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Dialogue between business and development institutions: dedication, trust, effectiveness

June 02, 6:36 UTC+3
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KEY CONCLUSIONS:

  • Development institutions are funded both at the federal and regional levels

“According to various estimates, in our country several hundred development institutions are functioning both at the federal and regional levels ... According to the Accounting Chamber of the Russian Federation, about RUB 4 trillion is invested in development institutions," said Andrey Sokolov,  Deputy Chief Executive Officer, TASS Russia.

  • Procurement of the SME Corporation in two years grew 23-fold, while that of state-owned companies from small businesses – 13-fold

“In the past year, procurement amounted to RUB 1.511 trillion . More than 35,000 small and medium businesses participated in tenders. The range of products comprises 121,000 items. When we re-launched the corporation, these figures stood at RUB 64.7 billion and 8,400 items,” said Alexander Braverman, Member of the Board of Directors,  Chief Executive Officer, Chairman of the Management Board, SME Corporation.

CHALLENGES:

  • Lack of information on regional support initiatives

“A region made a proposal and believes that everything is fine, while low ratings and neglect by entrepreneurs come as a surprise,” said  Svetlana Chupsheva, Chief Executive Officer , Agency  for Strategic Initiatives.

  • Massive bureaucracy in obtaining business permits

“It is necessary to fill in lots of different papers that complicate life and to liaise on an ongoing basis with government organisations that need to make sure that money is not wasted,” said Hans-Paul Buerkner, Chairman, The Boston Consulting Group.

  • Corrupt allocation of subsidies granted by development institutions

“We have 600 regional programmes to support local entrepreneurs, and they cannot really report their successes, as to the number of entrepreneurs trained, taxes generated, jobs created, etc. Subsidising is as clear as mud. They are often very straightforward: “Don't mess with that, it's the governor's money,” said Marina Bludyan, Vice President, All-Russian Non-Governmental Organization of Small and Medium-Sized Businesses Opora Russia.

  • Overlap between development institutions and private banks

“Practically every project run by development banks in Russia in the recent years, could well be financed by commercial banks,” said Dmitriy Pankin, Chairman of the Management Board, Eurasian Development Bank (EDB).

  • High administrative pressure on the economy

“It is important not to increase soft financing volumes, but rather tinker the challenges of the Russian business, i. e. influence by law enforcement, courts, and administrative pressure,” said Dmitriy Pankin.

SOLUTIONS:

  • Closer communication between the business community and government bodies

“We need to promote success stories that come as a result of government support. Entrepreneurs often think that we do not belong here, that support institutions are only there as a toy for those with capabilities,” said Marina Bludyan.

  • Creating a single information platform for Russian development institutions

“We will sign a memorandum to raise awareness on our support action for a maximum number of people to understand where they can go with what kind of projects,” said Svetlana Chupsheva.

“Bringing together the support institutions’ resources, at least in terms of information, would make no harm; on the contrary, it would be really useful,” said Alexander Stuglev, CEO, Roscongress Foundation.

  • Getting all paperwork done at a one stop shop

“The BCG has helped to put all this together in one entity, in the Ministry of Finance, both for imports and exports [in Indonesia]. I think this is one big issue, you can call it one stop shopping, ensuring that there are no multiple obstacles or bottlenecks,” said Hans-Paul Buerkner.

  • Development institutions’ focus on specific projects

“We should take longer-term, riskier projects. But it is essential not to go to the other extreme. When you pile up risky projects, and there are no returns, it may finally end up with the institution being unable to go on,” said Dmitriy Pankin.

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