Page 39 - ICD AR21 EN

3.6 EXTENDING A
USD 5 MILLION LINE OF FINANCING TO LEASING GROUP JSC IN LOCAL CURRENCY EQUIVALENT IN THE REPUBLIC OF KAZAKHSTAN
ICD will be launching its first local currency Sukuk Program in Kazakhstan Tenge (KZT) as part of ICD’s resource mobilization program to support ICD’s Line of Finance (LOF) operations in Kazakhstan and develop its private sector. The National Bank of the Republic
of Kazakhstan, the country’s central bank, and other investors, have expressed their willingness to subscribe for the first tranche of the KZT Sukuk issuance. The proceeds of the Sukuk will be deployed to extend lines of finance to financial institutions and non-bank financial institutions operating in Kazakhstan to support private sector development. Both deployment and repayments will be denominated in KZT.
Subsequently in December 2021, ICD approved a USD 5 million LOF in the equivalent of Kazakhstan Tenge (KZT) for the Leasing Group JSC. Established in 2005 in Almaty, Kazakhstan, Leasing Group is a first- time ICD client and focuses on the provision of leasing products, catering primarily to SMEs operating across various industries. Leasing Group has been listed on the Kazakhstan Stock Exchange (KASE) since 2018.
The transaction (ICD’s local currency Sukuk issuance and LOF operation) is the first of its kind for ICD, and can be replicated in other member countries, giving
ICD the capability of funding in local currency. Therefore, the successful implementation and closing of this transaction is envisaged to pave the way for ICD
to expand its reach in its member countries.
Following the COVID-19 pandemic, there is an urgent need to support Kazakhstan’s SME sector. As a result, SMEs from various industries affected by the COVID-19 pandemic will receive support from this facility. Currently, the SME sector is one of the key priorities for the Kazakh government, as announced by the President of Kazakhstan, and is in line with the country’s overall strategy of economic diversification into non-oil sectors. The government's long-term strategy positions the SME sector to account for 50% of the economy by 2050. This sector has a significant social role because it provides over 30% of the employment in the country.
The local currency facility is expected to contribute to achievement of the following SDGs: #8 – Decent work and economic growth; #9 – Industry, innovation, and infrastructure; and #17 – Partnership for the goals.
The USD 5 million LOF facility in local currency equivalent to be funded by ICD’s KZT local currency Sukuk in Kazakhstan will enable Leasing Group to introduce and grow its Islamic leasing portfolio and operations, as well as strengthen its balance sheet, contribute to the creation of direct jobs at the SME level, while providing financial returns to stakeholders and increasing government revenues in the form of taxes. Since this LOF facility will be provided in the local currency of Kazakhstan, it will have no or minimal foreign currency risk for the Leasing Group.
OUR OPERATIONS, ACTIVITIES AND PERFORMANCE: 2021 HIGHLIGHTS
STRONGER TOGETHER 37