The following is an excerpt from an IFC's Small and Medium Enterprise (SME) department newsletter called SME Focus. This is final part in a four-part series highlighting different country examples of IFC's work in this area. August 24, 2001Karaganda is a poor, isolated region of Kazakhstan. With unemployment high, much of Karaganda's population depends directly or indirectly on continued success of its largest industrial site, privatized steel plan Ispat Karmet. Employing roughly 50,0000 workers, the revitalized Soviet-era plant is the region's key engine of economic development. In 1997 IFC helped finance its US$241 million upgrade by one of the world's top steel makers, London-based LNM Group, thus launching the region on the road to deeper integration with the global economy. The plant has since shown a remarkable turnaround, becoming profitable and internationally competitive in just a few years. Now the challenge is to help more of Karaganda's people share in the benefits by deepening the project's ties with the local private sector. To help its client with this demanding task, IFC last year studied one of the world's strongest models of multinational involvement in SME development: Anglo American's Zimele program in South Africa. Combining financing with managerial and technical support on a for-profit basis, Zimele (the Zulu and Xhosa word for "self-sufficiency") has not only groomed 300 local SMEs as Anglo American suppliers, but has also built their value by helping them compete in the broader marketplace. Common business interests have been central to the 12-year-old program's success. After discussions with IFC, Anglo American agreed to help transfer its model to Karaganda. It sent a senior manager there last summer on a pro bono basis to meet with Ispat Karmet management and see if the Zimele approach could work under the very different local conditions in Kazakhstan. Things have moved rapidly since. IFC and Ispat Karmet have now teamed to finance a US$6.9 million SME fund that will be owned and operated as a subsidiary of this steel company. It expects to make up to 20 job-creating investments of between $20,000 and $1 million in local SMEs that supply the steel plant, while also supporting them with technical expertise and management training. The project should go a long way toward filling the financing and knowledge gaps faced by these local SMEs, and, in the process, reduce the steel producer's operating costs by strengthening its local supply chain. While the funding is essential, the SMEs must first be strengthened from the inside so that they will become profitable investment targets. Toward this end, IFC is providing $180,000 from its SME Capacity Building Facility to help launch the technical assistance program, which Ispat Karmet will then run from its own resources, with possible additional support from the European Bank for Reconstruction and Development. Useful links: For more information on IFC supply chain linkages projects: Alexis Duroy. For more on the International Finance Corporation, visit: http://www.ifc.org. For more on Small and Medium Enterprises, visit: http://www.ifc.org/about/contacts/sectors/smes/smes.html. For more on the Bank's work in the Europe and Central Asia region, visit: http://www.worldbank.org/eca. Other parts of the SME Focus series include Kenya, Vietnam & Cambodia, and Nigeria. | 
