Closing the Gap: Infrastructure in Kazakhstan

The Gap

• Infrastructure spending is a top-priority for developing economies; investment in infrastructure projects has been argued to have more significant effects on output per worker than non-infrastructure investment. It improves access to markets and facilitates labour mobility. Thus, developing economies should be investing around  6% to 10 % of GDP on it (Asian Infrastructure Investment Bank, 2020).

• In Kazakhstan, ‘the infrastructure gap’ is especially acute. The combination of vast territories, equivalent to all of Western Europe, and not a particularly large population of only 20 million, present a challenge. It is especially prominent in regional inequality, where the gap has reached 1.6 times, with regions like Almaty being over 90% sufficient and Abai trailing at 58.7% coverage (Politprosvet.kz, 2025). 

• However, proximity to major markets such as Russia and China, also present opportunities for investors. The country represents an accessible, politically neutral option at a time of geopolitical instability.

What about the government?

• The government of Kazakhstan has been active in trying to resolve the issues surrounding the lack of infrastructure. The flagship project “Kazakhstan 2050” implied goals such as better connectivity of the regions and further integration of the country into the global economy (Emerging Markets Forum, 2013).

• Moreover, the 2024-2029 infrastructure plan lays out specifically the plans to create a sustainable infrastructure framework for energy, transport, water supply, and sanitation projects (Government of Kazakhstan, 2024).

Project highlight

• A highlight of recent infrastructure investment was the Climate Resilient Water Resources Development Project. Backed by the Islamic Development Bank’s $1.15 billion in funding, the project aims to accelerate water infrastructure development and enhance resilience to climate change. 

Key Risks

• It is worth keeping in mind certain risks surrounding infrastructure investment in Kazakhstan. For example, there is a notable lack of transparency surrounding compensation and redress for communities affected by extractive projects (OECD, 2024). 

• Moreover, there are still notable gaps in labour rights as the Trade Union Law (2014) and Labour Code (2015) do not fully guarantee collective bargaining and the right to strike. However, there has been some progress in this sense (ILO, 2024).

The Cordoba View

• Favour hard-currency exposure: prioritise USD-denominated Eurobonds from quasi-sovereign issuers. These offer direct exposure to the state’s infrastructure pipeline without tenge risk.

• Avoid local-currency instruments:persistent FX volatility and shallow secondary markets make tenge-denominated bonds unsuitable for foreign portfolios seeking stable risk-adjusted returns.

• Use securitised vehicles for liquidity:frontier-tilted EM debt funds and ETFs with Kazakhstan exposure provide diversified access and easier exit options than direct project financing.

• Target infrastructure-linked issuers: focus on credits tied to energy transport, logistics, and digital backbone projects benefitting from the 2024–2029 infrastructure plan.