Agrobank

The idea of creating an Agrobank is stirring again, though it is not clear that those stirring it understand the difference between a bank and a credit organization. The ACC is currently a credit organization. A bank, unlike a credit organization, can take deposits from individuals and legal entities, carry out money transfers and participate in foreign exchange operations on the exchange.

For some reason, the proponents seem to believe that creating an Agrobank would increase lending to agricultural producers. I strongly doubt it. What it would do is deepen state involvement in the economy and create enormous risks for depositors.

First, deposit money is expensive. Once all the costs of attracting funds, servicing them and maintaining infrastructure are included, it will cost 2-3% more than the base rate, far above the 6% that farmers want.

Second, building a bank's infrastructure and competing with market players in non-lending services requires large investments and a market-calibre team with matching bonuses and incentives. That is practically impossible under our state's conditions, which means at least part of the business will simply not work. A simple example is Kazpost, which has been a loss-making business for decades, even though in the hands of competent private investors it could become a very strong player in the financial market.

Third, concentrating loans in a single sector creates major risks and will in future require large sums to rescue the financial institution.

I am generally opposed to the ACC engaging in direct lending. Banks and other players exist that can do this. In that respect, the ACC's strategy should move closer to that of the Damu Fund, but confined to the agricultural sector.

It would be logical to make the ACC the operator of all types of subsidies for farmers, taking this function away from the akimats and building a transparent digital platform covering all forms of support: subsidies for fertilizers and plant protection products, vaccines, seeds, investment and loans, as well as insurance, guarantees and so on.

Direct lending should be reformatted into lending through second-tier banks, microfinance organizations, leasing companies, distributors of fertilizers and plant protection products, and traders, who would receive targeted financing on market terms. In this segment, though, I would make greater use of guarantee instruments.

I am not a great specialist in the problems of the agricultural sector, but it seems to me that there is a lot we can improve. For example, systemic problems in veterinary control and phytosanitary regulation mean that, however many agreements on supplies of our products we reach at the government level, we cannot export them.

Grain receipts are still not a full-fledged financial instrument, even though creating one would make life much easier for both bankers and conscientious farmers. The country's irrigation infrastructure is, one might say, not in the best condition and also requires considerable attention. There are many such systemic problems. Let us focus on systemic issues, so that institutions work.