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THE MODERN STATE OF ENTREPRENEURSHIP OF THE REPUBLIC OF KAZAKHSTAN

Zh.B. Rakhmetulina1, B.Bekbenbetova2

L.N. Gumilyov Eurasian National University, Astana, the Republic of Kazakhstan

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AnnotationAt present, the development of entrepreneurship, as the basis of a market economy, is a strategic priority for Kazakhstan. Small and medium-sized entrepreneurship is the most mobile, dynamic and quickly adaptive to external conditions part of the Kazakhstan economy, which provides a significant share of employment, promotes competition and is an alternative to big business.

The article analyzes the state of small and medium business in the Republic of Kazakhstan, shows the main trends in changing the structure of entrepreneurial activity, shows the main indicators characterizing the development of small and medium-sized businesses (number of subjects, number of employees, output), the role of small and medium- sized enterprises in modernizing Kazakhstan economy and mechanisms of its development.

Key words: small and medium business, number of subjects, number of employees, tools to stimulate entrepreneurship.

Introduction Achievement of the goals and objectives set forth in the Address by the President of the Republic of Kazakhstan, Leader of the Nation, N.Nazarbayev "Strategy Kazakhstan-2050": new political course of the established state", is inextricably linked with the development of initiative and enterprise of all members of society, the expansion and strengthening of the positions of small and middle business. "Domestic entrepreneurshi p is a key driving force within Kazakhstan’s new economic policy. Overall, the share of small and medium enterprises must double by 2030", - such tasks are faced by the state [1].

The history of the evolution of developed countries confirms that small and medium business is a fundamental link, on the level of development of which depends on ensuring sustainable economic growth of the country. It is these sectors of the economy that have enormous potential to address many of the problems hampering the state's economic growth, such as undeveloped competition, inefficient use of tangible and intangible resources, dependence of domestic aggregate demand on imports, unemployment, poverty, etc.

Over the years of independence, Kazakhstan has achieved certain successes in the social and economic development of society, but economic growth was achieved mainly at the expense of large producers.

World experience shows that the success of market reforms and the progressive development of the national economy are largely determined by the extent to which it is possible to realize the potential of small and medium-sized business - the most dynamic and flexible sector of the economy.

In order for small and medium-sized entrepreneurship in Kazakhstan to fully fulfill its economic and social functions, integrated and comprehensive support and ensuring the viability are necessary. The study of the current state of domestic entrepreneurship, directions and trends of its development is intended to identify the features of entrepreneurship development in Kazakhstan, the analysis of which will help to develop recommendations on the activation of this process, improving the directions of state policy in the sphere of small and medium-sized entrepreneurship.

Methods. In the process of research, various regulatory and legal documents were used to regulate the activities of small and medium-sized enterprises. A number of statistical documents were analyzed as well.

During the research, the materials from periodicals and official Internet resources were used. To solve the set tasks, various methods and techniques were used in the work, in particular the following: methods of economic, abstract-logical, expert comparison, as well as methodological and theoretical aspects.

Results and discussion. For a short period of time, the regulatory framework regulating the activities of entrepreneurship entities has changed several times. The final version is formulated in the Entrepreneurial Code from October 29, 2015, according to which for the purposes of state statistics only one criterion for the average annual number of employees is used [2].

At the same time, individual entrepreneurs are recognized as subjects of small entrepreneurship without the formation of a legal entity and legal entities that carry out private entrepreneurship with a number of employees of up to 100 people, and subjects of medium-sized entrepreneurship - from 100 to 250 people.

According to official statistics based on observations on the activities of small and medium-sized entrepreneurship, in 2017 the average for Kazakhstan accounted for about 67 subjects per thousand people, in Europe this figure reaches 30-35 units. The share of the small and medium-sized entrepreneurship sector in the total number of economic entities in Kazakhstan is 96%, which corresponds to the level of developed countries.

The subjects of small and medium-sized entrepreneurship- legal entities and individual entrepreneurs-produced and sold 26.3% of goods (works, services) from the total sales volume in the country. The subjects of small and medium entrepreneurship provided jobs for 37% of the total number of employed in the country's economy.

The share of the gross added value of the small and medium-sized business sector in the GDP of the country was 23.1% in 2016 in Kazakhstan according to preliminary data, in the developed countries this share is 50-60%, in France - 50%, in Great Britain and the USA - 52%, Germany - 57%, and in China - more than 60%. According to various experts, there should be produced at least 50% of GDP for the normal functioning of a market economy in the small business sector.

Comparing some of Kazakhstan's indicators with developed countries, we note that in these countries, the share of annual output of small and medium-sized businesses reaches from 43% (Canada) to 57% (Germany) of GDP. According to the share of the employed population of SMEs in total employment, our country's indicators are also much lower than in developed countries, if it comes from 47% (Canada) to 75% (Japan), but in Kazakhstan it was 2016 only 27% (Fig.1).

Based on an annual World Bank study (Doing Business Report), which on the basis of 11 indicators assesses the ease of doing business in 189 countries. The indicators include: the complexity of creating an enterprise, obtaining a building permit, connecting to an energy saving system, registering property, taxation, etc. According to the results of this research, Kazakhstan ranked 35th in 2016 compared to 51th place in 2016, in just 1 years Kazakhstan rose by 16 positions[4].

  

Source: http://www.stat.gov.kz[3]

Figure 1- Comparison of macroeconomic indicators of small business entities

of Kazakhstan with the data of developed countries

It is important to note that Kazakhstan's small business has shown the abilities inherent in small entrepreneurship, flexible adaptation to crisis processes. So, for the last ten years from 2006-2016, the contribution of small and medium-sized entrepreneurship in providing employment has increased from 26.4% to 37% or by 1.4 times; the number of subjects of small and medium-sized entrepreneurship increased from 572.7 to 1186.6 thousand or 2 times. However, the existing sectoral structure of small enterprises and the trends of its change over many years and do not meet the needs of systemic modernization of the Kazakh economy.

In the strategic perspective, there are qualitatively new conditions for the development of small and medium-sized businesses, which differ significantly from the current and previous decade. In the new conditions for the formation of the business environment, new challenges and threats arise that, in the absence of an adequate response, could be accompanied by lagging and crisis processes in the economic, social and state-political spheres. At the same time, there are new opportunities arise that need to be fully used, changing the business environment and developing the competitive advantages of small and medium-sized businesses to modernize the economy in order to significantly improve the level and improve people's quality of life[5].

In order to select the strategy, priorities for implementing technological and structural changes that ensure sustainable and dynamic development of small and medium-sized entrepreneurship, an analysis of the situation in this sector of the economy over the past three years will be made.

As of January 1, 2018, the number of registered subjects of small and medium-sized entrepreneurship amounted to 1145,9 thousand units, including 208,7 thousand legal entities of small entrepreneurship (18,2% of the total amount), 2,6 thousand legal entities of medium entrepreneurship (0.2%), 747,1 thousand individual entrepreneurs (65.2%) and 188.5 thousand peasant (farmer) households (16,4%).

The instability of the market situation, the lack of effective credit policy from the side of banking structures, as well as the lack of competence of the entrepreneurs themselves leads to the fact that the number of enterprises created is insignificantly higher than the number of liquidated enterprises.

Of the total number of small and medium-sized entrepreneurship registered as of January 1, 2017, 79% were active. A high proportion of inactive subjects (21%) is caused by the fact that in the total number of registered entities there are enterprises that have ceased their economic activities, but in fact cannot be closed due to the certain complexity of the liquidation procedure.

As of 2016, the largest number of operating entities in the total number of registered has West-Kazakhstan (87%), East-Kazakhstan (86.1%) and Mangistau (85.7%) regions. The smallest proportion of operating entities was in Almaty (65.2%), which is lower by 13.8% than the Republican share. Following that, the dynamics and structure of operating subjects of small and medium-sized entrepreneurship from 2014 to 2016 are considered (table 1).

As can be seen from the table, the number of operating subjects of small and medium-sized entrepreneurship in the Republic for 2016 amounted to 1186.6 thousand units, which is 4.5% less than in 2015. In the structure of operating subjects of SMEs, organizational and legal forms are dominated by entities that carry out entrepreneurial activities without the formation of a legal entity - these are individual entrepreneurs, the number of which amounted to 813.5 thousand units as of January 1, 2017, or 68.6% of the total number of SME entities. The number of peasant (farm) households amounted to 180.8 thousand units (15.2%), legal entities of small entrepreneurship 189.6 thousand units (16%), legal entities of medium-sized entrepreneurship 2.7 thousand units (0.2%).

The structure of SME in terms of economic sectors is an important indicator of the qualitative development of the business sector and the economy as a whole. Figure 2а shows the structure of existing SME entities by economic activity. The largest number of operating SMEs operates in the area of trade - 37.2% and in agriculture - 18%. A small proportion of operating entities is represented in the following sectors: "financial and insurance activities" -0.6%, "health and social services" - 0.6%, "art, entertainment and leisure" - 0.7%.

Data of the statistical business register on the number of operating enterprises with foreign participation or in foreign ownership show that the largest concentration of such SMEs is in Almaty, where the share of legal entities with foreign participation or in foreign ownership is 7.2% of the total number of small and medium-sized enterprises, respectively. Among the five regions with the most optimal business climate for foreign investors there are West-Kazakhstan (7.2%), Atyrau (6.4%), Zhambyl (4.9%) and Mangistau (4.3%) regions. The dynamics and structure of the number employed in small and medium-sized entrepreneurship from 2014 to 2016 are considered below (Table 1).

The indicator of the number of employed in SMEs characterizes the importance of entrepreneurship in solving the employment problem. As of January 1, 2017, the number of employees in SMEs was 3166.8 thousand people. In absolute terms over the past three years, the number of jobs increased in the SME sector by 355.8 thousand people. In the breakdown by subjects of small enterprises there are 1249.3 thousand people (39.5%), at medium-sized enterprises - 352.9 thousand people (11.1%), individual entrepreneurs employ 1288.2 thousand people (40.7%) and in peasant (farm) households 276.4 thousand people (8.7%).

Analysis of the number of employed by region shows that the largest number of people employed in small and medium-sized entrepreneurship is in cities such as Astana (69.8%) and Almaty (68.9%). At the same time, the largest number of employees accounted for wholesale and retail trade and repair of vehicles - 29.8% or 943 thousand people and for agriculture, forestry and fisheries - 12.7% or 403.5 thousand people. A more detailed structure of the number of employees by types of economic activity is shown in figure 2в. The lowest number of employed in SMEs is observed in Zhambyl (23.4%) and Kyzylorda (24.8%) regions. Consider the dynamics and structure of output of production of small and medium-sized enterprises from 2014 to 2016 (Table 1).

 

Table 1

Indicators of SMEs

The number of operating subjects of small and medium-sized entrepreneurship

 

Total,

units

enterprises

Individual entrepreneurs

Peasant (farm) farms

small

medium

units

%

units

%

units

%

units

%

2014

1246978

153680

12,3

2672

0,2

904201

72,5

186425

15

2015

1242579

175679

14,1

2987

0,2

882849

71,1

181154

14,6

2016

1186629

189637

16

2741

0,2

813482

68,6

180799

15,2

Number of employed in small and medium-sized entrepreneurship

 

Total, people

people

%

people

%

people

%

people

%

2014

2810962

849015

30,2

516520

18,4

1136050

40,4

309377

11

2015

3183844

1185186

37,2

351779

11,1

1360338

42,7

286541

9

2016

3166792

1249270

39,5

352954

11,1

1288167

40,7

276401

8,7

Output of products by small and medium-sized enterprises

 

Total, mln. tenge

mln. tenge

%

mln. tenge

%

mln. tenge

%

mln. tenge

%

2014

15568081

8007342

51,4

5801985

37,3

972670

6,2

786084

5,1

2015

15699405

10200061

65

3076564

19,6

1518237

9,7

904543

5,7

2016

19609010

13568530

69,2

3484992

17,8

1511733

7,7

1043755

5,3

Source: http://www.stat.gov.kz

                                                 

The output of SMEs in 2016 amounted to 1,9609 billion tenge, which is 24.9% more than in the previous year (in 2015 - 15,699.4 billion tenge). Of them, legal entities of small enterprises - 13,568.5 billion tenge (or 69.2%), legal entities of medium-sized enterprises - 3,485 billion tenge (or 17.8%), individual entrepreneurs - 1511.7 billion tenge (or 7.7%) and peasant (farm) households - 1043.8 billion tenge (or 5.3%).

In the regional context, the highest per capita output is observed in the cities of Astana, Almaty and the West Kazakhstan region (2,729,200 tenge, 2006,1 thousand tenge and 1,712,700 tenge, respectively). The lowest indicators were recorded in Kyzylorda, South Kazakhstan and Zhambyl regions (239.5 thousand tenge, 257.3 thousand tenge and 274.5 thousand tenge, respectively). (Table 2).

 

Table 2

The main indicators of small and medium-sized businesses in the regional context for 2016y.

 

Share of SME operating entities in the total number of registered SME by regions, in %

Share of employment in SMEs in the total number of employed population, in %

Production of goods by SMEs per capita, KZT'000

Akmola

80,4

31,8

503,1

Aktobe

83,7

33

645,2

Almaty

84,5

26,2

326,4

Atyrau

83,1

41,7

1256,8

West Kazakhstan

87

33,5

1712,7

Zhambyl

75,2

23,4

274,5

Karaganda

84,6

35,2

427,6

Kostanay

79,8

30,6

479,5

Kyzylorda

80,7

24,8

239,5

Mangistau

85,7

40,3

878,8

South Kazakhstan

82

28,4

257,3

Pavlodar

84,7

32,7

522,2

North-Kazakhstan

76,6

33,8

485,1

East Kazakhstan

86,1

34,3

361,6

Astana city

73,9

69,8

2729,2

Almaty city

65,2

68,9

2006,1

Source: http://www.stat.gov.kz

In terms of types of economic activity, the largest share of output of SMEs was recorded in the industries such as "Industry" - 22% or 4305.2 billion tenge, "Construction" - 20.3% or 3990.8 billion tenge, "Wholesale and retail trade; repair of cars and motorcycles "- 19,9% or 3893 billion tenge.

The contribution of SMEs in the industries such as "Art, Entertainment and leisure" is insignificant - 0.6%, Education - 0.7%, "Healthcare and social services" - 0.7% (Figure 2с).

In order to eliminate the factors constraining the development of small business, it should be financed, because in managing the resources, entrepreneurs try to implement the following approach: achieving the maximum result with a minimum amount of resources. Most of the resources entrepreneurs prefer not to purchase, but to rent or borrow on credit. Due to this approach, the risk is minimized and the need for financial resources is reduced.

                              а)

               в)                                      с)

Source: http://www.stat.gov.kz

Figure 2- а) Structure of the number of operating SME entities ; в) Structure

of employment in SMEs; с) Structure of output by SMEs by types of economic activities for 2016, in %

The main sources of financing SMEs are the own savings of entrepreneurs. The most common source of financing the SMEs is informal financing (the so-called "partner loan"). This short and small money, which entrepreneurs mostly borrow from relatives and friends, is mainly used to replenish a working capital. Access of small enterprises to commercial loans is almost closed due to their high "price" and lack of collateral security.

Meanwhile, in economically developed countries, bank loans, government subsidies, grants from European funds make up more than 60% in the structure of SME financing. For example, in Germany, more than 40% of start-up small enterprises and 75% of medium-sized enterprises are directly connected to savings banks, which, in accordance with historically established traditions, primarily cover SMEs with their services that operate in the given territory.

The search for cheap funds for lending to small enterprises makes it necessary to look for new non-bank lending mechanisms. The system of credit cooperatives, based on the principle of mutual crediting, when entrepreneurs unite and mutually lend each other with the aim of not making a profit, but providing each other with at least "short money", seems to be one of such promising forms of financing. Credit cooperatives provide "small" loans, which banking institutions "do not work" with, considering them to be costly and low-yielding.

In addition, it is necessary to consider the possibility of other alternative financial support mechanisms for SMEs to reduce business risks, such as factoring, franchising, consulting, forfaiting [6].

A promising area for increasing the competitiveness and innovative activity of small enterprises is the creation of a network of integration associations of interconnected enterprises of the same technological chain, the so-called clusters. Combining enterprises into a single economic system - a cluster - could help enterprises to reduce production costs, improve access to advanced technologies, major suppliers, specialized services, and to reduce the risks of new innovative industries. Clusters attract foreign direct investment, promote the competitiveness of domestic enterprises, and stimulate exports. Most European countries actively support the creation of clusters with the help of state programs. For example, an automotive cluster in the Swedish Gothenburg, textile and furniture clusters in Italy, car clusters in Germany and Austria. In Kazakhstan, there is a huge potential in the creation of several clusters in the regions where there are large universities with scientific and technical potential, and many small and medium-sized enterprises with highly qualified employees [7].

Currently, there are several programs of state support for entrepreneurship in the country, such as the Business Road Map 2020, Employment Road Map 2020, Productivity 2020, Innovation and Entrepreneurship Development Program. In our opinion, a large number of state programs are counterproductive and lead to the dispersion of clearly insufficient financial resources allocated from the state budget to support SMEs.

The most effective tools to stimulate entrepreneurship are to reduce the tax burden and expand alternative sources of financing. The greatest support for entrepreneurs is the creation of a transparent tax and accounting system, which would improve the entrepreneurial climate. We believe that it is necessary to develop a comprehensive program document for the development of SMEs that would reflect the all-government complex of priorities and tasks related to this area. The development of the document should become one of the priority directions of the work of the Department for the Development of Entrepreneurship at the Ministry of Education and Science together with other ministries and stakeholders in this matter.

Conclusion. To sum up, serious work to create effective tools for supporting small and medium-sized entrepreneurship is underway in Kazakhstan; even today it gives certain results and will surely become the key to the further successful social and economic development of our country.

Considering the situation as a whole, it could be noted:

- growth of absolute indicators of small business (nominal number of registered SMEs in operation, volumes of products);

- the positive role of small business entities in industry and the construction industry in solving economic and social problems;

- a small share of small business in Kazakhstan's GDP (26.8%), in contrast to the developed countries of the world, where this figure ranges between 45-55%;

- low level of employment in entrepreneurship from the economically active population in our republic (27%), whereas it is 50-70% in developed countries;

- the branch structure of small enterprises and the trends of its change over many years do not meet the needs of systemic modernization of the Kazakhstani economy;

- the number of newly created enterprises is slightly higher than the number of liquidated enterprises.

The analysis shows the need to improve the state regulation of small and medium-sized enterprises in order to adjust and improve the negative development trends, both through financial and non-financial instruments.

Bibliography:

1 Address by the President of the Republic of Kazakhstan, Leader of the Nation, N.Nazarbayev “Strategy Kazakhstan-2050”: new political course of the established state”. December 14, 2012: www.strategy2050.kz

2 Code of the Republic of Kazakhstan "Entrepreneurial Code of the Republic of Kazakhstan" (as amended on 09.01.2018)

3 website of the Commiee on Stascs Ministry of naonal economy of the Republic of Kazakhstan: http://www.stat.gov.kz

4 https://newtimes.kz/ekonomika/item/40628-kazakhstan-sovershil-ryvok-v-rejtinge-doing-business

5 Халетов А., Мисюра М. Развитие малого и среднего предпринимательства в Республике Казахстан// Экономика и статистика.- 2017.-№3.- C.11-16.

6 Рахметулина Ж.Б., Кулмаганбетова А.С., Дубина И.Н.Инновационная активность предприятий малого и среднего бизнеса в Казахстане// Экономическое развитие региона: управление, инновации, подготовка кадров:. Материалы IV Международного экономического форума— Барнаул: Изд-во Алт. ун-та, 2017. – С.170-175.

7 Sherimova N. et al. Current Problems of Entrepreneurship Regulation in the Republic of Kazakhstan// Journal of Advanced Research in Law and

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