Capital Day: how has the economy of the Nur-Sultan city changed over 22 years? | FinReview
6 July 2020

Capital Day: how has the economy of the Nur-Sultan city changed over 22 years?

Traditionally, on July 6, Kazakhstan celebrates Capital Day. Our capital is one of the fastest growing cities in the world. The Nur-Sultan city has undergone a transformation from a provincial town to a modern capital.

22 years ago, the city of Akmola became the capital of Kazakhstan. The population at that time was only 300 thousand people. And today, the Nur-Sultan city is a millionth megalopolis, the center of the Eurasian space.

Our capital is the only one in the XXI century that was built over 10 years, and Kazakhstan is the only country that built a new capital at the turn of the century. Its development radically changed the whole of Kazakhstan, transforming it into an economically strong and politically stable state. understood how the economy of the Nur-Sultan city, which underwent a transformation from a provincial town to the modern capital, changed.

Nominal GRP of the capital increased by 272 times

The state of the region’s economy is most easily judged by the main macroeconomic indicators, such as, for example, GRP, level of business activity, employment, volume of attracted investments.

Gross regional product is an indicator that reflects the market value of all goods and services produced in the region. In 2019, its value in the Nur-Sultan city amounted to 7 trillion tenge and compared to 1997 increased by 272 times. In tenge terms, GRP indicators continuously grew over all 22 years.

An interesting trend is observed in the structure of GRP. In 2019, the production of goods gave the capital 19.3% of the total GRP, and the production of services – 74.5%. The rest is food taxes. At about this level, the GRP structure has been maintained since the mid-2000s.
In other words, services of a different plan – trade, car repair, real estate, finance and insurance – give the capital more added value than production.

The real growth of the GRP of the capital, that is, taking into account inflation, changed in different directions – in the 2000s, the indicator grew in double-digit dynamics, and then slowed down from 2008 to “minuses” and began to recover by 2010. Changes in dynamics are primarily caused by the crisis in financial markets in 2008 and the fall in oil prices in 2014 – 2015. To overcome them, the Government developed state programs, such as the Employment Roadmap, Business Roadmap, and Nurly Zhol.

The implementation of these programs allowed the country to withstand the negative trends that persist on world markets, increasing the business activity of the population.

As a result, 55% of GRP is generated by the business sector

The number of operating legal entities since 1999, whence the data from the Statistics Committee began, has grown by 16 times and as of June 1, 2020 amounted to 74,824 enterprises. Most of them are represented in trade, construction, education, telecommunications, and manufacturing.

It is the entrepreneurial sector that is the main employer in the capital – every third resident of the Nur-Sultan city is busy here, and their activity forms 55% of the gross regional product. Accordingly, entrepreneurship provides more than half of tax revenues. This is the highest rate among the regions.

Official unemployment in the Nur-Sultan city has been steadily declining since 2001. And this despite the fact that labor is growing rapidly.

However, experts often associate positive unemployment results in the capital with the peculiarities of the labor accounting system. Kazakhstanis without permanent employment, with low incomes and without contributions to the pension fund are shown in statistics as self-employed if they are not officially registered as unemployed.

But their share is regularly decreasing – if in 2001 the self-employed indicator was about 16% of the total economically active part of the capital’s population, then in 2020 the indicator decreased to 11%.

That is, measures taken in the country to support employment have a positive effect on the state of the labor market and, in particular, on reducing unemployment in the Nur-Sultan city.

The next indicator is the inflow of investments. The development of the capital is inextricably linked to investment income, which is characterized by continuous growth.

The total volume of attracted investments has increased 50 times

At the present stage of development of the economy of the region, capital investments play a significant role, since they are aimed at increasing the production capacities of enterprises. Since 2003, the volume of such investments in the Nur-Sultan city has exceeded 52 billion US dollars, or 9.8 trillion tenge. At the same time, about 82% of the funds raised in the city are off-budget, that is, it is the equity of enterprises and borrowed funds.

An interesting feature of these investment funds is that about 60% of them are formed by small and medium enterprises.
Another major priority in the economic policy of the capital are foreign direct investment. According to statistics from the National Bank, from 2014 to 2019, the volume of attracted foreign investments amounted to 5.1 billion US dollars.

If we talk about foreign participation in the capital’s economy, projects with foreign content have already exceeded 290 billion tenge. For example, in 2018, with the participation of foreign capital, 7 investment projects were implemented, including Alstom for the production of transformers (France), Eira Med for the construction of a plant producing medical devices (Denmark).

Today, 4027 foreign companies are registered in the city. This is a good indicator, given that competition for investment in the CIS is becoming more stringent every year. The reason for this is the growing instability and uncertainty in the world – sanctions, trade wars, geopolitical confrontations, and the epidemiological situation. However, in our case, it can be stated that the Nur-Sultan city remains a rather attractive platform for foreign investors.

Moreover, the Nur-Sultan city is a financial hub of the Central Asian region

Now about half of global GDP is generated in 300 large cities. Most of them are financial centers, such as New York, London, Shanghai, Hong Kong or Singapore. The basis of their economy is formed by finance, technology, logistics and related industries. It is through these centers that global cash flows flow.

Obviously, such cities are becoming a point of attraction for business, investment and highly qualified personnel. Now the Nur-Sultan city is developing in this direction. To do this, in 2019, the Astana International Financial Centre was launched. It was created as one of the tools to attract foreign investment into the country. Therefore, the financial center is endowed with a number of advantages that can stimulate the arrival of investors in the country.

Firstly, on the basis of the AIFC, a special jurisdiction has been created based on English law, which is used in most financial centers of the world and is understandable to investors.

Secondly, the participants of the financial center are provided with tax benefits up to 50 years, simplified currency, visa and labor regimes.
Thirdly, an independent court and an international arbitration center have been launched and operate to resolve disputes, where reputable British judges and lawyers from around the world work.

Fourth, the AIX stock exchange has been created, on which 62 securities have already been listed.

The first successes of the AIFC in attracting investments are already there. By mid-April 2020, the total market capitalization of the companies listed on the AIFC – Kazatomprom, Polymetal, Halyk Bank of Kazakhstan, Ferro Alloy Resources Limited and Kcell exceeded 13.7 billion US dollars. And the total amount of attracted investments through the AIX exchange amounted to 290 million US dollars.

Attracted investments form a pool of economic sectors that are promising from the point of view of investment, the development of which gives the greatest multiplier effect.

There are 10 such priority sectors of the economy for the Nur-Sultan city

These are tourism, development, modern production, a financial center, services for the public sector, international organizations and multinational companies, education, healthcare, trade and logistics, culture and sports, and creative sectors.

Development strategies have been developed for each sector. For example, work is already underway to attract private investors for the construction of schools. This is about 120 billion tenge of investment funds that will allow for the implementation of 8 projects, providing school education to 9 thousand students and new jobs for 1 thousand applicants.


In general, all of the above indicators and trends reflect the dynamic development of the economy of the Nur-Sultan city over 22 years. But this is far from all the achievements of the capital. For example, the list can be replenished with indicators such as an increase in population by 3 times, expansion of the city by 3 times, and an increase in the volume of housing built by 20 times.

Moreover, given that the Nur-Sultan city is the youngest capital of the world, its performance is an excellent achievement of the republic. And, being one of the geographical centers of the Eurasian continent, our capital has all the prospects of transformation into one of its leading world megacities.