The outcomes of presidential elections and occasional rifts between neighbouring countries seem to be the only certainties of living and operating in central Asia. This unpredictability is reflected in data from fDi Markets showing that post-Soviet republics in the region captured only 0.45% of worldwide FDI inflows between 2003 and 2013.

Yet, the International Finance Corporation’s (IFC) Tomasz Telma cannot give up on central Asia. As its director of Europe and central Asia, his role is to oversee investment in these regions. “Operating in central Asia is challenging. It is true that the region has a reputation for state officials being involved in business,” says Mr Telma, carefully choosing his words.


Profit goal

While the IFC is a part of the World Bank Group and aims to eradicate poverty and advance economic development by investing in commercially viable projects, its role is also to turn in a profit. The IFC currently has between $500m and $550m in assets spread across the region and annually invests close to $200m in new projects, according to Mr Telma’s estimates.

In the region, the IFC invests in sectors such as agribusiness, infrastructure, manufacturing and financial services. Investments in the latter take centre stage as co-operation with local banks bring support for small and medium-sized enterprises further down the chain. “The bulk of our exposure in central Asia is to banks that can distribute the funding on commercial terms to the clients,” says Mr Telma.

In Kyrgyzstan, the region’s poorest country, the IFC has invested in 23 projects since 1996, 80% of which are connected with financial services and range from granting credit lines for the country's biggest banks to loans for microfinance institutions. In Tajikistan and Uzbekistan, where the scope of the IFC’s activity is broader, financial sector-related projects still far outnumber investments into any other industries.

Kazakhstan dominates

The notable exception is Kazakhstan, whose economy is twice as big as all other countries in the region combined. “Companies should be of a certain size for us to be able to work with them directly and Kazakhstan has the largest number of such companies in central Asia,” says Mr Telma.

Kazakhstan is the IFC’s biggest client in the region. Since launching its financing operations there in 1997, the organisation has injected $1.5bn into 60 projects from sectors such as offshore oil and gas, food processing and commercial property development.

“From the standpoint of an average international investor, Kazakhstan has the most comfortable business climate,” says Mr Telma. “But that does not mean there are no opportunities in other countries. It all depends on how much patience and stamina an investor has.”