NUR-SULTAN — Every year the presidential address to the nation kicks off the political season, but this year was like no other. President Kassym-Jomart Tokayev’s September 1 state of the nation address was his second speech this year, promising bolder reforms in light of growing public demand for change.
The early presidential elections this fall were the title of the address. Tokayev also announced his intention to limit the president’s term to a single seven-year term, instead of the previous two five-year terms, seen as a significant political change not only for the country but for the region since independence.
Tokayev’s presidential term is supposed to end in 2024, and if re-elected, he would remain in office until 2029. The move, he said, would “significantly reduce the chances of power monopolization.”
Under Tokayev’s leadership, Kazakhstan went through a rather ambiguous stage of its development, which combines elements of evolution, reforms and anti-crisis response measures, said Kazakh political analyst Andrei Chebotarev. Nearly half of the president’s term, he said, was unplanned and when he took office in 2019 his ability to act fully was limited by what Chebotarev called an event of “global black swan”, referring to the COVID-19 pandemic.
“The expected re-election is, however, an opportunity for him to make up for lost time and do a lot of new things for the country,” the expert said.
While Tokayev’s decisions may raise some criticism among the protesting part of the population, as well as among international structures, Chebotarev noted, they simultaneously refuted previous criticisms directed at Tokayev.
“Many opponents have often criticized him for his weakness, indecisiveness and inconsistency, so he refutes these criticisms and assessments with his current actions. Furthermore, the president will go to the new elections not as a successor to Nursultan Nazarbayev with the support of the latter, but as a politically independent figure,” the expert said.
Chebotarev sees the elections as a chance to consolidate power, as the risks of destabilization increase. Difficult external and internal circumstances also explain this unexpected decision.
“Despite its multi-pronged foreign policy and readiness to remain neutral in various types of international conflicts, Kazakhstan, due to a number of objective factors, feels the critical consequences of the “sanctions war” between Russia and the The growing tensions between China and the United States and the ambiguous situation in Afghanistan following the return of the Taliban to power also pose potential risks for the country and Central Asia,” Chebotarev said.
Director of the Institute for Strategic Studies of Kazakhstan, Yerkin Tukumov, said the initiatives proposed on September 1 are a logical follow-up to the reforms announced by Tokayev in his speech in March, following the tragic events of January.
“Overall, the fact that the year started with political reforms confirms once again the principle that economics cannot come before politics. If we want an inclusive economic model, then, first, we need an inclusive political system. And for a long time in Kazakhstan, we followed the formula “first economy, then politics,” Tukumov said.
He welcomed Tokayev’s call for further administrative reform, saying the country needs new public managers and better access to leadership positions in the civil service for all, including private sector representatives.
“We have many businessmen who have already accumulated their capital and would like to use their knowledge, skills in the civil service system, and benefit the state,” he added.
Increased support for SMEs
Another important area Tokayev covered in his speech was the development of small and medium enterprises – all part of the new economic policy he was considering. He advocated a “regulation from the ground up” approach that envisions reducing the excessive administrative burden on businesses and creating a more comfortable environment for business activities.
Data indicates that nearly 1.4 million small and medium-sized enterprises operate in Kazakhstan and contribute 34.7% to the country’s gross domestic product, a significant increase from just 7.9% in 2015. As of 2015 , their production almost doubled, reaching 29.7 trillion tenge. (US$63 billion) in nominal terms.
Their underfunding, however, reached $42 billion, according to Tokayev.
Financial expert Assem Nurgaliyeva pointed out that it is possible to steer the entire financial sector towards lending to the economy, especially small and medium enterprises, and that banks are often reluctant to lend.
“Corporate loans themselves are very risky because they are different amounts than retail loans, and in an unstable environment, banks are selective and cautious about their borrowers. Retail is most attractive to banks – it is a more diverse and high-margin area, as it involves trading and interacting with individuals through transactional operations. After all, it’s private money, everyone wants to diversify their investments and get maximum return with minimum risk,” the expert said.
With the right means and mechanisms, she noted, the task is doable but will have to take into account the current geopolitical situation.
“In SMEs, banks and credit institutions face risks such as market, industry and external factors. External factors now have a particularly strong influence on supply chains, logistics, markets and costs. And banks, in any case, will be restricted in lending to businesses, which may translate into higher rates or stricter conditions for obtaining credit,” she said.
Focus on the social sector
Much of Tokayev’s speech was devoted to the country’s social sector, addressing gaps in health infrastructure in rural areas, the education sector and pension system reforms, among other issues.
Tokayev promised to build medical and midwifery posts in 650 villages in two years, modernize 32 district hospitals, raise the social status and salaries of educators, create 800,000 new places in schools by 2025, introduce concessional loans for education at 2-3% per year, raise the minimum wage and modernize the pension system.
Gulnaz Kasimova, a senior researcher at Kazakhstan’s Institute for Strategic Studies, said all of Tokayev’s proposed initiatives are ultimately designed to improve the quality of life in the country of 19 million people.
She cited the institute’s studies which indicate that the real income levels of most of the population do not allow them to fully meet their needs, and this difficult situation hits the socially vulnerable categories the hardest.
“Social security issues, including those of women on maternity leave, are getting attention. Difficulties related to the accumulation of several social roles by women and the resulting stressful entry into the labor market and, in some cases, forced resignations have been observed on several occasions. Increasing the duration of childcare allowance to one and a half years from January 2023 will level out the negative effects of short paid parental leave for both parent and child,” Kasimova said.