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Launch of the "Creating Value for All" Report in Sofia (Bulgaria, 28 April 2009)

The issue of ‘Public Policies and Business Opportunities in Times of Crisis’ was discussed at an international forum that was conducted today in Sofia. The Forum, organized by the United Nations Development Programme, the Bulgarian Development Bank, and the Global Compact Network in Bulgaria, highlighted actual issues on establishment of the inclusive business models and the value of micro-financing in times of crisis, presenting Bulgarian and international models and practices. The participants in the forum – businessmen, representatives of the United Nations, the bank sector, and public institutions exchanged ideas on what could be done by both the private sector and the state for integrating socially marginalized people in the market through promoting their economic activities.

Overview

The issue of ‘Public Policies and Business Opportunities in Times of Crisis’ was discussed at an international forum that was conducted today in Sofia. The Forum, organized by the United Nations Development Programme, the Bulgarian Development Bank and the Global Compact Network in Bulgaria, highlighted actual issues on establishment of the inclusive business models and the value of micro-financing in times of crisis, presenting Bulgarian and international models and practices. The participants in the forum – businessmen, representatives of the United Nations, the bank sector, and public institutions exchanged ideas on what could be done by both the private sector and the state for integrating socially marginalized people in the market through promoting their economic activities. Creating sustainable mechanisms for financing housing policies – opportunities in times of crisis, was also a topic on the agenda.

The forum was open by Henry R. Jackelen, UNDP Resident Representative. “Never have differences in wealth and inequality been greater”, highlighted Mr. Jackelen, and he added that 10 percent of the world’s population holds more than 80 percent of the wealth, while the poorest half represents just 1–2 percent. Such socioeconomic imbalances are not sustainable, especially when taken against the background of the global financial crisis.

The UNDP Global Report on ‘Creating Value for All: Strategies for Doing Business with the Poor’ gives such examples. The report was presented by Sahba Sobhani, Programme Manager, Private Sector Division, UNDP Headquarters (New York). The report offers inclusive business models devised by the private sector around the world and the region, and also gives examples of economic activity that actively engages the poor as participants and clients. Lack of foundations for functional markets excludes the poor from meaningful participation and deterring companies from doing business with them, note the report authors and conclude, that market conditions surrounding the poor can make doing business difficult, risky and expensive. The case studies in the report identify five broad constraints: limited market information, ineffective regulatory environments and inadequate physical infrastructure. Next are the missing knowledge and skills, and the restricted access to financial products and services. The analyzers suggest five open working strategies and models, applied by entrepreneurs in different countries in the world against these constraints.

The results of a case study on the establishment, development and the social mission of the Forus Bank in Russia was presented by Professor Boleslav Rok from the Kozminski Academy of entrepreneurship and management (Poland). The history of the bank started in 2000 when a Fund for Support of Microentrepreneurship was launched in Russia with the aid of Opportunity International. For its first five years the fund disbursed over 115,000 loans with a total value of US$ 132 million. This made it the biggest non-banking microfinance institution in Russia, serving clients in 26 regions in the country. In 2005, the Fund was transformed into Forus Bank, licensed by the Central Bank of the Russian Federation. The bank is providing access to high quality banking services for individuals and smallest enterprises that other banks tend to ignore. For two years its portfolio exceeded 16,500 loans of total US$ 36 million with the average loan size being about US$ 2,000. It’s indicative that 79 percent of Forus Bank clients are engaged in retail and 18 percent in the sector of services. About 82 percent of the bank clients are women. Forus bank uses both solidarity group and individual lending methodologies that help build social capital and networks among small scale entrepreneurs.

Sasho Tchkalski, Executive Director of the Bulgarian Development Bank (BDB) and Vice Chair of the BDB Advisory Board presented officially the concept of establishing a new microfinance institution – a subsidiary of the Bulgarian Development Bank which evolves from the successful microleasing scheme of Job Opportunities through Business Support – JOBS Project. It is expected that the new institution will start functioning in the following months when new opportunities for supporting starting businesses as well as small and micro business initiatives will be available. Now, the founders of the initiative are facing the challenge to make it sustainable and offering a wide range of services.

Representatives of commercial banks and microfinance institutions took part in the discussion on the micro-financing benefit in times of crisis. The experiences of the Bulgarian Development Bank, the Bulgarian Network for Microfinance Consortium, and the Bulgarian Association of Credit Cooperatives (BACCO) were also presented.

Creating sustainable mechanisms for financing housing policies in times of crisis was discussed by Bulgarian and foreign representatives of the Ministry of Regional Development of Bulgaria, the Energy Efficiency Fund and the Dutch International Guarantee Fund for Housing.

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Documentation

Media coverage

  • Bulgarian Telegraph Agency – The Global Crisis Hits SMEs, increases need for innovative business solutions  (pdf)
  • Dnevnik Daily – New MFI, Subsidiary to the Bulgarian Development Bank (pdf)
  • Pari Daily – New Scheme for Microfinancing (pdf)
  • Trud Daily New MFI (pdf)
  • Econ.bg – New MFI to start in few months (in Bulgarian)
  • Expert.bg – New MFI will start soon (in Bulgarian)
  • Classsa.bg (in Bulgarian)
  • Radio stations coverage: interviews for the Bulgarian National Radio with Haralan Alexandrov, panel moderator and the Representative of the Bulgarian Development Bank
  • TV coverage: EBF – TFV Economica, Voenen TV kanal, VTV, Evrokom TV

CONTACT DETAILS

Elena Panova
Private Sector Focal Point
PO Box 700
25 Khan Krum Str.
1040 Sofia
Bulgaria
Tel: +359-2-96-96-112
Fax: +359-2-96-96-122
www.undp.bg