Development Program 2012 – 2020 gets underway
Over KZT 448 million has been allocated in 2012 to address the key problems of single-industry towns in Kazakhstan, many of which have suffered severe economic decline as the industry they were built to serve has dwindled away. The funds are the first wave of a total KZT 120 billion (USD 750 million) which will ultimately be provided for regeneration of these towns under the Development Program 2012 – 2020 approved by Government last May.
In an interview on November 12, Serik Zhumangarin, Chairman of the Regional Development Committee of the Ministry of Economic Development and Trade, outlined how funds have been spent this year and how the broader program will unfold over the coming years.
Infrastructure and essential social services have been the key areas of focus so far, with investment in upgrading heat supply networks, roads, bridges and street lighting; renovating housing units, parks, sports grounds and parking lots; and building new waste disposal facilities and closing unauthorized dumping sites.
The Development Program identifies 27 single-industry towns with a total population of 1.5 million people, amounting to 16% of the urban population of Kazakhstan. Local representative assemblies (maslikhats) have been closely involved in drawing up comprehensive development plans for each of the 27 towns which will benefit from program funds.
The development plans are focused around three key areas:
Firstly, economic diversification: the aim is to reduce dependence on a single, raw materials-based industry. Each town will receive substantial funding to develop one “anchor” project, which must fulfill three criteria: it must be in a non-raw materials sector, create at least 100 jobs and increase the industrial production of the community by at least 20 per cent.
Secondly, fostering the small and medium-sized business sector: credit financing will be made available at low interest rates and without sectoral restrictions; grants will be awarded to finance new production facilities; and Entrepreneurship Support Centers, business incubators and microcredit lenders will be established.
A partnership program between Government and major employers will also support and develop local small and medium-sized business, based on the example of copper-mining company Kazakhmys plc in Karaganda, where long-term contracts given to local producers have led to the re-opening of many small production facilities.
Thirdly, creating employment for the local populations: a comprehensive program will offer vocational and technical education for young people and training and reorientation for the wider population.
While unemployment in single-industry towns is about average for the country at between 5.5 – 8 per cent, the percentage of self-employed people is significantly higher at an average 40 – 45 per cent and as the local economies have declined, this sector of the population has proved particularly vulnerable to economic hardship.
The industrial heritage of the single-industry towns will not, however, be abandoned. Of the 27 towns, 19 are still operating the specialized industries which were for so long the major drivers of the regional economies: for example, all of Kazakhstan’s chromium ore (95% of chromium ore in the CIS) comes from Khromtau, while Zhitikara is home to the only producer of commercial asbestos in the country.
The 2012-2020 Development Program for single-industry towns is part of the far-reaching response of the Government to the tragic events which unfolded in the western city of Zhanaozen in December 2011. After months of high unemployment, layoffs and peaceful industrial protests, a labor dispute between oil workers and executives of the national oil company escalated into violence which led to the tragic loss of 16 lives and many more people injured.