One of the reasons I enjoy coming to Kazakhstan is its hospitality and especially the generous and delicious meals. I have personally enjoyed many examples of the local produce: from rice grown in Kyzylorda to apples from Almaty and of course bread made of Kazakhstan’s high-quality wheat.
So I am especially pleased that this year’s Foreign Investor Council meeting on June 4-5 is focusing on agriculture in Kazakhstan.
We at the European Bank for Reconstruction and Development (EBRD) are already increasing our involvement in agriculture and we certainly want to do more to reform the sector and to increase its role in the economy.
Over the past year, we have pursued an innovative model of cooperation in Kazakhstan which makes me optimistic about taking on new challenges.
Last May, the EBRD and the Kazakh government signed an Enhanced Partnership Arrangement to boost reform, re-energise transition and to help channel some of the oil wealth into other sectors.
As a result, we increased our annual investment in Kazakhstan by about 80 per cent, to over $700 million last year, focusing on areas that directly improve people’s lives, such as public utilities and transport. This brings our total financing here to more than $7 billion.
We are now ready to deepen our cooperation in agriculture. Our main message is that the private sector has to play a larger role.
Many citizens of Kazakhstan heard family stories about ancestors who were farmers or herders, and have an instinctive understanding of the bonds that tie a farmer to his land and to his livestock. President Nazarbayev himself comes from a family of agricultural workers and is, in his own words, “the son, the grandson and the great-grandson of cattle herders”.
Kazakhstan was the breadbasket of the Soviet Union, but at a great price. The farmers’ bonds to their land were all but destroyed.
Today, it is time to return private initiative, know-how and entrepreneurial spirit to agriculture in Kazakhstan. This will allow the country to play a key role in global food security and to diversify its economy.
Food Security and Role for Kazakhstan
The simple truth is that the world needs more food. Food security and sustainable agriculture are at the heart of the global debate, in which the EBRD is active. We launched our Private Sector for Food Security initiative four years ago, in partnership with the UN’s Food and Agriculture Organisation (FAO), to help governments create conditions for companies to grow more.
Kazakhstan can play a greater role by creating the right climate for companies to increase production and exports – especially now when there is a gap in the markets created by geopolitical turmoil. Agriculture is also key for the economy of Kazakhstan itself.
Diversification
According to my Kazakh friends, Kazakhstan produces the best hard wheat in the world, and experts confirm this. The country is one of the top 10 wheat exporters and the second-largest wheat flour exporter in the world.
The country achieved this while most agriculture remains controlled by the state. So maybe things are fine as they are?
We know Kazakhstan’s answer to this question: change is necessary. A promising industry like agriculture should be generating greater income for Kazakhstan and insuring it against oil price shocks. New technologies, fresh capital and dynamic entrepreneurs need to come to the sector.
Rebalancing the economy, allowing private companies to play a more active role, is our shared goal under the Strategic Partnership. I would like to stress the role of domestic companies here.
Foreign investment is important because it brings new technologies and practices.
But to realise the full potential of Kazakh agriculture, there needs to be a strong domestic private sector.
Companies need to reform from within to attract international financing, including from the EBRD. They need to become more transparent, improve their corporate governance and financial management. And there simply needs to be more of them.
Already in the Field
The EBRD and Kazakhstan are already ploughing away in the sector.
We provided financing to companies like Louis Dreyfus Commodities and RG Brands. We are working on credit lines to SMEs, including in agriculture. Thanks to support by the Kazakh government, we are about to launch a new programme, “Advice to Agribusiness”.
Last year, the government invited us to get Kazakhstan connected to the Agriculture Market Information System, and we are working, in partnership with the FAO, to get the country fully plugged in.
We are also involved in large-scale transport infrastructure projects like roads and rail which are necessary for any sector.
We financed part of the Western Europe-Western China corridor, crucial for grain exports to China.
But to really boost agriculture exports, more needs to be done in storage, transport and trading infrastructure.
Agriculture can be very promising, but we at the EBRD also know how challenging it is to reform this particular sector in any country. There are no easy recipes. But Kazakhstan has found ways to turn other big challenges into successes. We are ready to be a committed partner as Kazakhstan takes on this new task.
The author is President of the European Bank for Reconstruction and Development.
