Overview of the SME sector in the country and the capital until the situation with the pandemic

Today, small and medium-sized businesses affect the economic development of the state directly, and solving the problems of employment, creation of new jobs, filling the internal market with domestic goods and competitive environment formation depend on its development.

It is known that in countries with a high level of development, the share of SMEs in GDP is about half, based on the total employment of the population. They practically fill all sectors of the economy. Italy is 68%, Finland is 60%, USA is 56%, Turkey is 56%, Japan is 56%, China is 55%, and Russia is 20%.

However, the pandemic made adjustments and did not leave out SMEs, adversely affecting the development of this sector in all countries. According to the KPMG analysis, the coronavirus pandemic affected the supply chain of raw materials, services and goods in almost all key sectors of the economy of Kazakhstan, including food and non-food retail, real estate, and HoReCa. So, 66% of the companies surveyed in the non-food retail sector froze expansion plans, the rest will implement projects within the framework of a reduced budget and economy format.

According to the Small Business Status Report, 31% of small businesses and 52% of private enterprises ceased operations as a result of the crisis in the United States.

However, there are those that are actively developing. The fifth annual list of small giants of Forbes identified 25 small business companies that showed their activity and maintained profitability during the pandemic. Among them are the following:

1. “Kiolbassa Smoked Meats” company, “Production of smoked meat” project, revenue made $ 91 million in 2019. The revenue of Kiolbassa Smoked Meats has grown by 460% over the past 11 years.

2. “Camp Gladiator” company, the “National fitness-camp” project, revenue made $ 60 million in 2019.

“Camp Gladiator” company released a 6-week virtual training for $ 39. (personal membership usually costs between $ 59 to $ 79 per month). Class attendance increased from 4,000 to nearly 10,000 workouts per week outdoor with Zoom. The company retained 97% of its customer base of nearly 80,000 and acquired an additional 20,000 customers and 700,000 US dollars. The company plans to maintain its virtual offers for a long time and hires new trainers, many of whom have recently been fired from other fitness companies.

3. "Armor Protective Packaging" company, production of anti-corrosion products, revenue in 2019 made $ 20 million.

The company assists customers in the fight against rust with its line of anti-corrosion products and patented nanotechnology to prevent steam-water corrosion, which coat the metal with a protective layer of ultrathin ions.

4. Mexican bakery chain “La Monarca Bakery & Café”, revenue in 2019 made $ 15 million.

5. "Cohen Architectural Woodworking" company, a woodworking project, the company's revenue in 2019 was $ 12.5 million.

6. "Consuela" company, bag and accessories manufacturing project, revenue in 2019 was $ 12 million.

Consuela sells its products from two stores in Austin, Texas, as well as online and at 800 retail stores across the country.

At the same time, the number of electronic payments increased in Kazakhstan, more than 75%. The demand for online delivery companies has increased. The communications industry showed growth for the first quarter of 2020 by 17.7% compared to the same period last year. Perhaps this growth is due to the need for many customers to switch to a remote mode of operation and online interaction.

Astana Invest prepared a short review of the SME sector in the country and the capital before the pandemic situation.

In short:

In 2019, Nur-Sultan is the country's leader in the share of SMEs in the city’s GRP - 57.9%.

In total, 5.9 trillion tenge products were produced by SMEs of Nur-Sultan, taking the second position after Almaty (8 trillion tenge).

The number of employees in SMEs is 379,799.

In Kazakhstan, the total output amounted to 31 trillion tenge. Nur-Sultan takes the 3rd place among the regions of Kazakhstan in the number of operating small and medium-sized enterprises (Fig. 2), and in terms of the dynamics of SME growth in comparison with the previous year it is second only to Shymkent (Nur-Sultan - 107.8% Shymkent - 107.9%). Over the past 5 years, the number of SMEs in the city has grown by 36%.

The largest number of entrepreneurs in the city is engaged in the wholesale and retail trade and construction.

Small enterprises are the main investors of the city, whose investments in 2019 amounted to 81% of the total investment (large business - 11.5%, medium business - 7.5%).

Sources:

1. KPMG study “Impact of COVID-19 on key sectors of the economy of Kazakhstan”, May 2020;

2. The Committee on Statistics of the Ministry of National Economy of the Republic of Kazakhstan;

3. Online edition of Forbes.com, Forbes Kazakhstan.