© CABAR - Central Asian Bureau for Analytical Reporting
Please make active links to the source, when using materials from this website

Business in Kazakhstan during the Pandemic: Slumping Sales and Illegal Work

Empty shop windows, close food courts – this is what the majority of shopping malls look like in Kazakhstan today. Because of restrictions related to coronavirus, it is unprofitable for many boutique owners and public catering owners to work. The purchasing power sharply declined, while the rental payments were not cancelled.

Follow us on LinkedIn


Photo: CABAR.asia

«A restaurant-keeper is not a criminal.» This is the slogan used by café and restaurant owners when they attacked the akimat of Almaty on November 13, 2020. According to businessmen, the revenues of the restaurant business halved during the pandemic. Moreover, entrepreneurs have to pay fines imposed on them by inspectors.

«Three inspectors came to us one after another. They have a different method now: they send a couple of people to our bar. Then, they see that we violate the decree and start calling various instances. They do not pay their bills. This is a loss to us and a real racketeering,»  restaurant-keeper Daniyar Ischanov said (quoted from astanatv.kz).

Self-isolation and strict lockdown in Kazakhstan during the first wave of coronavirus have had a serious impact on small and medium-sized businesses. The crisis affected those who work in the service industry – travel agents, hairdressers, manicure masters, employees of event agencies.

«Those who worked illegally could survive,» city hairdresser Moldir said.

Work of hairdressers during the pandemic. Photo: CABAR.asia

She is a single mother, raising her seven-year-old son with disability. To support her family and pay a rent for the apartment during the lockdown she worked at home.

«I brought my tools from the salon, put the mirror and additional lights. I served a few people a day. I feared that my neighbours would know about it and report it to the local police officer. Then I would be fined, I guess,» Moldir said.

The money she earned was enough to buy must-have food and medications for the son. She had to take out a consumer loan at 30 per cent per annum to pay for the apartment.

«I want to pay out the loan, so I have to work three times more. If they announce the lockdown, I’ll be working at home again,» the woman said.

In case of the second wave of pandemic and restrictions, the owner of the salon, where Moldir works, installed dark windows and hanged blinds. Now the inspectors won’t be able to see if the salon works or not.

Back to the 90s 

According to the Ministry of National Economy of Kazakhstan, the global economy and trade are still facing uncertainty.

«According to updated forecasts of international financial organisations for 2020, the slowdown in the growth rate of the global economy is estimated from minus 4.4 per cent to minus 7.6 per cent, global trade from minus 7 per cent to minus 10.6 per cent,» Ruslan Dalenov, minister of national economy, said at the session of the government on November 10.

According to the agency, production of services in Kazakhstan decreased by 6.1 per cent, and the annual inflation rate was 7.1 per cent over 10 months of this year.

The purchasing power reduced as well, according to Zarina Ismailova, shop assistant of the home clothing department.

«The situation is deplorable, the sales declined by 50 per cent. The shopping mall did not reduce the rent, but gave time for two weeks, but in the following months they took this money from us,» she said.

Zarina Ismailova. Photo: CABAR.asia

She said the consequences of coronavirus would affect the small and mid-sized enterprises at least for six months. People are concerned about feeding their families, not about buying clothes.

«It’s very sad and disappointing that in this situation you are left alone with your problems. Based on my experience, we have not been supported at all,» Ismailova said.

According to the Bureau of National Statistics of Kazakhstan, the highest in 25 years decline in the household consumption was reported by results of the first six months of 2020. Moreover, household spending in January-June 2020 declined by 8.3 per cent.

«The people are getting poorer, buying essential things only – bread, macaroni products, cereals. If carbonated drinks, chocolate bars for children were top-selling items before, now «chekushka» (small bottles of vodka – author’s note) are top selling items because men drink more now,»  Botagoz Kadyrzhanova, the tenant of a grocery store, said.

Counters at a grocery store. Photo: CABAR.asia

It is like in the 90s, as salespersons recalled. People borrow food until they receive salary, and such borrowers are put on a special list.

Meanwhile, on November 24, the minister of finance Yerulan Zhamaubayev reported at the session of the parliament’s Mazhilis that Kazakhstan is going to take out two loans in the amount of more than 1.5 billion euros to fight coronavirus. The first loan in the amount of 908.6 million euros is set forth in the agreement between Kazakhstan and the Asian Development Bank.

The second agreement with the Asian Infrastructure Investment Bank was signed for the amount of 661.8 million euros. The money would be spent to finance the budget deficit of 2021 and to support the measures of the government to fight the consequences of the COVID-19 pandemic and to restore the economy.

Yet entrepreneurs take this state support with scepticism.

«We, the representatives of business, do not need state support! The National Bank has already allocated 600 billion tenge (1.4 billion dollars) for preferential loans for SMEs, and later on 200 billion more (468.3 million dollars) to subsidise the loan rate. In general, it is 1.3 times more than Russia allocated to support SMEs (about 90 billion rouble). However, no result followed. The money disappears in second-tier banks, just like in the Bermuda Triangle; the SMEs do not get the funds,» Sanzhar Bokayev posted on his page on Facebook.

According to forecasts, the economy of Kazakhstan will reach the pre-crisis rates of growth only at the end of 2021. Before that, the entrepreneurs will have to tighten their belt, the chief economist of the Eurasian Development Bank and Eurasian Fund for Stabilisation and Development, Evgeny Vinokurov, said.

In his opinion, recovery depends mainly on the state supportive measures. According to the economist, the basic scenario of the EADB reads that the recovery of economies of Central Asian countries and Russia is based on the gradual lifting of restrictions in the second quarter of 2021 and the growth of economies in European countries, United States, China.

This article was prepared as part of the Giving Voice, Driving Change – from the Borderland to the Steppes Project.

If you have found a spelling error, please, notify us by selecting that text and pressing Ctrl+Enter.

Spelling error report
The following text will be sent to our editors: