A key challenge in the creation of sound market economies in the countries of the former Soviet Union is the development of strong small and medium-sized enterprises. To intensify its support for this process the European Bank for Reconstruction and Development (EBRD) is signing three agreements with the Kazakh Bank Center Credit worth US$14mn. The bank was set up in 1988 to provide services to local SMEs and has been a partner of the EBRD for more than five years.

The three agreements foresee US$6mn under the Kazakhstan Small Business Programme, US$5mn under the regional Trade Facilitation Programme and US$3mn under the Warehouse Receipts Programme. The signing brings the EBRD’s overall exposure on Bank Center Credit to US$20mn.

Mike Davey, the EBRD’s director for Kazakhstan, Kyrgyz Republic and Tajikistan , states that the increase in the scope of the bank’s operations with BCC confirmed its confidence in the Kazakh banking system and its aim of supporting the country’s medium-sized banks. A healthy banking system is best be promoted through healthy competition, he says. Providing support is a key means for the EBRD to help ensure such competition in Kazakhstan .

The Kazakhstan Small Business Programme was established in 1997 to extend credit lines to selected local bank partners which then lend the funds exclusively to micro and small enterprises, facilitating access to finance for Kazakh entrepreneurs. The programme also provides technical assistance and training for the development of a viable banking structure. In 2002, the EBRD extended the programme which has a volume of US$177.5mn.

The Trade Facilitation Programme, initiated in 1999, supports trade to, from and within the EBRD’s 27 countries of operations. The bank guarantees payment obligations of local issuing banks to their western confirming counterparts in respect of trade-finance instruments. The fast-growing programme recently topped the €1bn mark for volume financed.

The Warehouse Receipts Programme provides farmers, grain companies and traders with access to all-year-round finance by using grain as collateral. It gives farmers direct access to finance and offers them flexibility to choose the best time to sell their grain. Last year the EBRD provided more than €105mn to finance the programme in Kazakhstan , and is preparing to continue the successful scheme this year.

At the end of 2002, Bank Center Credit had total assets of US$327mn and total capital of US$40mn, making it the fifth-largest bank in Kazakhstan . Its outstanding SME portfolio under the Kazakhstan Small Business Programme exceeds US$8mn via 1,500 clients and is rapidly growing.