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Posts Tagged ‘Eastern Europe & CIS’
Q&A with Murat Cokgezen, case study author of Hey Textile (Turkey)

Murat Cokgezen was born in Istanbul, Turkey. He is currently teaching at Marmara University Department of Economics, Istanbul, Turkey. His main research interests are entrepreneurship and business environment in Turkey, Central Asia and Caucasus. He is currently working on the effects of state owned enterprises on local entrepreneurship. Murat authored a GIM case study on a textile company in Turkey, namely Hey Textile, a study about a female entrepreneur in Turkey who achieved business success by breaking from the conventional practices in the textile industry and investing in poorer parts of Turkey.

Hey Textile is a clothing business in Turkey run by a woman entrepreneur, who achieved success by breaking from conventional business practices and investing in poorer parts of the country. About half of the jobs are created for women, which has contributed to their empowerment through greater income and independence. Click here to watch the Hey Textile video.

To download the Hey Textile case study from the GIM database, please click here.

What is Hey Textile’s basic value proposition and what makes its financial model sustainable?

Turkey, like many other emerging economies, suffers from socio – economic disparities in geographical regions. Hey Textile, by taking advantage of government incentives for business investments in impoverished regions, shifted its investments from developed regions around Istanbul to less developed ones, creating income opportunities and employment for poor rural populations in the textile industry. This new strategy, not only benefited Hey Textile, through cost reductions in their operations, but also the region’s economic and social welfare, through investment in rural areas. While the newly created jobs and offered trainings contributed to income increase of the poor locals on the one hand, increased income transformed social life in rural areas, especially through women’s empowerment, since women constitute the vast majority of Hey Textile’s work force.

What have been the biggest challenges hindering the Hey Textile’s development and growth?

The basic challenge Hey Textile faced when investing in rural predominantly agricultural areas, was the lack of qualified employees with relevant skills for the garment industry and the lack of familiarity of its newly hired workers with the working conditions in an industrial environment. The training programme offered by the enterprise and co-funded by Turkey’s State Employment Agency helped to overcome this constraint.

A second challenge came from the difficulty of finding adequate local partners for its investments in these rural areas, as most potential partners were not familiar with this industry and expectations of investors had to be carefully managed. Government incentives helped to spark regional development.

What are the benefits for the poor generated by Hey Textile?

Hey Textile’s four new production units created job opportunities for approximately 1,000 locals who live in and around four districts, in which per capita income is well below the average of Turkey. When one considers the populations of these districts are around 10’000 inhabitants, the impact of these investments on the community becomes apparent. The workers of Hey Textile factories are offered above average salaries and better conditions compared to the ones in the region.

What are the implications for a woman-led entrepreneurial success story in Turkey?

Despite the legal equality granted to women in the early years of the Republic, social status of women is still well behind men. All social and economic indicators are worse for women than those for men.

Initiatives of Mrs. Bektaş, owner of Hey Textile, have attracted the public’s attention and made her a public figure. This was something unusual, particularly in business. I am sure that success of Mrs Bektas encouraged other potential female entrepreneurs to enter into a business.

Additionally, she was appointed as President of the Women Entrepreneurs Board of the Union of Chambers and Commodity Exchanges of Turkey. She put tremendous effort to improve women’s position in business, either as a worker or as an entrepreneur.

What has been your personal experience going through the GIM training and case research process?

‘What is good for business is also good for the poor’. I have always believed in this motto. Before participating in this project, the only source of my belief was the studies that had been done by others. Working on this case study gave me the opportunity to see how an ordinary business may change people’s life.

Q&A with Olga Kutuzova, case study author of The Fund (Russian Federation)

Olga Kutuzova is a public administration specialist, a Member of the Board of Directors of “International Investment center” (IIC), an international NGO in special consultative status with ECOSOC UN, a UNECE expert, and has worked for the US Department of Commerce. Olga authored a GIM case study on mobile banking in Russia, namely The Voronezh Oblast State Fund for Small Business Support, which helps low-income entrepreneurs from remote areas to get access to financial services by leveraging innovative technologies, such as mobile banking and non-personalized plastic cards.

The Fund in cooperation with multitude of partners provides microfinance services, be it commercial capital, and mobile banking for MSMEs in the remote regions of Voronezh Oblast. The mobile banking project is perceived as a major driver of innovative financial service instruments to serve underprivileged businesses in remote areas with no physical infrastructure in place.

To download the Voronezh Oblast Fund case study from the GIM database, please click here.

What is the Fund’s basic value proposition and what makes its financial model sustainable?

The Voronezh Oblast State Fund for Small Business Support (‘the Fund’) in cooperation with a variety of partners provides microfinance services and mobile banking for micro-and small businesses in the remote regions of Voronezh Oblast. In spite of Voronezh Oblast disadvantaged socio-economic situation it has got a relatively developed telecommunication infrastructure, which created a good base for the development of mobile banking in the region.

The Fund’s vision is to promote access to small business loans for economically active people and thereby help to create employment in Voronezh Oblast. The Fund provides people from remote areas with access to commercial capital and actively promotes additional financial services to a greater number of clients. The mobile banking project is perceived as a major driver of innovative financial service instruments to serve underprivileged businesses, particularly in remote areas, where no physical banking infrastructure is in place

What have been the biggest challenges hindering the Fund’s development and growth?

The Fund has faced three major constraints: the lack of adequate legal regulation of microfinance activities, poor banking infrastructure in remote regions and financial and technological illiteracy.

The Fund was able to overcome the challenges by having received the financial support from the development partners – the Swiss Foundation for Technical Cooperation (Swisscontact), DAI and the Eurasia Foundation (USAID funding). The support was provided especially in the initial portfolio enlargement and the Fund’s methodology development. During 2007-2009, the Fund received subsidies from the Voronezh Oblast government within the framework of the Voronezh regional target program for the development of regional business and for providing financial and consulting services to small businesses in remote areas.

What is the state of financial inclusion in the different regions of the Russian Federation?

In Russia, the number of microfinance organizations is growing steadily. As of early 2008, the country had more than 2,300 microfinance providers of various types (credit cooperatives, state foundations and non-profit organizations) with an aggregate loan portfolio of around 25 billion rubles (USD 1 billion). Nevertheless, around half of Russia’s economically active population lacks adequate access to financial services: according to current Prime-minister Vladimir Putin’s message to the State Council, approximately 60 million Russians do not have access to banking services and only one quarter of Russians have a bank account.

What are the promises in terms of human development of the use of the Fund’s services?

For people living in remote areas, where banks do not have many branches or offices, the use of microfinance permit to start a business, increase quality of life, achieve better level of education and improve living and health conditions. Mobile banking enables people to become more economically active without having to rely on conventional banking infrastructure.

What are the benefits produced for the poor by the Fund?

The Fund aims to serve the market segment that has no or limited access to banking services. In 2007, the Fund started to develop a project that promoted the use of mobile banking and non-personalized plastic cards, helping low-income businesses from remote areas get access to financial services. The project started in 2009. Through the provision of mobile banking and non-personalized banking cards directly at the Fund’s offices, people get access to financial services in remote areas without physically having to travel to a branch of the bank.

What are the main challenges facing the Fund? Do you have recommendations?

Now the Fund has a new general director, appointed by Voronezh Oblast Administration. I hope he will continue overcoming the progressive changes, started by the previous manager. The financial crisis, followed by raising prices for food products, will increase demand for micro-financial services from farmers living in remote areas.

What has been your personal experience going through the GIM training and case research process?

I appreciate team-building during the GIM training and experience gained in teaching methods with case study presentation. The case research process itself was quite hard, but at the end I feel proud that I made it through.

How do you intend to use the experience you gained from working on the case study for UNDP? Do you plan to disseminate this newly created knowledge in any way?

I am planning to use the experience from working on the UNDP case study and information about microfinance in a preparation for the 3rd annual conference “Public Diplomacy and Youth Volunteering”, which will be devoted to “Poverty Alleviation and Youth Entrepreneurship”. This conference will be aimed at youth in social-oriented enterprises and held in the UN Palace of Nations in Geneva in October 2012.

Launch of the GIM Regional Report in Belarus

A presentation of the GIM Regional Report “Business Solutions to Poverty – How inclusive business models create opportunities for all in emerging Europe and Central Asia” took place on March 1, 2011, at the National Press Center in Minsk, Belarus. The Report is the first one, where the concept of inclusive business models is applied to the Europe and Central Asia region. The Report has been prepared based on 19 dedicated (specially commissioned) cases conducted in countries of the region (including Belarus), containing specific examples of profitable business, which at the same time positively impacted population and environment.

“I believe that this Report will serve as an advocacy tool for private businesses, government agencies, civil society organizations and other development actors to work together to encourage growth and higher standards of living in Belarus”, noted Mr. Antonius Broek, UNDP Resident Representative in Belarus. The Belarusian experience in providing medical services to people in need was presented by Mr. Vladimir Karpovich, the Joint LLC “Mobile TeleSystems” Director General. Within the framework of the UN Global Compact, the MTS Company initiated a project on promotion of telemedicine (“distant medical services”) in small towns and rural areas. Thus a mobile equipment complex “Cardian-PM” has been procured and installed at the Ratomka district hospital to ensure “mobile” transmission of electro cardiograms for expert analysis to the Minsk central district hospital.

“Business is quite actively developing in the capital and regional centers of Belarus, which, at the moment, is not typical about small towns and rural areas”, stated Alexander Likhachevsky, Director of Department on Entrepreneurship of the Belarus Ministry of Economy. “It is a lengthy process, which would require both creation of infrastructure and changing perception of promotion and development of entrepreneurship, pursued by people in the field. So, the activities carried out by UNDP in order to develop private businesses in remote areas contribute to implementation of plans that the government envisaged in this sphere.”

Please click here to download the press release, and here to watch a TV report on the launch event (in Belarusian).