Member Article

Why innovative, tech startups should look to Kazakhstan for a new frontier to launch their businesses

While still a relatively young country (it will be celebrating its 30th birthday in December), Kazakhstan is the 9th largest country in the world, is rich in natural resources (for example it ranks 6th in the world for its mineral resources) and has a booming economy (the largest in Central Asia). As an emerging market, it offers scope in some sectors, which may already be saturated in the UK and/or less likely to develop, such as agri-tech, making it an interesting country for UK businesses to consider and explore.

Its location is attractive. Russia lies to the north of Kazakhstan, while China is along the country’s eastern border. Countries south of Kazakhstan include Turkmenistan, Uzbekistan and Kyrgyzstan. President Shigeo Katsu of Nazarbayev University, Kazakhstan’s flagship academic institution with aspirations to become a global-level research university, has a very good description of the country as “not land-locked but land-linked”.

Since its independence in 1991, Kazakhstan has established diplomatic relations with more than 139 countries. Reforms have largely removed price controls and reduced subsidies, and encouraged growth in the industrial and service sectors, liberalised foreign trade, promoted export growth, and encouraged foreign investment. The EU and the US have recognised it as a country with a market economy and it became a member of the World Trade Organisation in 2015.

Financially speaking, there is a strong presence from Chinese banks as well as the EBRD and Eurasia Bank. In the World Bank’s Ease of Doing Business Survey for 2020, Kazakhstan ranked 25th (out of 190 countries surveyed). There is also a favourable investment climate. In addition to this, The Constitution of the Republic of Kazakhstan and other regulatory acts provide for various guarantees of investor’s rights.

The AIFC – the newest financial centre in the world An initiative of Kazakhstan’s First President, Nursultan Nazarabeyev, the AIFC which launched in 2018, is the newest financial centre in the world and the only one in Central Asia, located in Kazakhstan’s capital Nur-Sultan. There are a thousand companies registered at AIFC from more than 50 countries, including some from the UK, and its particular areas of interest are in Islamic finance, fintech and green finance.

There is a strong focus on B2B, including fintech. Pavel Koktyshev, the CEO of the AIFC’s Tech Hub, says that organisations such as Kaspi Bank, a high-tech company offering financial and banking services, are already somewhat known outside Kazakhstan – demonstrating their growing global presence.

Koktyshev explains the Tech Hub is helping to build the tech development stream and ecosystem to support companies, “connecting the dots” with the different Ministries, whilst leaving the running of accelerator programmes to others. Its role is to help bring new tech initiatives to Kazakhstan, supporting their soft landing and then building up new economy streams for the country in fields such as GovTech, Industry 4.0, FinTech, GreenTech, Digital Transformation, connecting technopreneurs worldwide and attracting them to do business with AIFC in Kazakhstan. Because of its positioning within the AIFC where it sees the challenges faced by the larger firms and corporations, the Tech Hub plays an interesting role, promoting more open innovation and acting almost as professional match maker between the Kazakh banks, for example, and Tech Hub companies.

Much of the country’s startup success is due to the tech ecosystem that is developing around them. One such organisation that’s helping to grow interest in the role of business angels, while helping local businesses go global is QazInnovations.

Innovation is at the heart of growth Nazarbayev University has its own Innovation Cluster, NURIS, focused on high-tech business creation, offering a 12 week programme and potential investment. Since 2016, the Cluster has supported 157 startups and provided 1m (US dollars) in grants. It has staged over 3,000 events, 80 hackathons and has future plans for an Astana Business Campus Science Park. Some of its current technopark companies, or graduates of the NURIS Business Incubation Program include: • Educated Medical Solutions (production of disposable medical devices used in minimally invasive cardiology procedures) • QazDron (as its name suggests producing unmanned aerial vehicle (UAV) systems) • KazAeroSpace (remote sensing data processing techniques as well as the largest private company UAV fleet) • Ecostandrt.kz (biological processing of organic waste) • Okoo (interactive online educational platform for teaching programming through AI) • Cleverest Technologies (system for the textile industry to detect defects in raw material fabrics) • ReLive Research (for the rehabilitation of patients after a stroke, including equipment and software for reading and recognizing brain signals)

Technological innovation The Astana Hub, which was launched by the First President on 6th October 2018 and is the largest technopark for IT startups in Central Asia, exists specifically to develop a startup culture in the country, supporting high-tech projects to strengthen Kazakhstan’s economy.

With various arms it includes a hub space as a corporate business incubator aimed at the development of IT projects. As of October 2021, Astana Hub includes 558 member companies, 54 of which are foreign. It also cooperates with international organisations including Rutec Ventures and Unbound Innovations, both in the UK. In 2021, Astana Hub opened its first branch in Almaty, a city where more than 2,600 IT companies are registered and where 40% of the entire market of technological goods and services in Kazakhstan is located.

For entrepreneurs seeking blossoming, emerging markets with an innovative start up and entrepreneurial ecosystem, Kazakhstan is definitely worth a look for potential collaborations or even a future home for a business.

This was posted in Bdaily's Members' News section by Mike Smith .