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Russia
>> Regional Overview >> Russia Overview Activity Data Sheet
PROGRAM: Russia
TITLE & NUMBER: Accelerated Development and Growth of Private Enterprise, 118-013
STATUS: Continuing
PROPOSED FY 2001 OBLIGATION AND FUNDING SOURCE: $10,810,000 (FSA)
PROPOSED FY 2002 OBLIGATION AND FUNDING SOURCE: $13,650,000 (FSA)
INITIAL OBLIGATION: FY 1992 ESTIMATED COMPLETION DATE: FY 2004Summary: Despite measurable economic growth in 2000, expansion of the small and medium enterprise sector in Russia, which is key to the transformation of the economy, remains slow. To address this situation, USAID supports the development of a market economy where all Russian citizens have greater opportunities to improve their standard of living. To do so, we focus on the development and growth of micro, small, and medium enterprises in Russia. Specifically, we seek to improve the prosperity of Russians through sound business management practices, including business training for managers in Western management practices and on-site client-oriented business-consulting services. We also promote access to credit through support for microfinance programs to provide small credits to entrepreneurs, including small private farmers, and to demonstrate that non-bank credit programs are viable and sustainable. In addition, USAID supports trade and investment and banking reform through strengthening trade and business associations and increasing availability of credit guarantees. Through all these programs, we seek to strengthen Russian institutions, particularly in microfinance and business development, to provide services on a sustainable basis for the small and medium enterprise sector.
Program Categories include micro, small and medium enterprise technical assistance, micro-enterprise credit, agriculture and agribusiness, trade and investment regimes, and banking regulatory reform to support smaller business development.
Key Results: We expect that three key results must be achieved to meet this objective: (1) small- and medium-sized businesses flourish over time; (2) successful models of private ownership and modern management are widely replicated; and (3) widespread adoption of modern management practices by private firms, which then attract external financing.
Performance and Prospects: The USAID program of support to the small and medium enterprise (SME) sector remains a key component of the Mission's overall program to support economic transformation in Russia. Our programs in management training and consulting to SMEs, microfinance, and trade and investment linkages in the regions continue to reach individual entrepreneurs, help create employment opportunities, and strengthen Russian institutions that provide services to the SME sector. Most importantly, the efforts of the SME owners who are our direct beneficiaries show that successful businesses can be created and prosper in Russia. During FY 2001 USAID intends to obligate $10,810,000 to this strategic objective.
During FY 2000, USAID-funded SME business programs provided business development assistance, including hands-on U.S. expertise and management training. Three thousand firms received direct assistance to improve and expand their businesses. In addition, our support sustained and created more than 122,000 jobs during the year. We also trained over 6,000 entrepreneurs in management and marketing skills. We strengthened more than 50 Russian business support institutions and associations to both provide services to Russian entrepreneurs and advocate for policy change at the regional level. Since there is still great unmet demand by Russian businesses and business support institutions for such assistance, we will continue our present program to respond to Russian initiative and develop Russian capacity in the SME sector in FY 2001. The USAID-sponsored network of business support institutions, business training programs, client-focused business volunteer assignments and business advocacy will continue to supply Russian enterprises with tools to support private sector growth. A key focus will remain the acceleration of the development of Russian institutions to provide business services. We will also actively support business education for school-age children. In FY 2001, USAID plans to fund business development services in the amount of $6,100,000.
In microenterprise credit, over 8,700 microcredit loans were made during the last year, totaling over $7 million. Repayment rates exceeded 97%, and 71% of the loan recipients were women. The average size of credit obtained was $1,050. Policy efforts intended to complement the ongoing programs are also having a positive impact, and the success of the USAID-supported programs has led other donors to support the continued expansion of the microfinance sector. During the next fiscal year, USAID will add a new component to strengthen Russian indigenous microfinance institutions and encourage them to adopt appropriate microfinance methodology to ensure their long-term sustainability. In FY 2001, USAID intends to obligate $2,350,000 for programs.
Agribusiness investment expanded through a joint USAID-USDA activity working with USAID's business support institutions. Under the agricultural credit program, USAID provided technical assistance to Russian loan institutions and on-site expertise to approximately 26 credit cooperatives. Over 500 loans, totaling over $1.1 million were disbursed to private farmers through these 26 regional cooperatives. A pilot agribusiness investment activity promotes reforms in the sector in three regions, and investment. USAID is also helping create a sustainable Russian network of rural credit cooperatives. In FY 2001, USAID plans to provide $700,000 to continue to support these agribusiness activities.
The Mission carries out several other well-targeted initiatives in trade and investment and banking reform. These activities emphasize the importance of reducing the administrative and regulatory constraints by continuing dialogue through the U.S.- Russia Small Business Working Group. These activities also support credit financing through the Development Credit Authority project in the Russian Far East, which provides credit guarantees for project financing, and through the Loan Portfolio Guarantee program, which provides credit guarantees for working capital to develop businesses. Both these activities will be continued in FY 2001. A pilot e-commerce initiative will also be undertaken in FY 2001 to promote greater access to and appropriate privacy safeguards for use of e-commerce channels by Russian entrepreneurs. Finally, the U.S.-Russia Small Business Working Group Action Plan will be implemented to improve the policy dialogue at the Federal level to further improve small business development in such areas as development and use of alternative non-banking institutions. The Mission expects to utilize $1,660,000 for these activities in FY 2001.
In FY 2002, the Mission will focus increasingly on microfinance. The Mission also plans to concentrate more on improving the business development environment for SMEs in Russia through policy dialogue. Less emphasis will be placed on international accounting standards and the innovative technologies program in Tomsk. No new activity areas are anticipated in the portfolio. However, the Mission's business development program remains flexible to be able to respond to targets of opportunity.
Beneficiaries: The direct beneficiaries of these activities are the entrepreneurs and firms that receive training, consulting assistance, and credit provided by USAID-funded organizations. Indirect beneficiaries include the people employed by these businesses and their customers. Indirect beneficiaries also include the Russian public, who will benefit from the overall economic growth and investment generated by SME entrepreneurs.
Possible Adjustments to Plans: None anticipated.
Other Donor Programs: As a leader in the small business sector, USAID works with private Russian institutions, the managers and owners of private enterprises and associations of private businesses, and various Ministries and agencies of the Russian government at national, regional, and local levels. Other donors utilize USAID models extensively and coordinate with USAID to ensure that no activity overlap or duplication occurs. For instance, technical assistance from the European Union (EU-TACIS) complements USAID-funded private enterprise development programs through the Small and Medium Enterprise Development Agency (SMEDA) initiative. EU-TACIS is continuing this program and has asked some USAID business support institutions to participate to provide greater geographical coverage. The United Nations Development Program works actively in small business support and has expressed a willingness to work with our business support institutions in the regions. The Eurasia Foundation, which places programmatic priority on small business, continues to fund discrete activities to develop the sector. The United States-Russian Investment Fund (TUSRIF) provides loans and equity investments and has launched an aggressive leasing program. The European Bank for Reconstruction and Development continues to lend to small businesses and make equity investments. The British Department for International Development is designing a large microcredit program, modeled on the successful USAID-supported programs.
Principal Contractors, Grantees, or Agencies: USAID cooperates extensively with U.S. non governmental organizations and for-profit contractors to implement the Mission's broad program of support to private sector growth under this objective. They include Counterpart International, Agricultural Cooperative Development Institute/Volunteers in Overseas Cooperative Assistance (ACDI/VOCA), University of Alaska, Foundation for International Community Assistance, American Development Foundation, U.S. Energy Association, Academy of Management and the Market, U.S Russia Business Forum, Citizens Democracy Corps, Opportunity International, Institutional Reform and the Informal Sector (IRIS), American Chamber of Commerce in Russia, U.S. Small Business Administration, U.S. Department of Agriculture, Carana Corporation, Management Systems International and Center for Citizen Initiatives.
FY 2002 Performance Table
Selected Performance Measures: Accelerated Development and Growth of Private Enterprises, 118-013
Indicator FY97 (Actual) FY98 (Actual) FY99 (Actual) FY00 (Actual) FY01 (Plan) FY02 (Plan) Indicator 1: Number of jobs created and/or sustained 0 81,812 101,842 138,772 30,000 40,000 Indicator 2: External financing and/or investment obtained by client firms of USAID Business Support Institutions (BSIs) 20 29.2 36.9 69.7 75 100 Indicator 3: Small and medium size businesses flourish over time 861,063 868,008 890,800 875,496 910,000 950,000 Indicator Information:
Indicator Level (S)or(IR) Unit of Measure Source Indicator Description Indicator 1: IR Number Final and Quarterly reports of SUNY/Volkhov, CCI/RISE, JAR, OI, UAA, Morozov, URSBF, Counterpart, FINCA, ACDI/VOCA, CDC, IRIS, MAC, PRARI, Eurasia Foundation, and USEA Number of jobs created and/or sustained per year Indicator 2: IR US $ million Information from other USAID/Russia contractors and grantees Client firms get external financing and/or investment at USAID Business Support Institutions (BSIs) Indicator 3: S Number SME Statistics provided by the Russian Resource Center for SMEs Gross number of registered SMEs in Russia on December 31 U.S. Financing
(In thousands of dollars)
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Last Updated on: May 29, 2002 |
