Page 24 - bne magazine September 2023

24 I Companies & Markets bne September 2023
The government’s drive to make all its services available online, for example, is generally deemed a major success. Registering an apartment purchase, fixing a doctor’s appointment, or ordering a vanity car licence plate –
all this can now be done with relative ease over the internet.
According to official estimates, around 95% of public services can currently be effected online. Fully 11mn such transactions were carried out in Kazakhstan in 2022. That figure translates to 81% of all public services rendered.
Beneficiaries of this state of affairs are effusive.
Almaty resident Dmitry Pak said he spent just half an hour updating his driver's licence through Kaspi Bank’s ubiquitous mobile app.
“I sent my application, and before I could even have lunch, I received a notification that my licence was ready,” he told Eurasianet. “I can’t believe that just a few years ago we lived in a bureaucratic country where every little thing meant waiting in lines.”
The private sector is likewise increasingly relying on modern technology in search of a competitive edge. The goal is always to provide the public with frictionless ways to perform everyday tasks, be it ordering groceries from home or renting e-scooters on the street.
“Our consumers are already accustomed to ‘couch comfort’ and are less and less willing to put up with any difficulties, as they were until recently,” Pak said.
If there is a point zero for this technological turn in Kazakhstan, it is likely to be found in former president Nursultan Nazarbayev’s visit to China in 2016. During that trip, Nazarbayev met with Jack Ma, a founder of the colossal e-commerce company Alibaba Group, who advised the Kazakh leader to focus more on his country’s IT sector. By all accounts, this exchange appears to have left an impression on Nazarbayev and his people.
“Prior to this, the authorities in Kazakhstan provided support only to traditional small and medium sized businesses, and there was virtually no IT sector,” Magzhan Madiyev, chief executive of Astana Hub, Central Asia’s largest technopark, told Eurasianet. “But then the situation began to change rapidly.”
The government under Nazarbayev designated the development and implementation of modern technologies in all spheres of public life a key strategic goal. In 2017, a national programme under the title Digital Kazakhstan was adopted. This included more than 20 projects aimed at the “digital transformation” of the economy and public services.
A year later, the government created Astana Hub, Kazakhstan’s answer to Silicon Valley. The point of this self-styled technopark is to provide free-of-charge infrastructure to
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startups, while also providing them with training and business development skills from both domestic and foreign mentors. Residents of the IT park further benefit from tax breaks.
“We are engaged in the education and development of promising startups at all stages, in all areas,” said Madiyev. “I don’t know of any other IT platform in the world that applies such a systematic approach.”
The figures appear to vindicate the approach. Where in 2020 there were 300 companies registered at Astana Hub, that number has since quadrupled. Total sales revenue increased from 55bn tenge ($134mn at the rate of the time) to 220bn tenge ($495mn) in 2022.
Things are slicker now than they were at the outset. To begin with, many novice Kazakh startup founders were unable to even produce a proper Powerpoint presentation, Madiyev said. Now they are totally different people, he added.
One Astana Hub resident, CTOgram, has brought an ease- enhancing edge to the business of sourcing automotive parts. The company’s mobile app helps car owners quickly find components directly from warehouses. CTOgram’s database comprises 250,000 car owners, more than 70 parts suppliers and 2,000 car servicing points.
“The component market in Kazakhstan is large, but unsystematised and disordered, and there is also a lack of quality service stations: you have a choice between a lot of garages with poor service and a dealer with high prices,” said Tursumbayev. “We are solving this problem.”
Because Kazakhstan’s market is limited – the country has a relatively small population of 19mn – local startups are focusing much of their energy on scalability potential and training their eyes on foreign countries.
Astana Hub’s CEO estimates that by the end of this year, about 40% of the revenue generated by his technopark will come from selling products to foreign markets. The plan is to make $500mn in revenue from exports by 2025.
Madiyev thinks that target could even be hit as early as next year. It helps that numerous Russian and Belarusian IT companies have relocated to Astana Hub since the start of the invasion of Ukraine.
Seizing opportunities in the tech sector feels particularly important for Kazakhstan, whose economy continues to rely heavily – too heavily, almost everybody agrees – on the export of raw natural resources, such as crude oil. The way Madiyev sees it, Kazakhstan has no choice but to completely change its economy and the way people think with it.
“In the future, everything will be about technology,” he said. “And it is up to us to decide whether we will be active players or also-rans."