 ALMATY, Kazakhstan - "We are now one of the leading producers in the region,” farmer Darkhan Tishabayev says proudly of his company, which cultivates wheat in southern Kazakhstan. “But just a few years ago, we were lagging behind others, struggling to survive.” Tishabayev attributes the change to the loan he received as part of a World Bank–supported project to support private farming in Kazakhstan.
In 1998, the agricultural sector in Kazakhstan was at its lowest in 30 years. A significant number of farms were facing mounting losses, and rural incomes were steadily declining. It was at this time when the Government of Kazakhstan initiated the Agricultural Post-Privatization Assistance Project, requesting Bank support. Previous efforts—which included farm privatization and elimination of state control over agricultural trading—had failed to revive the sector chiefly because the county's overall legal and institutional framework remained weak and financing for farmers was virtually nonexistent. In particular, banks were scared of lending to agricultural businesses, which employed 25 percent of the country’s labor force, because of the high level of perceived risk and the banks' own lack of long-term funds. A better environment for rural finance  The World Bank and the Kazakh government launched the US$ 15 million project as the first part of a larger program that focused on improving the country's policy and legal framework for rural finance, providing advice and training to newly emerging rural enterprises, and improving farmer’s access to commercial financial services.
The project disbursed 141 loans totaling US $19 million (with the Bank contributing $12.3 million) through seven commercial banks, in addition to providing technical assistance and training. The repayment rate was over 98 percent—an outcome that made many bankers reassess their original perception of rural enterprises as risky and unstable. During field visits, it was evident that the project had enabled most participating farmers to improve their income and living standards, and some were even able to contribute significantly to their communities' economic and social activities. Easing farmers' transition to the new economy  The project helped bring about legal reforms as well, and allowed several thousand rural entrepreneurs to receive training in economics, marketing, and technical issues—easing the transition of restructured farms and associated enterprises to the new economy.
“The support from the World Bank was huge—and timely,” Tishabayev says, pointing out that the new funds enabled the purchase of modern equipment and expand farming activities. “Instead of putting our energies into fixing our prehistoric machinery, we can concentrate on our land full time—and cultivate all of it," he says, adding that thanks to new resources, he and his associates even rent additional land to work on. * * * This progress was made possible thanks to the World Bank's Agricultural Post-Privatization Assistance Project-I (1998-2003). To read more about the second phase (2004-2009) of this endeavor, click here. |
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