Mariyam Ismailova | 27.12.2025
The Importance of SMEs in Developing Economies like Kazakhstan
SMEs in many developing countries are more than just enterprises, they are an important foundation of economic development and innovation. In Kazakhstan, where a heavy dependence on natural resources has been stifling economic development for many years and where overall diversity has been called for, SMEs are an important factor in building a more strong and innovative economy. Employment opportunities and innovation development in regions are only some of the important areas where SMEs have made significant contributions to the economy. However, SMEs are faced with many factors that could potentially hinder their development or limit their potential.
SMEs have been recognized as playing an essential role in the economic growth of Kazakhstan. One in every five people in Kazakhstan is working in businesses, while SMEs have contributed 39.8% to gross value added, putting the country at the verge of achieving the 40% benchmark. Micro and small enterprises account for 99.9% of all businesses, with over 4.4million people employed in the country compared to the economically active number that stands at 45.5%, increasing employment by 3.9% in the previous year. Medium scale businesses have gained strength, contributing 7.9% to GDP in 2025. For SMEs, the government has introduced 117 financial and non financial services, digitalized processes for compliance with regulations, taxation policies, and favorable financing programs such as Örleu, which has supported more than 1700 projects valued at 482billion tenge. Already, research shows that SME development has a positive effect on influencing families’ income and reducing poverty in rural areas. SMEs are becoming an important area within developing a more resilient and inclusive economy for Kazakhstan.
The SMEs have several major roles that are essential for the economy, apart from the size or the contribution of the GDP that they represent, as is the case with many small countries. The SMEs have a very vital influence when it comes to job creation and stability as far as income is concerned. They create employment opportunities for about half the economically active population of Kazakhstan. The influence that the SMEs have when it comes to employment is quite vital, especially when considering the fact that many regions, especially the semi urban ones, don't have many organisations that can be referred to as big. There’s clear evidence that the influence that the SMEs have has a positive effect on the incomes of the people, which basically leads to reduced unemployment and poverty. Individual entrepreneurship, especially when considering the aspect of individuals, has been very effective when it comes to income, which leads to financial stability. The influence that the SMEs have when it comes to the aspect of diversification of the economy, especially considering the fact that the economy depends on natural resources, is significant, SMEs expand activity into services, manufacturing, agriculture and trade. This reduces vulnerability to price increases and creates a stable economic position. When income sources are diversified, households are protected during economic downturns. Moreover, SMEs boost innovation and competitiveness. Their small/medium size allows them to adapt and respond to changing demand quicker, SMEs can easily innovate, improve, and compete more effectively. As a result, SMEs are crucial for Kazakhstan’s sustainable growth.
However, SMEs in Kazakhstan face a number of challenges, which hinder their development. The first challenge is a financial barrier. This is because SMEs have difficulties accessing loans due to a number of reasons, including high security requirements, interest rates, as well as back terms that can't be met. Studies show that a significant number of SMEs are denied loans, especially in rural areas. Additionally, administrative barriers are heavy. This is due to complex procedures, administrative barriers, as well as asymmetric information about SME programs. This affects SME development, especially in areas that are far from large cities. The next challenge is that operating in the informal sector is a problem. This is because many organisations engage in tax evasions, which affects formally registered SMEs, creating an uneven competitive environment, as well as lowering government revenues. Lastly, growing beyond micro enterprises is a challenge due to financial, administrative and uneven regional SME development programs, which hinder SME growth from micro to medium enterprises.
Kazakhstan has been making efforts to provide more support for SMEs. Current Kazakhstan businesses are involved in the overall gross value added, and about one in five Kazakh citizens is employed in the business sector, which proves the effectiveness of the efforts that have been implemented. To empower the business owners, the government has been improving the consolidated list of 117 tools to support for SMEs, which help enhance the quality of the industry, introduce new technologies, enable the industry to export the products, as well as improve access to finances using system baqylauda.qoldau.kz, which has been used successfully by more that 222,000 business owners. Apart from that, slightly changing the regulatory requirements for the business, which involve the use of technology for the requirements that are supposed to be met, and adjusting the requirements for qualification, has been done to provide businesses with clear conditions for regulatory compliance. This will enable major businesses to engage with Kazakh SMEs for longer contracts, which will increase market stability and demand. Moreover, finances to support SMEs have been increased, as the Örleü concessional financing programme has funded more than 1700 projects, which helped SMEs significantly. The Damu Fund guarantee funds have been ensuring that the SMEs get finances to invest using the Damu Fund loan. Also, partnerships have been formed with international institutions, which are setting the development strategy for the growth of SMEs, as the partnership with the European Bank for Reconstruction and Development (EBRD) is setting the strategy to grow medium enterprises two or three times.
SMEs have been recognized as playing an essential role in the economic growth of Kazakhstan. One in every five people in Kazakhstan is working in businesses, while SMEs have contributed 39.8% to gross value added, putting the country at the verge of achieving the 40% benchmark. Micro and small enterprises account for 99.9% of all businesses, with over 4.4million people employed in the country compared to the economically active number that stands at 45.5%, increasing employment by 3.9% in the previous year. Medium scale businesses have gained strength, contributing 7.9% to GDP in 2025. For SMEs, the government has introduced 117 financial and non financial services, digitalized processes for compliance with regulations, taxation policies, and favorable financing programs such as Örleu, which has supported more than 1700 projects valued at 482billion tenge. Already, research shows that SME development has a positive effect on influencing families’ income and reducing poverty in rural areas. SMEs are becoming an important area within developing a more resilient and inclusive economy for Kazakhstan.
The SMEs have several major roles that are essential for the economy, apart from the size or the contribution of the GDP that they represent, as is the case with many small countries. The SMEs have a very vital influence when it comes to job creation and stability as far as income is concerned. They create employment opportunities for about half the economically active population of Kazakhstan. The influence that the SMEs have when it comes to employment is quite vital, especially when considering the fact that many regions, especially the semi urban ones, don't have many organisations that can be referred to as big. There’s clear evidence that the influence that the SMEs have has a positive effect on the incomes of the people, which basically leads to reduced unemployment and poverty. Individual entrepreneurship, especially when considering the aspect of individuals, has been very effective when it comes to income, which leads to financial stability. The influence that the SMEs have when it comes to the aspect of diversification of the economy, especially considering the fact that the economy depends on natural resources, is significant, SMEs expand activity into services, manufacturing, agriculture and trade. This reduces vulnerability to price increases and creates a stable economic position. When income sources are diversified, households are protected during economic downturns. Moreover, SMEs boost innovation and competitiveness. Their small/medium size allows them to adapt and respond to changing demand quicker, SMEs can easily innovate, improve, and compete more effectively. As a result, SMEs are crucial for Kazakhstan’s sustainable growth.
However, SMEs in Kazakhstan face a number of challenges, which hinder their development. The first challenge is a financial barrier. This is because SMEs have difficulties accessing loans due to a number of reasons, including high security requirements, interest rates, as well as back terms that can't be met. Studies show that a significant number of SMEs are denied loans, especially in rural areas. Additionally, administrative barriers are heavy. This is due to complex procedures, administrative barriers, as well as asymmetric information about SME programs. This affects SME development, especially in areas that are far from large cities. The next challenge is that operating in the informal sector is a problem. This is because many organisations engage in tax evasions, which affects formally registered SMEs, creating an uneven competitive environment, as well as lowering government revenues. Lastly, growing beyond micro enterprises is a challenge due to financial, administrative and uneven regional SME development programs, which hinder SME growth from micro to medium enterprises.
Kazakhstan has been making efforts to provide more support for SMEs. Current Kazakhstan businesses are involved in the overall gross value added, and about one in five Kazakh citizens is employed in the business sector, which proves the effectiveness of the efforts that have been implemented. To empower the business owners, the government has been improving the consolidated list of 117 tools to support for SMEs, which help enhance the quality of the industry, introduce new technologies, enable the industry to export the products, as well as improve access to finances using system baqylauda.qoldau.kz, which has been used successfully by more that 222,000 business owners. Apart from that, slightly changing the regulatory requirements for the business, which involve the use of technology for the requirements that are supposed to be met, and adjusting the requirements for qualification, has been done to provide businesses with clear conditions for regulatory compliance. This will enable major businesses to engage with Kazakh SMEs for longer contracts, which will increase market stability and demand. Moreover, finances to support SMEs have been increased, as the Örleü concessional financing programme has funded more than 1700 projects, which helped SMEs significantly. The Damu Fund guarantee funds have been ensuring that the SMEs get finances to invest using the Damu Fund loan. Also, partnerships have been formed with international institutions, which are setting the development strategy for the growth of SMEs, as the partnership with the European Bank for Reconstruction and Development (EBRD) is setting the strategy to grow medium enterprises two or three times.
