Development institutions of Kazakhstan

Current methods of evaluating projects in development institutions of Kazakhstan and ways to improve them to reach Sustainable Development Goals

 

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Table of Contents

 

  1. Abstract 3
  2. Introduction and problem statement 4
  3. Literature review.. 5
  4. Methodology. 5
  5. Results and discussion. 6
  6. Conclusions and recommendations. 6
  7. References. 8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1.    Abstract

Sustainable development and economic growth is one of the major concerns of the world today. The Sustainable Development Goals (SDGs) adopted by the UN in 2016 have provided the blueprint for creating a stronger and better future for all. Since then, the mechanisms to achieve SDGs have been incorporated into policies and strategies of global development institutions and nations around the world. The current research aims at evaluating the relevance of international organizations’ fiduciary standards, environmental and social risks management principles for project design, implementation and monitoring practices in Kazakhstan and Central Asian countries.Since gaining independence, Kazakhstan has been primarily addressing the challenge of nation building and economic development leaving aside the environmental and social agenda. Therefore, we see the contribution and added value of theresearch in establishing a framework for creation, evaluation and execution of investment projects in order to help the achievement of SDGs for economic growth and development through foreign direct investment.

The research will be mainly based on the qualitative approach. The comparative analysis of the standards, mechanisms and principles will be conducted using the primary and secondary data. The data will be collected through interviews and document reviews.

The final result and finding of the research is expected to be the assessment of the validity of the approach used by international organizations to ensure achievement of SDGs when designing, implementing and monitoring investment projects in Kazakhstan.

 

 

 

 

 

 

 

 

 

 

 

2.    Introduction and problem statement

Sustainable development has been pivoting point for international agenda for the first twenty years of XXI century. In January 2016, the UN adopted the 17 Sustainable Development Goals (SDGs) of the 2030 Agenda for Sustainable Development uniting human rights, human development and environmental issues within one global framework. Since measures to promote economic growth, human rights and environmental issues considered apart of each other have failed to resolve the problems of developing countries, this new approach seems an attempt to address the development issues in a holistic manner. Sustainable development considers not only poor countries and regions but also the whole world emphasizing on broad collaboration of developed nations and developing countries to facilitate global economic growth while preserving the environment[1].

One of the major keys to economic growth is investment in capital. Its importance for developing countries cannot be overestimated. However, the history of post-war world shows that concentrating efforts on solely economics or human rights or environment never works. Investment in industries without close consideration of environmental and humanitarian issues quite often led to failure rendering efforts and expenditures ineffective if not harmful. It appears direct investments should be made taking into account not only economic factors like profits but also accompanied by a number of conditions to maintain proper consideration of human rights and preservation of environment. Major global development institutions implement Environmental and Social Safeguards (ESS) in the course of development and implementation of investment projects they participate in. ESS were initially introduced by International Finance Corporation (IFC) subsidiary of the World Bank. Other institutions directly or indirectly related to UN employ ESS for the needs of project assessment and monitoring with minor changes or additions. ESS include quite detailed ranking of environmental and social risks, requirements for appropriate mitigation measures in cases of threats and establishment of Environmental and Social Risk Management System in the course of project implementation.

Unfortunately, environmental and humanitarian agenda are often neglected in the course of development and implementation of investment projects outside the programs led by global development institutions. In case of Kazakhstan, current environmental and social terms enforced by authorities are rather formalistic, outdated and insufficient. Further strengthening of these terms would only lead to growth in corruption practices and respective amounts of bribes.This state of affairs has developed as a result of the fact that economic concerns and political development have been prioritized by the government in the first 25 years of Kazakhstan’s independence (White, 2019). However,it is obvious that strong environmental governance as well as social welfare policy are essential to ensure sustainable development of Kazakhstan. Today, as the country matured it is ready to fulfill its commitments to achieve the SDGs as President Tokayev reaffirmed in his Address at the General Debates of the 74th session of the UN General Assembly[2].In this regard, we find it appropriate that new sustainable development conditions are to be introduced to private and quasi-government project financing and implementation entities so the new investment projects of any nature will contribute to sustainable development of the nation in addition to requirements set by public service authorities.

In this research we are going to thoroughly examine the international best practice in implementation of ESS for investment projects, evaluate its applicability in Kazakhstani context, namelywhether it can and should be extended to investment projects of the private sector, which are financed through a quasi-state line within the framework of industrial development programs.Consequently, we will establish a methodological basis for Environmental and Social Risk Assessment, Mitigation and Management Manual for the investment projects with private participation in Kazakhstan and Central Asia.

The added value of the research is creation of a framework for the investment projects development, assessment and implementation to support the achievement of SDGs in the course of economic growth and development through foreign direct investment by incentivization rather than coercion.

3.    Literature review

Many theoreticians have studied the concept of sustainable development. In our research, we will touch upon this concept as it lays the basis for the definition and comprehension of the SDGs, which present our major focus. We will perform a study into how SDGs are perceived by the nations, how the countries include the SDGs into their policies and strategies with the emphasis on investment projects. We will also investigate the most recognized project evaluation methodologies and techniques paying special attention to the approaches used by international development institutions.

4.    Methodology

We are going to consider projects containing Environmental and Social Risk Management entirely or partially on account on how smooth were the processes of design, implementation and monitoring above mentioned risks. Requirements set by major “green” multilateral organizations towards accredited entities are going to be closely examinedand compared to the practice of the projects implemented in Kazakhstan. Therefore, this research will take on the qualitative approach and will include primary and secondary data analysis.

To collect primary data, we are planning to conduct interviews with key stakeholders, namely, the UNDP experts in Kazakhstan, private sector workers and representatives of government bodies. The interviews will be organized either face-to-face or in written form depending on the availability of the interviewees and the characteristics of the interview type which is yet to be defined. Secondary data will be collected through review of frameworks, guidelines and standards elaborated and used by global development institutes such as the World Bank Environmental and Social Framework, UN SDG Project Assessment Tool, Green Climate Fund Programming Manual, UN Scaling Finance for the Sustainable Development Goals and the like. Another source of secondary data is the documentation (technical documentation, records, reports) of ongoing and finalized projects. A number of project cases both involving international organizations and the projects outside the programs led by global development institutions will be selected for content analysis. The research might have limitations as to the availability of the information for content analysis and the limited number of interviews conducted or else. To overcome the possible limitations a risk assessment exercise will be performed by the research team to find appropriate solutions to potential challenges.

 

5.    Results and discussion

The main purpose of research is finding out the applicability of fiduciary standards, environmental and social risk management adopted by international organization to project design, implementation and monitoring practices in Kazakhstan and other Central Asian nations.

The research will have the assessment of the applicability of fiduciary standards, environmental and social risk management adopted by international organization to project design, implementation and monitoring practices in Kazakhstan and other Central Asian nations as ultimate conclusion.

Barriers and workarounds along with policy proposals are to be discussed based on the assessment. The set of recommendations over localization of these practices to investment activities led and financed by public, quasi-government and international entities along with practical implementation within lending or equity acquisition deals.

6.    Conclusions and recommendations

The short history of industrialization in Kazakhstan shows the necessity to require investment projects financed by public funds of every origin to maintain not only commercial viability, but also responsibilities towards environment and communities located in the vicinity of the project sites. These requirements should extend beyond formal environmental and social safeguards set by public authorities. Environmental and social risk management and targets should be embedded within contractual paperwork by financing parties and the implementation should be monitored along with financial and technical indicators. Adoption of best practices related to fiduciary standards should significantly decrease corruption and corporate misconduct. Environmental and social risks should be determined, mitigation actions should be detailed and bound to measurable indicators to be used within financial and technical monitoring of the project implementation. Improvements to environment and community in the vicinity of the project site should be included to project performance indicators monitored by financing parties.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7.    References

Address by Kassym-Jomart Tokayev, President of the Republic of Kazakhstan at the General Debates of the 74th Session of the UN GA retrieved from

https://www.akorda.kz/en/speeches/external_political_affairs/ext_speeches_and_addresses/address-by-kassym-jomart-tokayev-president-of-the-republic-of-kazakhstan-at-the-general-debates-of-the-74th-session-of-the-un-ga

Green Climate Fund, GCF Programming Manual

The World Bank, Environmental and Social Framework

United Nations, Scaling Finance for the Sustainable Development Goals

United Nations, SDG Bonds and Corporate Finance

United Nations, SDG Project Assessment Tool

United Nations, The Sustainable Development Agenda retrieved from

https://www.un.org/sustainabledevelopment/development-agenda-retired/

White K.D. (2019) Environmental Issues of Kazakhstan. Springer Nature Switzerland: Global Encyclopedia of Public Administration, Public Policy, and Governance

 

 

 

[1]https://www.un.org/sustainabledevelopment/development-agenda-retired/

[2]https://www.akorda.kz/en/speeches/external_political_affairs/ext_speeches_and_addresses/address-by-kassym-jomart-tokayev-president-of-the-republic-of-kazakhstan-at-the-general-debates-of-the-74th-session-of-the-un-ga

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