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Good practice Imported

Damu Fund's Market-Aligned Partial Guarantees — Kazakhstan's Evidence-Tested SME Credit Instrument

Kazakhstan · Astana · See the Kazakhstan profile · See the Astana profile

Evidence: Quasi-experimental Top 3% 91/100 · Ask Evidence Copilot about this practice

Kazakhstan's Damu Fund tested three SME finance instruments; a 2026 World Bank study found market-aligned partial guarantees raised employment ~24% and sales ~21%, while interest-rate subsidies cut employment ~10% — proof that guarantee design matters more than spending.

+24%
Employment effect of market-aligned partial guarantees
+21%
Sales effect of market-aligned partial guarantees
-10%
Employment effect of interest-rate subsidies
13,000
Projects backed (2025)
2.2 trillion tenge
Total value backed (2025)
+80%
Rise in government-guaranteed lending (2019–2024)
Damu Fund's Market-Aligned Partial Guarantees — Kazakhstan's Evidence-Tested SME Credit Instrument

Details

Maturity
Established
Promoter
Damu Entrepreneurship Development Fund (JSC)
Period
1997–2025
Keywords
SME finance, credit guarantees, entrepreneurship support, financial inclusion

Context

Damu Entrepreneurship Development Fund, Kazakhstan's state-owned SME finance institution founded in 1997, channels interest-rate subsidies, credit guarantees and direct lending to small businesses through 11 partner banks.

Results

A 2026 World Bank comparative study found market-aligned partial guarantees — where firms pay a fee and lenders retain part of the credit risk — raised supported firms' employment by roughly 24% and sales by roughly 21%, while interest-rate subsidies cut employment by about 10% with no sales gain and fully subsidised guarantees had only minimal impact.

Implementation
Indicative cost
High (€500k–€5M)
Time to results
Long (> 3 years)
Staffing & skills
partner bank credit officers across 11 partner banks, Damu Fund guarantee administrators

Conditions for success

  • designing guarantees so lenders retain part of the credit risk (fee-based, partial guarantees) rather than a full subsidy, so lenders keep an incentive to screen borrowers carefully

Common failure modes

  • interest-rate subsidies reduced employment at supported firms by about 10% with no sales gain
  • fully subsidised guarantees had only minimal impact because neither lenders nor borrowers had reason to behave differently

Commonly funded by

National / regional programmes

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Data sources

Where this practice's information was retrieved from, and when.

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