Accountability and Transparency

The State-Civil Society Relationship in Kazakhstan: Mechanisms of Cooperation and Support

The International Journal
of Not-for-Profit Law

Volume 6, Issue 3, June 2004

By Vsevolod Ovcharenko*

The idea of state support of civil society recently gained recognition from representatives of the state administration of Kazakhstan. At the unprecedented Civic Forum, which took place in October 2003 in the capital, Astana, President Nursultan Nazarbayev announced ideas for cooperation between the government and civil society. The main result of the Civic Forum is acknowledgment by the authorities of the fact that civil society is beneficial for the government, and that cooperation between the two sectors should include state support of the social activities of civil society organizations (CSOs). There is an opportunity now for Kazakhstan to move forward and strongly improve cooperation between the state and civil society, yet the converse is also true.

Cooperation between the state and civil society can be divided into three areas:

  • Adoption of a favorable legal environment stimulating civil society development and growth;
  • Public participation; and
  • Financial support of civil society organizations’ social activities by the government.

Let us briefly consider achievements in each of the three areas and indicate the principal problems preventing the development of effective and efficient mechanisms for state support of civil society organizations.

Adoption of a Favourable Legal Environment

The situation in this area is the most complicated and progress the least noticeable. During the last five years, there has been a negative and repressive trend. However, the change in composition of the Majilis (the lower chamber of Kazakhstan’s parliament) in the autumn 2004 parliamentary elections offers the possibility for positive movement.

Principal Problems:

  • The prohibition of activity of non-registered (informal) public associations in Kazakhstan,which results in citizens’ being unable to associate without first getting legal status as an entity, even if just to resolve problems of a local and temporary nature.
  • Territorial divisions remain in the registration of public associations:they are registered as local, regional, or national organizations. This gives the authorities an excuse to ban the national activity of any public association not registered as a national organization. The formal excuse is that its activity is conducted beyond the territorial limits stipulated in its constitutive documents and thereby violates the law.
  • High registration fees still exist. For instance, the registration of an average NGO in Kazakhstan costs not less than 170 USD (the state registration fee is 130 USD), and the cost of state registration of public associations with national status is more than 1,000 USD (the state registration fee is 1,040 USD).

Public Participation

One can define three quite developed mechanisms of public participation in Kazakhstan:

  • Public participation in the form of civil society representatives’ participation in drafting various normative acts at different levels (national, regional, and local). Representatives of NGOs are increasingly involved in working groups drafting normative acts.
  • Consideration by the government of civil society initiatives. The most recent example is the revocation by the President of his directive to enact the Law on NGOs, a repressive and anti-NGO draft that was sharply and broadly criticized and opposed by NGOs throughout the country.
  • Participation of NGO representatives in councils created and functioning within the executive. NGOs helped to create, and for the past three years have participated in, Cooperation Councils that operate in five Oblasts (Provinces) of Kazakhstan. These boards advise the government on strategies of cooperation with civil society. In addition, at the national level, three NGOs (Confederation of NGOs of Kazakhstan, Diabetic Association of the Republic of Kazakhstan, and Consumers Rights’ Protection League) were included in the National Council, the advisory board of the President of Kazakhstan. These Cooperation Councils represent a first step in creating a structure for long-term engagement of the state with civil society organizations.

Principal Problems:

The status of such Cooperation Councils is only advisory and is governed by acts of executive authorities rather than by legislation adopted by parliament. The criteria for selecting NGO representatives are not transparent (it is a discretionary decision of the head of executive authority and not governed by any prerequisites or procedures). One major criticism of these councils is that for the most part, NGOs controlled by the respective provincial governments (so-called “GONGOs”) are selected as members.

Financial Support of CSOs by the Government

The financial support provided by the government to NGOs can be labeled as direct or indirect, ranging from the direct funding of activities to mere tax preferences.

Subsidies (Grants), Including “Natural Subsidies”

Kazakhstan legislation provides for the granting of subsidies to youth and children’s organizations, but does not specify any criteria for identifying such organizations. Also, several municipal laws, including those of Almaty, Kazakhstan’s biggest city, provide for a considerable discount in rental payments for public organizations leasing premises on municipal property. This results in a rate one-tenth the average market value for similar premises. Such a discount is called a “natural subsidy.” However, similar to the situation with youth and children’s organizations, local legislation does not specify what organizations are eligible. Without such criteria, this leasing discount is left to the unlimited discretion of local officials administering municipal property.

Principal Problem:

The constitutional ban on state financing of public associations in Kazakhstan could be extended after the adoption of the pending Budget Code because the term financing, and thus the constitutional ban, is defined in this law to include any usage of state finances, including payments under state procurement contracts.

“Grants” Given under State Procurement Contracts

During the summer of 2003 the Ministry of Culture, Information and Public Accord (now split into the Ministry of Culture and the Ministry of Information) conducted tenders and distributed grants among NGOs using state procurement procedures and state procurement contracts. Such tenders had a closed nature and only NGOs were eligible to participate (exclusion of other organizations violates the principle of fair competition stipulated by state procurement legislation). Furthermore, only invited NGOs could participate. A more detailed analysis of such “procurement grants” is complicated by the classified status of information on those grant tenders.

Principal Problems:

The non-transparent mechanisms of “grant tenders” and usage of the term “grant” (commonly used to specify project subsidies) to characterize a type of state procurement contract complicates the situation with direct financing of NGOs and arouses reasonable suspicions regarding the potential corruptive nature of such experiments.

State Procurement Legislation

State procurement legislation in Kazakhstan does not in principle preclude NGOs from participation in state procurement contracts. However, a lot of hidden problems are revealed by the application of such legislation to NGOs over the last five years.

Principal Problems:

State procurement law formally provides for equal treatment of all potential vendors under state procurement contracts. In reality, NGOs have less opportunity to compete with commercial vendors because of the limited and restricted assets they possess. This prevents them from being able to place a compulsory security deposit along with a tender application, 3 percent of the contract price. Moreover, state procurement legislation does not stipulate special procedures for procurement of social services. Also, there are no special criteria to evaluate tenders for services—the law only stipulates that the “lowest price” be sought. This ignores the quality of services, qualifications, reputation, and other non-price factors. As a result, both NGO participation in state procurement of social services and procurement of social services by the state are discouraged due to inadequate regulations.

Pending Law on State Social Contracting 

As the result of a long process of lobbying by certain NGO activists, the government finally agreed that in the period 2003-2004 it would draft and submit to parliament a Law on State Social Contracting, which is supposed to stimulate and develop state procurement of social services from NGOs. However, the draft law prepared by the Ministry of Information does not solve any of the problems mentioned above; on the contrary, it creates a lot of new ones. Primarily, this results from a closed drafting process in the Ministry of Information, without involving representatives from the Agency on State Procurement and the various social Ministries (Health, Education, Labour, and Social Protection).

Tax Preferences

During the last four years, many preferences for non-commercial organizations (NCOs) and social sphere organizations (SSOs) have been incorporated into Kazakhstan’s tax legislation. Yet there are many inconsistencies and problems:

  • There is no definition in the Tax Code that resolves the so-called “one-dollar problem” whereby a de minimusomission in calculations or receipt of advance payments for services results in an SSO not meeting the 90 percent requirement for revenue generated from exempt activities (listed in the Tax Code). Under this scenario, the result is an immediate loss of all tax preferences and the necessity to pay corporate income tax for all proceeds, including those from charitable donations. This uncertainty in the tax legislation obviously prevents real competition between state-owned institutions and private institutions (which could find themselves with an unplanned tax burden at the end of the year) in the provision of services in the spheres of education, culture, and health care.
  • Physical individuals are still unable to claim any deductions from taxable income for their charitable donations to NCOs and SSOs.
  • There is still no opportunity for legal entities to deduct from their income tax charitable donations transferred to SSOs (including, but not limited to schools, universities, institutions for the disabled, theaters, and museums).

General Conclusions

The legislative framework is critical to NGO-government cooperation and economic support for NGOs. The current situation of government interest in civil society and civil society’s interest in working with government presents an opportunity to transform the current and past sporadic ad hoc experiments in state support of civil society into a regulated system that is open and transparent. So, although there are indications of this growing state-civil society relationship, further steps need to be taken to ensure the delivery of efficient and effective social services in Kazakhstan.

Should the state take on this challenge, we can expect that the state-civil society relationship will escape the negative public image most often associated with practices that look to be mere political patronage. The state can use the upcoming legislative agenda to remedy any current inefficiencies within the state-civil society relationship.


* Vsevolod Ovcharenko is Legal Consultant for Kazakhstan at the Central Asia office of the International Center for Not-for-Profit Law (ICNL) in Almaty. For further information, please contact Kevin Borrup, ICNL Program Director for Central Asia, Web: This article originally appeared in the Winter 2003-Spring 2004 issue of the Social Economy and Law (SEAL) Journal, published by the European Foundation Centre. We are grateful to SEAL for permission to reprint it