Agriculture, forestry and fisheries account for only 4.3% of GDP. The low level of development of the sphere is associated with a lack of funding, insufficient innovative equipment, and inadequacy of special equipment. Nevertheless, Kazakhstan has great potential for agricultural development. By 2021, it is expected that exports of processed products may increase 2.5 times to 2.4 billion US dollars, and labor productivity will grow 3 times and reach 3.7 million tenge per employee. As a result, more than 600 thousand new jobs will be created.
Agriculture is one of the important sectors of the economy, which allows to strengthen the food and economic stability of the country, labor potential, the settlement of rural areas and increase economic diversification. Kazakhstan has great potential for the development of the sphere by increasing the competitiveness of the agricultural sector and creating added value of products through its processing. In particular, the export positions of the oil and meat sectors are strengthened annually, and the country has already become one of the largest exporting countries in the world for grain and flour.
Nevertheless, in the structure of GDP, agriculture, forestry and fisheries account for only 4.3% or 1.9 trillion tenge. Over the past ten years, the sector’s share in GDP ranged from 4.2% to 4.9%, while only in 2009 and 2010 Kazakhstan managed to overcome the border of the interval and reach indicators of 6.2% and 6%, respectively. According to the World Bank, in countries with high agricultural potential, the sector’s share in GDP is on average 14.2%.
Over the years of independence of Kazakhstan, state policy in the field of agriculture was implemented on the basis of nine program documents:
- socio-economic development of the “Aul” for 1991 – 1995 and for the period up to 2000;
- development of the agro-industrial complex for 1993 – 1995 and up to 2000;
- development of agricultural production for 2000-2002;
- state agri-food program for 2003-2005;
- development of rural areas for 2004 – 2010;
- sustainable development of the agro-industrial complex for 2006 – 2010;
- priority measures for the implementation of the Concept of sustainable development of the agro-industrial complex for 2006 – 2010;
- development of the agro-industrial complex for 2010 – 2014;
- on the development of the agro-industrial complex “Agribusiness-2017”.
However, as before, about 80% of agricultural output is sold in the form of raw materials, without processing, and finished products have poor competitiveness. Moreover, over 90% of investments in fixed assets in agriculture, forestry and fisheries are directed specifically to the cultivation of seasonal crops (58.2%) and livestock (32.3%).
In January – August 2019, the volume of investments in fixed assets in the sphere amounted to 263.7 billion tenge, an increase of 50.1% compared to the same period in 2018. In the financing structure, the main share (78.3%) was formed from the equity of enterprises. Borrowed funds amounted to 16.6%, and the share of bank financing – only 5.1%.
In the regional context, the bulk of investment (49.4% or 130.2 billion tenge) is concentrated in grain-growing regions. So, 62.6 billion tenge was allocated to the North Kazakhstan region (growth compared to the same period of 2018 – 38.4%), to Akmola region – 35 billion tenge (growth – 77%), to Kostanay region – 32.7 billion tenge (growth – 33.6%).
At the same time, in the city of Almaty, a decrease in investments was recorded immediately by 92.1%, in the city of Shymkent – by 83.8%, in the Mangystau region – by 79.8% and the Atyrau region – by 65.4%.
Moreover, foreign investors have become less interested in agriculture in Kazakhstan. Over the past four years, foreign direct investment has been declining annually by an average of 45%. If in 2015 the volume of FDI was at the level of 71.5 million US dollars, then in 2018 – 11.2 million US dollars. And, for the first half of 2019, the volume of FDI amounted to 6.6 million US dollars.
Obviously, for the development of the sector, investment growth is necessary, and in the current market system, FDI is of high importance for the national economy, since an increase in the export of Kazakhstani products and investment flows by 10% ensures a GDP growth of 9.2%. Entrepreneurs can attract foreign investment through the platform of the Astana International Financial Centre, which is a holistic institution for working with foreign investors, which includes various divisions – from administrative (AIFC court, international arbitration center, Committee for the regulation of financial services, expat center ) to specific areas of development (FinTech, EdTech, Astana International Exchange, Islamic finance, green finance). AIFC operates on the principles of English common law applicable in 27% of the 320 jurisdictions of the world. The created infrastructure provides international investors with a clear legal understanding of the procedure for activities in Kazakhstan, guarantees the protection of invested assets, simplifies the search for cost-effective projects and accompanies investors at all stages of their activities.
Kazakhstan agricultural entrepreneurs can attract additional capital through the AIFC through Islamic financing, launching startup projects and attracting borrowed funds from foreign investors.
The growth of investment flows will accelerate the development of the agro-industrial complex, which in turn will have a positive effect on the country’s economy. So, by 2021, labor productivity can grow by 3 times and reach 3.7 million tenge per worker, export of processed agricultural products can increase by 2.5 times to 2.4 billion US dollars, investment in fixed assets can grow by 2.5 times, and the amount of borrowed funds – 9 times. As a result, more than 600 thousand new jobs will be created. These indicators represent socio-economic significance, as 42% of the country’s population (7.6 million people) live in rural areas, and the total number of unemployed in the republic is 443 thousand people.