our projects before. But this is billions over years not a few
millions. This is a different scale. We believe it will be a game changer in
increasing the impact of the bank and scaling up our investment.
The plan is relatively simple. Kazakhstans
government will hand the cash to the EBRD-led team, which will then choose the
projects we want, and design them, said Deschamps. The state then comes in as
a co-financier, providing grants and technical assistance, or as a revenue
back-up when it comes to PPPs [public-private partnerships]. The EBRD has
4.7bn vested in 170, mostly private sector, projects around the country.
Deschamps insisted that investments would
be chosen based on the promise of returns, and on their ability to diversify
the nations industrial base, rather than on the premise of political
patronage. We are in charge totally of choosing our projects, the EBRD
Central to the plan is the promise to upend
an economic policy that, to the naked eye, has served the central Asian state
well. Kazakhstans economy grew by 6% year on year in 2013. Yet robust topline
figures conceal increasing frustration at the pace of reform.
Development aspirations have been a bit
stuck by implementation bottlenecks, Deschamps said most visible in the
delays hobbling drilling in the vast Kashagan oil field. The return of the
reformist Karim Massimov, a respected economic manager and trusted aide to
president Nursultan Nazarbayev, for his second stint as premier in April 2014,
Virtually the first thing Massimov did on
his return to office was to call on the EBRD. On the second day back in the
saddle as premier he called us in to chat, and weve been talking about
projects and funding since then, said Deschamps. He wants to get a viable and
sustainable PPP system in place, and we are looking at changes in legislation
that will make them bankable. He knows what reform means.
The EBRD clearly hopes this will first
become a model that works, and then becomes a template for the region. If other
countries adopt a similar policy, it will justify all the hard work put in by
the multilateral over the past 23 years.