The Business Year

Moazzam A. Mekan


Flying the Standard

Regional Manager of Central Asia, International Finance Corporation (IFC)


Moazzam A. Mekan recently took over as Regional Manager of Central Asia at IFC. He joined the World Bank Group in 1988 in the Latin America and Caribbean Region. He has over 20 years of experience in the field of infrastructure investments and PPPs. Most recently he was based in IFC’s office in Dubai, where he was responsible for its transaction advisory practice on PPPs for the Middle East and North Africa region.

How do you think public-private partnerships (PPPs) will be used to further leverage the advantage of the country? There are two reasons to undertake PPPs, for example projects based on […]

How do you think public-private partnerships (PPPs) will be used to further leverage the advantage of the country?

There are two reasons to undertake PPPs, for example projects based on PPP: first, to supplement fiscal budgets and, second, to improve the delivery of public services. Kazakhstan epitomizes the need for PPPs. It is a vast, landlocked country, and faces challenges related to insufficient and aging infrastructure. Given its vastness and need for connectivity, it requires new and better infrastructure, including roads, railways, airports, airlines, power, and gas distribution networks. This requires a lot of money. So far, the infrastructure has been funded and provided by the government or public agencies. They all face fiscal constraints. Thus, PPPs should be seen not as a replacement or substitute for the government, but as an off-balance sheet tool to increase investments in infrastructure and other areas of interest. The second important reason, sometimes considered even more important than the first, is to improve the quality and efficiency of public services. That means that PPPs allow a country to not only improve the quality of public services, but also to build these services in the first place. Well-structured PPP projects not only help rationalize project costs, but they also help reduce project completion times. PPPs are a great mechanism to avoid the building of white elephants, since private sector investors seek a return on their capital. This is why nearly every country in today’s world has some sort of a PPP program, including Kazakhstan.

The IFC is advising on corporate governance. How would you rate the enforcement of sound corporate governance locally?

The IFC is committed to improving corporate governance as a way of promoting sustainable private sector investment and strengthening capital markets in emerging markets. We see that corporate governance development is a pressing issue for Kazakhstani companies due to many factors, including the intention of companies to go public, attract domestic and foreign investment, and enhance operational efficiency and image. The outlook for corporate governance standards implementation could be considered positive because both the government and the business community recognize the necessity for improving corporate governance practices in Kazakhstan. The IFC is a recognized global leader in the promotion of corporate governance standards and has developed a globally respected and well-tested methodology for evaluating corporate governance practices, risks, and opportunities. In Kazakhstan, the IFC, together with its two partners, offers corporate governance services for companies and financial institutions, including thematic training, tailored diagnostic reviews, consultations on specific corporate governance matters, and in-depth assessments with implementation plans.

Kazakhstan’s banking sector is stable, but there are issues with 30% of the loan book. What needs to be done to overcome this challenge?

A well-functioning financial sector and improved access to finance remains an important element of the growth and diversification agenda. Improved access to finance is essential for the growth of the non-oil sector in line with the government of Kazakhstan’s efforts on diversification. The government has done a number of things to restore the health of the banking sector. It has recently announced the privatization of the banks that needed to be rescued during the financial crisis. A new legal framework governing bankruptcy and insolvency is also being developed to address problems of highly indebted firms—an essential foundation for the resolution of NPLs. Efforts are needed to ensure proper loan valuation and provisioning, and decisive actions are required to reduce bad loans and replenish bank capital where needed.



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