English (UK)
The DAMU Fund has traditionally been viewed as a key instrument for supporting small and medium-sized businesses (SMEs) in Kazakhstan. However, amid the country's transition toward a green economy and the growth of capital markets, structural limitations in the Fund’s new subsidy and guarantee programs are becoming increasingly evident—especially in financing renewable energy (RE) projects.
Key Challenges: Three Strategic Failures
1. Lack of Instruments for Bond Financing
Despite the growing adoption of sustainable finance instruments—such as ESG platforms and green bonds on the AIX and KASE exchanges—the DAMU Fund does not include bond financing in its interest rate subsidy or guarantee programs. This significantly reduces the attractiveness of bond issuance for private investors and prevents long-term support for green infrastructure projects.
2. Exclusion of OKED Code 35.11 (Electricity Production) from Priority Sectors
This decision effectively excludes RE projects from priority financial support, despite their strategic importance for sustainable development, fulfillment of Kazakhstan’s international emissions reduction commitments, and export potential.
| Sector | Status in DAMU Program |
|---|---|
| Electricity production (OKED 35.11) | Not included in priority sectors |
| Equipment installation / construction | Included |
| Production of PV modules / ESS | Included |
As a result, RE companies implementing major infrastructure projects are unable to receive subsidies or guarantees, despite winning KOREM auctions and signing 20-year offtake contracts.
3. Lack of Transparency and Weak Business Engagement
The DAMU Fund’s new programs have been launched without pilot phases or open consultations. Market players are not informed in a timely manner about upcoming changes and are not involved in the development of new approaches—particularly regarding ESG tools and project finance mechanisms.
Why This Matters
- Critical RE projects financed through capital markets may be delayed or canceled.
- Private investment inflows into a stable and high-potential sector are being restricted.
- A paradox arises: PV plant construction or solar installation may receive support, while electricity production itself does not.
- ESG regression: limiting green bond financing undermines Kazakhstan’s sustainable development commitments and the mission of Baiterek Holding.
Policy Recommendations
| Measure | Proposal |
|---|---|
| Inclusion of OKED 35.11 | Reinstate electricity production from RE as a priority sector |
| Support for bond financing | Extend programs to cover bond issues, including guarantees and coupon subsidies |
| Integration with AIX/KASE | Sign cooperation MoUs with local exchanges for ESG-aligned finance |
| Transparency and dialogue | Conduct open consultations with businesses and industry associations before launching new instruments |
Conclusion
Kazakhstan’s SME sector can—and should—use the DAMU Fund as a strategic tool to support sustainable energy and modernize the financial market. To do this, existing limitations must be removed, and renewable energy should be reinstated as a priority sector—serving as a foundation for the country’s new industrialization.