Kazakhstan, a country of 18 million inhabitants located between Russia and China, has been battling poverty since gaining independence from the Soviet Union in 1991. The following top 10 facts about poverty in Kazakhstan show that despite the country’s independent economy being so young, there is a lot to be hopeful for about the future of the Kazakh economy.
This hope, in turn, leads to more programs and opportunities that help to alleviate poverty; however, Kazakhstan’s economic infrastructure still remains a somewhat volatile environment — despite booming energy and agricultural industries — due to corruption and over-dependence on global energy markets.
Top 10 Facts About Poverty in Kazakhstan
- Kazakhstan has a large agriculture market and is the sixth largest wheat producer in the world. The agriculture industry employs nearly 18 percent of the nation’s working population but only yields between 5-7 percent of their GDP. Nearly 80 percent of cultivation is done with machinery near the end of its lifecycle — local production of tractors, combines and other farm machinery are mostly non-existent, causing a large tab for importing expensive farming equipment mostly from Russia. This low return on investment (ROI) for Kazakh farmers leaves little to pay a significant percentage of its workforce; this lack can then leaves employees in the agricultural industry near or below the poverty line.
- Kazakhstan’s Ministry of Agriculture launched a $158 million initiative to establish cooperatives to support small to medium-sized farms. These coops aim to help offset the low ROI for small, rural farmers by helping with buying new machinery, storage and transport products, veterinary services and other business costs.
- Kazakhstan is the world’s third largest producer of oil. Oil sales account for roughly a quarter of Kazakhstan’s GDP and about 60 percent of its total exports. The nation also has massive reserves of natural gas, coal and uranium. Astana, Kazakhstan was host city to EXPO 2017 for Future Energies. Due to Kazakhstan’s over-dependence on sales of oil and material reserves, its economy is still largely at the mercy of worldwide energy prices. The sharp decline of oil prices in 2014 had such a widespread effect on the Kazakh economy that its currency — tenge — was devalued by 23 percent by 2015.
- Chevron invested $36.8 billion for an expansion to Kazakhstan’s Tengiz oil field. The massive Kashagan field also began production in October 2016 after years of delays and $55 billion in development costs. Kazakhstan had a 10.5 percent increase in oil production in 2017, helping the economy climb back after the spike in oil prices in 2014.
- The poverty rate in Kazakhstan is actually quite low. Those living below the $1.90/day rate in Kazakhstan was estimated to be 2.6 percent in 2016, and the unemployment rate was estimated to be 5 percent in 2017, according to the CIA World Fact Book. These numbers, though promising, are quite deceptive. Kazakhstan’s annual income per capita in 2017 was only $3,010, which equals about $8.25 per day.
- Corruption is rampant in Kazakhstan. Companies cite corruption as being the number one constraint for doing business in Kazakhstan, according to a 2016 GAN Business Anti-Corruption report. Earlier this year, former Kazakh Economy Minister, Kuandyk Bishimbayev, was sentenced to 10 years on corruption charges. This comes just three years after a case was brought against 21 Kazakh public officials on corruption-related charges.
- Kazakhstan suffers from a complex form of regional poverty disparity. Since Kazakhstan is quite young, the government is still underdeveloped in rural areas. The U.N. is working with Kazakhstan to address this phenomenon. Developing infrastructure and education opportunities in poor, rural areas is just a few examples of how they are addressing the problem.
- Kazakhstan has achieved nearly 100 percent literacy rate. Kazakhstan has an estimated 99.8 percent literacy rate and a school life expectancy (the total number of years a student can expect to go to school) of 15 years — from primary schools to tertiary educations (such as universities) and trade schools. Kazakhstan currently has a $67 million loan from the World Bank Group for modernizing education. The objectives of this loan are to improve curricular standards, increase learning outcomes in rural and disadvantaged schools and increase citizen engagement.
- The World Economic Forum ranked Kazakhstan 57th out of 144 countries in its 2017 Global Competitiveness Rankings. This ranking represents a falling of four spots from the previous report. The cause of this decline in ranking, and the “most problematic factors for doing business” with Kazakhstan, according to the report, include lack of access to funding, corruption and an inadequately educated workforce.
- Kazakhstan has a thriving NGO sector. One such NGO is Wonder Foundation, based out of the U.K. Wonder is a charity dedicated to helping girls, women and their families access education and support needed to defeat poverty. The organization is currently working on helping young women gain access to skills, educations and rights in Almaty and the surrounding area.
A Young, But Mighty Nation
These top 10 facts about poverty in Kazakhstan prove that poverty is not an insurmountable problem for the Central Asian state. The country’s GDP is steadily climbing while the nation works to be a major player in the oil and raw materials markets.
Kazakhstan also works to diversify their trading portfolio, enacting state programs to bolster secondary industries in the country and improve working and living conditions for their residents.
Economic sustainability is a slow and steady process, and Kazakhstan is heading in the right direction. At just 27 years old, these top 10 facts about poverty in Kazakhstan are indicative of a young country that has the potential to be at the forefront of world oil and agriculture markets and, someday, a significant participant in the global economy.
– Nicholas Hodges