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

1. UNDP/UNIDO Project “Support to SME Development in Kyrgyzstan”, KYR/97/001 Executing Agency: April 1997-March 1998 – Ministry of Labour and Social Protection March 1998-September 2000- State Fund for SME Support September 2000-till now – SME and Tourism Development Department at the Prime-Minister Office Date of start of the Project: Planned: April 1997 In fact: August 1997 Date of end of the Project: Planned: April 1999 New: December 2001

2. Major tasks of the Project • Macro level task – to contribute towards creating an enabling policy and regulatory environment to promote entrepreneurship and development of SMEs; • Micro level task – to enhance the national capacity for providing support services to SMEs, direct assistance to entrepreneurs and enterprises

3. Partners of the Project 1. 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.

4. International and Foreign Oranizations • UNDP Projects, ILO, USAID, Helvetas, TACIS, TICA, JICA, Danida, Counterpart Consortium, Soros Foundation, Konrad Adenauer Stiftung, ETF, Eurasia Foundation, FINCA, Peace Corps, Merci Corps, WB, EBRD, ADB, KfW, CAAEF. Forms of co-operation: Round Tables, conferences, Donors meetings, join studies and publications, information exchange, trainings, seminars etc.

5. 3. NGOs Women’s Congress of Kyrgyzstan, Women’s Business and Public Initiatives Support Fund, Issyk-Kul Regional Development Fund, Fund for Talents Support, Manager – Professional, Marketing Service Bureau, Chamber of Trade and Industry, Bishkek Chamber of Commerce, Industry and Handicraft. Forms of co-operation: Trainings, seminars, counseling, business-planning, Round Tables, conferences, technical assistance.

6. Our clients • Most vulnerable layers of the society with focus to women entrepreneurship, invalids and jobless • Potential and acting entrepreneurs • Small and Medium Enterprises • Local administrations, dealing with SME development • NGOs, Self-Assistance Groups, Business Associations and Foreign and International organizations • Education Institutions

10. The book and other publications of the Project • The first in the Kyrgyzstan history – SME manual was written by the Bishkek SBDC team. It was issued in two language versions (Russian and Kyrgyz) • SME project launched an initiative of publishing SME Working Materials series. • Until December 2001, seven issues were published:

11. CDF and PRSP • Poverty Reduction Strategy Program (PRSP) – the first and decisive phase of the Comprehensive Development Framework (CDF) is aimed at “rapid development of the private sector, which will become the source for poverty reduction by generating employment opportunities and stimulating economic growth” through establishing of new MSME businesses and in development of already existing ones.

12. Poorest layers of the society MSMEs Business community State institutions of all levels NGOs International organizations Education institutions Strategy of transition of the SME Project to sustainable system of providing supporting services 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

13. Conclusion and Recommendations of the in-depth evaluationThe 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.

14. 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

15. Additional SBDC Activities and Financial Sustainability • In 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.

17. 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’.