Kazakhstan on Wednesday swore in its second-ever president since independence, following the shock resignation of their ruler of 28 years Nursultan Nazarbayev.

The first official act of Kassym-Jomart Tokayev — who by Kazakh constitution became president by default — was to rename the capital city after Mr Nazabayev, indicating there would be no departure from the abdicated leader's policy.

Mr Nazabayev's long rumoured resignation triggered an internal debate over who will succeed the leader in elections next year.

Astana, a futuristic capital city – littered with glass-faced architectural feats, which was simply named the Kazakh word for "capital" – will now be known as Nursultan, or "Sultan of Light" in Kazakh, in honour of the former president.

"The results of an independent Kazakhstan are there for all to see," the country's new leader said. "I propose...naming the country's capital Nursultan in honour of the first president".

The Kazakh parliament then voted to pass the change of name.

The newly appointed president also said the main streets in every major city should be named after Mr Nazarbayev and portraits of the post-Soviet-era ruler should continue to hang in schools and other public places.

Kazakhstan, Kyrgyzstan, Tajikistan and Uzbekistan are set to lead expansion of Islamic banking in CIS countries. AFP

He "remains the only and lifelong father of the people," Mr Tokayev said.

Also on Wednesday Mr Nazabayev's daughter, Dariga Nazarbayeva, was elected speaker of the Senate, setting her up to succeed Mr Tokayev if he resigns and as a key political figure in elections next year.

Ms Nazarbayeva, 55, is the eldest of three daughters and as the most politically active – she served as deputy prime minister from 2015 to 2016 – has often been mentioned as a potential successor. Mr Nazabayev once ruled out handing over power to family members.

Mr Nazabayev announced his resignation on Tuesday, ending nearly 30 years as head of state of central Asia's largest economy.

"I have taken the decision to refuse the mandate of the presidency," he said in a speech broadcast on state television.

Mr Nazarbayev, 78, has served in the office since April 1991 but has led Kazakhstan since 1989 while it was still part of the Soviet Union.

“I will be with you to serve until the end of my days,” he said. “I see my future task in ensuring a new generation of leaders.”

As the chairman of the Security Council, a constitutional organ setting guidelines for foreign and interior politics, Mr Nazarbayev will continue to "be the power of the throne," following the example of Singapore's Lee Kuan Yew, who coined the minister-mentor model.

President Tokayev, 65, a life long diplomat who has been foreign minister twice, "is a safe pair of hands and a loyal presidential lieutenant," Kate Mallinson, an Associate Fellow for Chatham House's Russia and Eurasia Programme wrote, adding that "Nazarbayev Inc." continues to rule.

But Mr Tokayev faces the challenge of reviving Kazakhstan's stagnating economy – the government has spent nearly $18 billion (Dh66bn) on banking bailouts – and balancing relations with the country's two giant neighbours Russia and China.

Chinese Foreign Ministry spokesman Geng Shuang said Beijing is fully confident in bilateral cooperation, while Russian President Vladimir Putin said “we hope for continuity” in Kazakh policies.

However, argued Ms Mallinson, "the interim succession plan is still vulnerable to external and internal factors including Russia’s role, the price of oil, socio-economic issues and elite politics," and warned of external "hostile figures" who might seek to take advantage of the power vacuum.