2021 Entrepreneurial Activity Review

In Kazakhstan, policy conditions for starting a business have improved recently. This is evident both from GEM survey results as well as from the improving scores given by other research sources such as the Ease of Doing Business rankings. The result of these improvements is a culture that is highly ambitious and supportive of entrepreneurship.  Among GEM Level B economies in 2021, for example, Kazakhstan had the third-highest rate of survey respondents saying that in their country it is easy to start a business (52.4%). In a related measure, 65.4% said they had the skills, knowledge and experience required to start a business, the fourth-highest rate among GEM Level B economies.

Yet the most impressive finding of the 2021 survey was that only 12.1% of Kazakhs who saw good opportunities to start a business would not do so for fear it might fail, the lowest rate among all GEM economies across the three Levels. Given this level of confidence, it is unsurprising that so many Kazakh adults intend to start a business in the next three years (55.3%). The rise in entrepreneurial intentions has been a recent development, increasing significantly in 2017 to 46%, and increasing gradually since then. This mirrors the country’s GDP figures, which also grew at higher rates starting in 2016 through 2019 after a few years of slow growth, suggesting a correlation between expanded economic opportunity and entrepreneurial intentions among the general population.

Policymakers should track if confidence can remain high despite the recent economic difficulties resulting from COVID-19. In both 2021 and 2020, around 93% of Kazakh respondents reported their household had lost income as a result of the pandemic, the highest among GEM Level B economies. The relationship between growth and confidence could be disrupted in this difficult economic environment. Perhaps those already involved in entrepreneurship will help grow the economy to aid in its recovery. For example, among the country’s relatively high level of early-stage entrepreneurs (19.9% TEA rate), 59.1% say they plan on using more digital technology to grow their business, demonstrating a commitment to grow in the face of some difficult economic circumstances.

2021 Framework Conditions Review

Kazakhstan’s framework condition scores were mixed in 2021. Unsurprisingly, given the strong entrepreneurial culture noted above, their Social and Cultural Norms score of 5.6 was second among GEM Level B economies. A strong entrepreneurial culture will help resist some of the pessimistic attitudes towards entrepreneurship that might occur when an economy is temporarily contracting. The country’s governance conditions were also scored fairly high in 2021, improving from 2020. In particular, the condition Government Policy: Support and Relevance was highly rated by experts, receiving a 5.6 score, second among GEM Level B economies; while Government Policy: Taxes and Bureaucracy (5.5) was third. These show an impressive commitment by the state to supporting entrepreneurship, even as many competing priorities emerged during the pandemic. Indeed, this appears to be a state priority.

Some areas for improvement that could have a strong, immediate impact on entrepreneurs are finance and R&D. Kazakhstan’s Entrepreneurial Finance condition received a score of 4.2, 10th among Level B economies. Some policies, such as loan guarantees to promising entrepreneurial projects, may incentivize financial institutions to lend more in an otherwise tightening environment. The condition Research and Development Transfers received a 2.9, 16th among GEM Level B economies, reflecting some barriers to knowledge and other IP sharing between large and small organizations. Policies that would offer tax incentives for sharing IP could be an immediate benefit for those new businesses looking to grow in the competitive technology field.