UNDP/UNIDO Project “Support to SME UNDP/UNIDO Project “Support to SME Development in Kyrgyzstan”, KYR/97/001Development in Kyrgyzstan”, KYR/97/001

Executing Agency:Executing Agency:April 1997-March 1998 – Ministry of Labour and Social April 1997-March 1998 – Ministry of Labour and Social

ProtectionProtectionMarch 1998-September 2000- State Fund for SME March 1998-September 2000- State Fund for SME

SupportSupportSeptember 2000-till now – SME and Tourism September 2000-till now – SME and Tourism

Development Department at the Prime-Minister OfficeDevelopment Department at the Prime-Minister Office

Date of start of the Project:Date of start of the Project:Planned: April 1997Planned: April 1997 In fact: August In fact: August

19971997Date of end of the Project:Date of end of the Project:

Planned: April 1999Planned: April 1999 New: December New: December 20012001

22

Major tasks of the ProjectMajor tasks of the Project

Macro level taskMacro level task – to contribute – to contribute towards creating an enabling policy towards creating an enabling policy and regulatory environment to and regulatory environment to promote entrepreneurship and promote entrepreneurship and development of SMEs;development of SMEs;

Micro level task Micro level task – to enhance the – to enhance the national capacity for providing support national capacity for providing support services to SMEs, direct assistance to services to SMEs, direct assistance to entrepreneurs and enterprises entrepreneurs and enterprises

33

Partners of the ProjectPartners of the Project

1. State Institutions1. State Institutions::

State Commission for SME Development

Ministry of Foreign Trade and Industry

National Statistic Committee

State Inspection for Standardization and Metrology

Local State Administrations

Forms of co-operation:

Round Tables, Joint working groups, seminars, trainings,

conferences, recommendations, technical assistance etc.

44

International and Foreign OranizationsInternational and Foreign Oranizations

UNDP Projects, ILO, USAID, Helvetas, UNDP Projects, ILO, USAID, Helvetas, TACIS, TICA, JICA, Danida, Counterpart TACIS, TICA, JICA, Danida, Counterpart Consortium, Soros Foundation, Konrad Consortium, Soros Foundation, Konrad Adenauer Stiftung, ETF, Eurasia Adenauer Stiftung, ETF, Eurasia Foundation, FINCA, Peace Corps, Merci Foundation, FINCA, Peace Corps, Merci Corps, WB, EBRD, ADB, KfW, CAAEF.Corps, WB, EBRD, ADB, KfW, CAAEF.

Forms of co-operation:Forms of co-operation: Round Tables, conferences, Donors Round Tables, conferences, Donors meetings, join studies and publications, meetings, join studies and publications, information exchange, trainings, seminars information exchange, trainings, seminars etc.etc.

55

3. NGOs3. NGOs

Women’s Congress of Kyrgyzstan, Women’s Women’s Congress of Kyrgyzstan, Women’s Business and Public Initiatives Support Fund, Business and Public Initiatives Support Fund, Issyk-Kul Regional Development Fund, Fund for Issyk-Kul Regional Development Fund, Fund for Talents Support, Manager – Professional, Talents Support, Manager – Professional, Marketing Service Bureau, Chamber of Trade and Marketing Service Bureau, Chamber of Trade and Industry, Bishkek Chamber of Commerce, Industry, Bishkek Chamber of Commerce, Industry and Handicraft.Industry and Handicraft.

Forms of co-operation:Forms of co-operation:Trainings, seminars, counseling, business-planning, Trainings, seminars, counseling, business-planning,

Round Tables, conferences, technical assistance.Round Tables, conferences, technical assistance.

66

Our clientsOur clients

Most vulnerable layers of the society with Most vulnerable layers of the society with focus to women entrepreneurship, invalids focus to women entrepreneurship, invalids and joblessand jobless

Potential and acting entrepreneursPotential and acting entrepreneurs Small and Medium EnterprisesSmall and Medium Enterprises Local administrations, dealing with SME Local administrations, dealing with SME

developmentdevelopment NGOs, Self-Assistance Groups, Business NGOs, Self-Assistance Groups, Business

Associations and Foreign and International Associations and Foreign and International organizationsorganizations

Education InstitutionsEducation Institutions

77

N a t io n a l N e tw o r k o f S B D C s

S B D C

S B D C

S B D C

S B D C

S B D C

C on su ltin gB u rea u

88

SME policy advice and the National Network of Integrated Business Cenrtes (IBCs) in Kyrgyzstan

N a t i o n a l N e t w o r k o f I n t e g r a t e d B u s i n e s s C e n t r e s B*

D – IBC Institutional Component B – IBC Financial Component A – IBC Technical Assistance Component

CTA UNDP/ UNIDO SME Project Kyrgyzstan

SME and Tourism Department of the Prime-Minister’s Office

UNIDO/UNDP SME Project Small Business Development

Centres’ network

State Fund for SME Support At the Government of

Kyrgyz Republic

Chamber of Commerce and Industry of the Kyrgyz

Republic

State Local Administration

Small Business Development Centre in Bishkek – main

Resource Centre

State Fund for SME Support – Headquarter in Bishkek

Chamber of Commerce and Industry – Headquarter in

Bishkek

Karakol Consulting Bureau/ NGO

F E

Integrated Business Cenre in Osh

A B C D

Integrated Business Centre in Talas

A B C D

Integrated Business Centre in Naryn

A B C D

Integrated Business Centre in Jalal-Abad

A B C D

C – IBC Information Component

A - Component of the Small Business Development Centres’ network (UNIDO/UNDP SME Project) B - Component of the network of the State Fund for SME Support at the Government of the Kyrgyz Republic (Regional Offices) C - Component of the network of the Chamber of Commerce and Industry of the Kyrgyz Republic (Regional Departments) D - Component of the Local State Administration (Regional Departments for SME Support) E - SME Consulting Bureau at the local NGO, trained and supported by the SBDC network (new model) F - NGO B* - Regional Office of the State Fund for SME Support in Karakol

99

Summary Table of SBDC network activities. As for 31 December 2001

SBDC 1998 – 31 December 2001

Number of clients

Number of business-plans

prepared

Number of seminars

Number of trained (participants of

seminars)

Bishkek 1460 435 97 2150

Osh 1400 280 48 1500

Naryn 850 350 28 500

Talas 2000 340 78 1142

Jalal-Abad 1400 470 38 1020

Total 6030 1865 289 6310

1010

The book and other publications of the The book and other publications of the ProjectProject

The first in the Kyrgyzstan history – The first in the Kyrgyzstan history – SME manual was written by the SME manual was written by the Bishkek SBDC team. It was issued in Bishkek SBDC team. It was issued in two language versions (Russian and two language versions (Russian and Kyrgyz)Kyrgyz)

SME project launched an initiative of SME project launched an initiative of publishing publishing SME Working Materials SME Working Materials series.series.

Until December 2001, seven issues Until December 2001, seven issues were published:were published:

1111

CDF and PRSPCDF and PRSP

Poverty Reduction Strategy Program Poverty Reduction Strategy Program (PRSP) – the first and decisive phase of the (PRSP) – the first and decisive phase of the Comprehensive Development Framework Comprehensive Development Framework (CDF) is aimed at(CDF) is aimed at

““rapid development of the private sector, rapid development of the private sector, which will become the source for poverty which will become the source for poverty reduction by generating employment reduction by generating employment opportunities and stimulating economic opportunities and stimulating economic growth” growth” through establishing of new MSME through establishing of new MSME businesses and in development of already businesses and in development of already existing ones.existing ones.

1212

Strategy of transition of the SME Project to Strategy of transition of the SME Project to sustainable system of providing supporting sustainable system of providing supporting

servicesservices Poorest layers of the societyPoorest layers of the society MSMEsMSMEs Business communityBusiness community State institutions of all levelsState institutions of all levels NGOsNGOs International organizationsInternational organizations Education institutionsEducation institutions

SME Project

Trainings, Consulting, Recommendations, exchange of views

Steps to be taken;Further development of the NGO as a successor of the project

Transition to partial and, later, full financial self-sustainability

Inculcation of the flexible system of payment for consulting and training services

Search and attraction of alternative sources of financing

Expansion of services spectrum

1313

Conclusion and Recommendations of the in-depth evaluation

The independent expert Mr. Richard Temsch, Independent Consultant, President of the Missing Link International Consulting Corporation in San

Francisco, USA

evaluated very positively accomplishments and current activities of

the Project.

1414

The Project should continue in its effort to advise the Government in creating a supportive environment for SMEs.In addition to existing provisions, e.g. following measures, among others, could be introduced or reintroduced:•Creation of favorable conditions for foreign direct investment•Tax holidays for start-up firms•Accelerated depreciation of equipment•Tax breaks for environmentally sound technologies•Tax advantages for the employment of disabled persons•Tax advantages for the employment of refugees•Research grants for hi-tech firms•Harmonization of standards and norms with the EU•Protection of intellectual property rights

1515

Additional SBDC Activities and Financial SustainabilityIn order to approach financial sustainability in the future, the

Project should take the necessary steps already now:•Registration as an independent NGO with the right to charge fees for services•Drafting an adequate fee structure•Actively promoting and advertising the SBDCs’ products •Proactively finding new income sources and key accounts for the SBDCs•Developing new products with the SBDCs •Designing a marketing strategy for all products of the SBDCs•Promoting cooperation with UNIDO’s Investment and Technology Promotion Offices (ITPO) network to help clients find business partners abroad.

1616

Lessons Learned A part of the (mostly positive) experience gained in the Project can be useful for other projects in the future.

In large projects with centers on multiple locations it is important to employ an experienced

full-time resident CTA. The proper selection of the CTA is very important for the successful and smooth

implementation of the project and can save funds that would otherwise be needed for more international advisers.

In Projects with NEX modality it is crucial to select a fitting executing agency and the right NPD. The executing agency and the NPD should have a vital interest in the Project, sufficient influence in the government and good outreach to the target beneficiary.

The Government and its agencies involved in a project, whether it is nationally executed or not, should be advised not to make any commitments it is not going to fulfil, such the provision of office space or paying the utility bills.

Recruiting and appropriately training experienced national professionals with a proven Success record saves time by cutting the learning curve and is more cost effective than relying on long term foreign advisors in addition to the CTA. Careful recruiting is essential for finding qualified staff and publicly advertising the jobs, as done in the subject Project, excludes nepotism.

The degree of financial sustainability is not only a function of the performance of a project and the economy in the country, but also dependent on policy objectives and donor coordination.

1717

The UNIDO project “Business and Investment Promotion Unit - BIP Unit (TF/RER/00/002) is a part of the Regional UNIDO/Turkey Joint Programme for

Promoting Small and Medium Enterprises in NIS and aims at contributing to national efforts in supporting private entrepreneurship and SME development

• by facilitating an access of the Kyrgyz SMEs to the UNIDO investment promotion offices in major industrialized countries.

•BIP unit develops support services for SMEs to promote co-operation and

partnership with other local and foreign enterprises.•Business advisory services to entrepreneurs for the purpose of setting-up joint

venture and other types of partnerships and business alliances with enterprises in other countries.

The clients of the unit:•Enterprises with a great export potential and attractive for investments;•Entrepreneurs with a viable business plan.

The BIP Unit is an independent Centre that serves as a gateway to promote investments and joint ventures for SMEs in Kyrgyzstan. The experts

of the unit are assisting in promoting Kyrgyz projects, if necessary by travelling to other countries and potential partners. Besides, the BIP unit is

connected to UNIDO investment promotion offices (ITPO) in major industrialized countries through electronic platform “UNIDO Exchange’.

1818

BIP Unit and its Partners:

UNIDO HQ UNDP country office

Entrepreneurs and

Enterprises

SBDCs Network

BUSINESS & INVESTMENT

PROMOTION UNIT (Bishkek)

NGOs, active in

SME support

Turkish Trust Fund

Foru

m

Secretariat of Special

Representative of the President of KR on

Foreign Investments

Investment Promotion

Center