Qualitative survey ”Contribution of Remitteces to the Development ...”


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Contribution of Remitteces to the Development of Small and Medium Enterpreses (Case studies).

Publication produced within the project "Remittances Developing Moldovan Communities" implemented by Hilfswerk Austria International in partnership with the National Assistance and Information Centre for NGOs in Moldova – CONTACT with financial support of European Union.


The views expressed in this publication belong exclusively to authors and do not necessarily reflect the views of the European Commission.

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Qualitative survey ”Contribution of Remitteces to the Development ...”

  1. 1. European Union External Action Grant 2010 / 228-991 QUALITATIVE SURVEY CONTRIBUTION OF REMITTANCES TO THE DEVELOPMENT OF SMALL AND MEDIUM ENTERPRISES (CASE STUDIES) This project is funded by The European Union A project implemented by Hilfswerk Austria International
  2. 2. Hilfswerk Austria International Center of Sociological Investigations and Marketing Research „CBS-AXA” Qualitative survey Contribution of remittances to the development of small and medium enterprices (case studies) Natalia Vladicescu and Alexandrina Gadarag Publication produced within the project „Remittances Developing Moldovan Communities” implemented by Hilfswerk Austria International in partnership with the National Assistance and Information Centre for NGOs in Moldova – CONTACT with financial support of European Union. The views expressed in this publication belong exclusively to authors and do not necessarily reflect the views of the European Commission. This project is funded by the European Union Delegation of The European Union to Republic of Moldova 12 Kogalniceanu Street, Chisinau, MD-2001, Republic of Moldova Tel.: (+373 22) 50 52 10 Fax: (+373 22) 27 26 22 A project implemented by Hilfswerk Austria International 85 Alexandru cel Bun Street, Chişinău, MD-2012, Republica Moldova Tel.: (+373 22) 21 25 41 Fax: (+373 22) 21 25 54
  3. 3. Qualitative survey Contents: Introduction 3 Methodology 5 I. Main findings of the survey 7 1.1. Experience of labour migration 7 1.2. Criteria and important factors in selecting the business starting up or business development field: 8 1.3. Remittances and business development opportunities 8 1.4. Barriers and challenges in business development 9 II. Case study: Businesses started up, developed with the support of remittances 11 2.1. Agriculture and stock raising 11 2.2. Commerce and services 15 III. Case Studies: Entrepreneurs who participated in the grant contest within the “Remittances Developing Moldovan Communities” Project, but who did not benefited from funding 22 IV. Entrepreneurs whose microprojects have been financially supported within the “Remittances Developing Moldovan Communities” Programme 25 4.1. Microproject “Technical installations for the wrought iron processing” 25 4.2. Mictoproject “Beekeeping. Purchase of a mobile laboratory for extracting honey” 27 4.3. “Construction, setup and outfit of an agricultural hardware repair workshop” 30 4.4. Microproject “Rabbit farm” 33 4.5. Microproject “Business development: Production, packing and marketing of corn flour” 35 4.6. Microproject „ETL-10 cables electrotechnical mobile laboratory” 37 4.7. Microproject “Growing and selling currant and gooseberries” 40 Conclusions and recommendations 43 2
  4. 4. Qualitative survey Introduction Population migration phenomenon, especially emigration, is an important one for Moldova, given the scale and socio-economic impact of it. The Republic of Moldova is a country supplying labour force to the East, particularly to the Russian Federation, as well as to the West, mainly to Italy, and other EU countries1. According to some official data, about 350,000 Moldovan citizens2 are working abroad, which represents around one third of the working age population. Given the circulatory nature of the migration process, it is estimated that around 600,000 people are involved in migration for work. These figures are significant when related to the country’s population, which counts 3.6 million people3. Sociological surveys4 performed in this area have ascertained that the main reasons determining Moldovan citizens to leave abroad were and still are the following: lack of jobs (half of the people who left5 have implied this reason), inappropriate remuneration in relation to cost of living. Social networks developed in the host country, reunification of family members are among the factors conditioning the going abroad. Labour migration is on the agenda of governmental and non-governmental institutions, as well as of foreign partners. Or, the consolidation of joint efforts in order to strengthen the benefits and diminish the negative impact of migration is a natural desideratum. Over the last years, the governmental sector, with the support of international organizations, focused on assessing the psycho-social impact of migration over families, particularly over children remaining without parental care. Economic benefits of migration are indisputable; remittances provide a considerable support to Moldova’s economy, particularly to budgets of households receiving money from abroad. According to our estimations, about 1.5 million persons live in households receiving remittances, and for over half of these households, remittances mean the main income source6. In general, remittances are meant for consumption, the largest part of them is used for the day by day expenditures and long use assets. Investments are made in the education of children, in financially supporting them, providing them with certain opportunities. Real estate represents an attractive field for Moldovan migrants: construction, reparation and provision with various facilities, purchase of flats, particularly in Chisinau, have concentrated a significant share of remittances. The number of persons who have invested remittances in starting up a business in Moldova is small in relation to the number of persons involved in the migration process. There are several factors determining this behaviour. Part of migrants with precarious living conditions before migration have oriented their efforts towards improving their living conditions, purchasing dwelling space, long use objects, etc. Other migrants, with financial potential, are concerned about investing in Moldova, where the business environment is perceived as a hostile one and focused on protectionism. Also, in our society, the entrepreneurial culture and education is at a low level, and this is particularly felt in the failure situations in the small business; to a large extent, these failures are predictable and are associated with the wrongly drafted business plan or the lack of it. The reflection of these examples in the society is limiting the intention of others to invest the money earned abroad in starting up a business here. Another important aspect related to barriers in starting up and developing a business is related to the negative perception that a good part of Moldovan citizens have towards businesspeople, often qualified as immoral and destructive. Besides, there is also the fact that some people do not know in what to invest, what field to select for their business, so that their investment is less risky. At the same time, there are people with ideas, but with limited resources to materialize them. 1 2 BNS, Year 2010. BNS. 3 The 2004 Census counted 3,581,100 persons. 4 OIM 2004, 2006, 2009 şi ILO/BNS, 2008. 5 ILO/BNS, 2008. 6 CBS-AXA/OIM, 2009. 3
  5. 5. Qualitative survey Within this context, both state institutions and international organizations are strengthening their efforts in order to diminish the consumatory nature of remittances and direct them towards entrepreneurial investments. Hence, the Moldovan Government has initiated the pilot project on attracting remittances in the economy PARE 1+1, for 2010-20121. The project “Remittances Developing Moldovan Communities”2, within which this survey has been produced, comes within the same context of mobilising human and financial resources for the sustainable economic development of the country. Surely, this desideratum is a long-term one, which would be felt in several areas and, apart from injecting some financial resources into the national economy and the return of some migrants, would create employment opportunities for other people and finally would contribute to the development of the economy and improvement of population’s welfare. This report is a qualitative approach to how remittances were and are invested in setting up and developing businesses in the Republic of Moldova. The analysis is focused on two basic elements: presenting some remittances investment models as alternatives to the consumatorist model, on one side, and description of challenges/difficulties faced by those running a business in Moldova, on the other side. 1 http://www.odimm.md/index.php?option=com_content&view=article&id=70&Itemid=208 2 More details on: http://migranti.md/2012/09/concurs-de-granturi-mici-in-cadrul-proiectului-remitentele-dezvolta-comunitatile-din-moldova/ 4
  6. 6. Qualitative survey Methodology This report contains an analysis of the qualitative survey carried out within the “Remittances Developing Moldovan Communities” Project, implemented by Hilfswerk Austria International, with the financial support of the European Union. Project Goal: To contribute to the connection of the migration process with the economic development of Moldova and efficient use of positive effects/consequences of migration in order to develop rural communities in the target-area. Specific Objectives:  To enhance the positive impact of remittances coming to Moldova;  To improve the capacity of beneficiaries of remittances and of local communities in the four target districts to initiate revenue generating activities;  To develop small businesses. Duration of the Project: •• 1 April 2011—31 January 2014 (34 months). Implementation Area: •• Districts of Telenesti, Soldanesti, Orhei and Rezina. Target group: •• Moldovan citizen; •• Migrant from Moldova or first/second degree relative - beneficiary of remittances; •• Aged between 20 and 45 years when applying to the programme; •• Willing to launch a new business in Moldova or to develop an existing business; •• A person who can confirm, by submitting supporting documents, that he/she is/was a labour migrant or is/was a beneficiary of remittances. Goal of the qualitative sociological survey: •• To present examples of investments of remittances in the business development in Moldova. Specific objectives of the survey: •• Identify the context that has determined the investment; •• Establish the main barriers in initiating and developing a business; •• Present positive experiences of investing remittances and the background of businesses for microprojects that participated in the contest and finalists. The qualitative survey is focused on two categories of respondents, representing the subjects of the research: •• Migrants who have invested remittances in various areas in Moldova; •• Participants in the small grants programme within the „Remittances Developing Moldovan Communities” Project, intending to start up a business in Moldova or to develop an existing business; •• Winners of the contest (whose microprojects have been funded). In order to identify respondents from the first category, the authors have contacted municipalities with the largest number of enterprises registered and have selected localities with entrepreneurs who used to work abroad in the past. As for the second category, the lists of participants have been provided to us by the team of the Public Association Hilfswerk Austria in the Republic of Moldova. 5
  7. 7. Qualitative survey Data collection period: May-September 2012. Additionally, persons whose microprojects have been recommended for funding were interviewed in March 2013. After assessing 33 microproject applications submitted within the contest, 7 were proposed for funding, and namely:  “Beekeeping. Purchase of a mobile laboratory for extracting honey”;  “Growing and selling currant and gooseberries”;  “Construction, setup and outfit of a repair workshop”;  „ETL-10 cables electrotechnical mobile laboratory”;  “Business development: production, packing and marketing of corn flour”;  “Rabbit farm”;  “Technical installations for the wrought iron processing.” Information was collected on the basis of the interview guide, focused on two main aspects: 1) migration and accumulation of experience and resources; 2) developing a business in Moldova. As many as 25 entrepreneurs were interviewed within the survey: 12 from the urban area and another 13 from the rural environment. Limits and challenges of the survey The survey has ascertained reluctance from the owners of small and medium enterprises to openly share the history of their business. This reserve is mainly due to the fear and worries about consequences related to unfair competition, possible problems with authorities, risks for the own assets, etc. Within the informal discussions, some owners highlighted the fact that it has been very difficult for them to start up their business, due to pressures from state institutions, as well as from some individuals, therefore they prefer to keep quiet about this issue. Others stated they could not work under the conditions of the Republic of Moldova, observing all provisions of the legislation, because fiscal pressures and controls performed by various institutions are oriented towards sanctioning the entrepreneur. Remittances were mainly invested in the following areas: ™™ real estate; ™™ commerce; ™™ agriculture; ™™ other types of services. Persons with investments in real estate have preponderantly purchased flats in Chisinau with the aim to offer them for rent, but this activity is not regulated. In the most of cases, immovable assets are rented without any agreements. Investments in real estate are considered to be with minimum risks, and provide a stable income. Also, some people who worked abroad have invested in transportation means, which they offer for rent or work personally on municipal, interurban or even international routes. Part of workers in construction have created consolidated teams, purchased tools, equipment and provide services in the country and abroad, but do not have an official statute. Therefore, these categories of respondents were not covered by the survey because they provide services but are not included in the taxpayers’ category. Obviously, the listed aspects require deeper investigations, and the decision-making factors should undertake bigger efforts in order to create opportunities for our workers returning home, so that they are motivated to register their activities. Despite all the above-mentioned barriers, we managed to identify several persons who have agreed to provide us with the information required for this survey. 6
  8. 8. Qualitative survey I. Main findings of the survey 1.1. Experience of labour migration Leaving abroad for a job was for the most of the interviewed persons the only solution to achieve certain goals: purchase or repair buildings, provide education opportunities for their children, etc. A good part of respondents were very young when they have decided to emigrate for the first time, considering the departure for a job abroad as an important step, a change to improve their life, to affirm themselves in the society; some of them even have abandoned their education in Moldova. Lack of jobs or low wages were the reasons implied by the majority of participants in the survey. Other reasons were the entrepreneurship, the dream of starting up or developing a business. In some cases, remittances continue feeding the needs of their enterprises. Members of their families, their relatives working abroad are the ones who continue investing in the development of businesses in Moldova. At the beginning, works fulfilled abroad were, without exceptions, unqualified jobs. But gradually, many of the interviewed persons managed to affirm themselves in the host country, becoming managers or even initiating their own business abroad. The reasons for returning to Moldova are very different from respondent to respondent, varying from subjective ones (like the will to be together with the family, children; homesickness; confidence that they can achieve something home), up to the objective ones (like the impossibility to extend legal staying in the host country, problems with authorities in the respective country, worsening health condition, decrease in incomes, will to continue the education, etc.). The experience of migration has scarred all respondents. Activities performed in the host country, even if without having any direct connections with the business they have started or are running in Moldova, have influenced them at the level of attitudes and behaviours. Hence, they state that while abroad they have learned:  that small and medium businesses are very important in the economy of a country;  that family businesses can be successful and they may be inherited from generation to generation;  that a business is developing gradually, one has to start from a good idea and work hard;  that it is important to fully get involved in the business, to work along the other employees, and by doing so, you have a double advantage: you monitor the business and employees, from one hand, and stimulate them, from the other hand;  to change priorities, no more exaggerated emphasis on clothing and accessories;  about the optimist spirit of people, their positivism and confidence in themselves - “they do not wait for somebody to do something for them;”  that they can get funding and support from some institutions or individuals when they have a good idea and are insistent;  that money must be invested to generate new financial resources; 7
  9. 9. Qualitative survey  about the importance of upgrading and modernizing processes at different stages in entrepreneurship;  that they must be responsible, punctual and work with dedication;  to respect private property;  to have higher requirements towards their employees, who must comply with strict rules;  to permanently improve themselves, to learn, get new skills helping them in their entrepreneurial activity. 1.2. Criteria and important factors in selecting the business starting up or business development field:  experience in the field, this is particularly applicable to businesses initiated in agriculture;  available resource (agricultural land plots, rooms, etc.);  identification of the need for a certain service;  innovative nature of the business (on-line selling, payment terminals, etc.);  relation of the need to invest and the available resources;  the will to produce something. 1.3. Remittances and business development opportunities Based on the entrepreneurial opportunities and emigration experience of respondents, four main categories may be distinguished:  persons who have worked abroad, have accumulated certain financial resources and/or experience and returned to the country for various reasons and, in order to ensure their further activity, have initiated a business in Moldova;  members of families running the business, but the main investors are other members of the family, who continue working abroad;  the business in Moldova was initiated prior to the migration, and entrepreneurs decided to go abroad in order to develop the business or to pay off certain debts or loans they have taken to develop the business, which they were unable to pay back if working in Moldova;  migrants, members of their families who have initiated a business being stimulated by the existing projects, programmes (PNAET, PARE 1+1, “Remittances Developing Moldovan Communities,” etc.). 8
  10. 10. Qualitative survey 1.4. Barriers and challenges in business development Interviewed persons have identified several barriers in the business development: a) limited financial resources, and the fear and reluctance about bank loans; Most of the interviewed people have ideas how they could develop and upgrade their business, diversify the activity, improve the way their products are distributed, but do not have resources to implement these ideas. Some of them try to identify them by applying for grants, by requesting more advantageous credits, loans from friends, etc., while others are waiting for the best moment to come so that their money earned abroad is safe; b) Insufficient education/knowledge about initiating and developing a business; c) wrong selection of the activity field; d) lack of knowledge about subtilities of the field they have starting up the business; e) over-estimation of the delivery market; f ) exaggerated diversification of activity fields without having sufficient resources to cover the investment needs; g) insufficient experience in monitoring investments and revenues; h) weak cooperation with other entrepreneurs in the field; i) tax policy: legislation in effect contains unclear provisions that can be interpreted, and civil servants from the start are suspicious about business people, with a behaviour far from being cooperative; j) lack of experience in relations with state institutions, difficulties in enterprise’s bookkeeping, these being the reasons why informal activities are preferred; k) incipient and small businesses are disadvantaged, including by the tax policy; because VAT nonpayers cannot compete with VAT payers on the same market segment; l) difficulties and ambiguous standards for obtaining authorisations for construction and construction commissioning authorisations; m) underdeveloped infrastructure (roads, water supply and sewerage services); n) insufficient human resources: several entrepreneurs have mentioned the human factor as being an important obstacle for the business development. The following are the issues mentioned at this chapter: •• insufficient staff training; •• lack of responsibility (delays, unauthorised absences from work; inappropriate behaviour with the tools they work with, with clients, etc.); •• difficulties in finding honest people (many are used, like in the Soviet time, to take goods/ products from their workplace, and they continue doing the same nowadays). o) envy and hostile attitude of some persons from the environment, attempts to disturb, suspend the activity; 9
  11. 11. Qualitative survey p) small delivery market in Moldova, insufficient quantities for export; q) high production costs in relation to the selling price of the production; r) limited knowledge in marketing strategies, as well as strategies to attract and keep customers; s) the expectation that invested resources will bring fast revenues, will be quickly recovered; t) exaggerated focus on commerce, by opening of trade units, although some respondents are aware of this aspect and mentioned that they have tried to identify other areas to invest; u) vulnerability to bilks and other profiteers, lack of trust in state institutions that could help them; v) failure to observe contractual provisions by business partners, while sanctioning mechanisms are uphill and require financial resources and time from the affected party; w) higher risks related to investments in Moldova, law revenues from small businesses in comparison with the labour remuneration they have in the host country; x) lack of corporate management experience (with respect to those running the business of their relatives). 10
  12. 12. Qualitative survey II. Case study: Businesses started up, developed with the support of remittances 2.1. Agriculture and stock raising Case study 1. Investments in agriculture F., 46, growing cereals and providing services in the agricultural field She initiated a business in the agriculture in 2007, before that she worked as a chief-accountant in several enterprises. She always wanted to open her own business in order to financially support the family, as well as not to depend on others. She preferred agriculture because she was born and always worked in the country side. She was annoyed to see important areas of agricultural land in her village left unworked. The start of her business was a difficult one: “I started with 5,400 lei as statutory capital, own tractor T-150, old, made in 1984, and lots of debts (loans taken from relatives, a credit). Agricultural year 2007 was a dry one, but loans had to be reimbursed anyhow and the land plot had to be prepared for the following year.” In order to develop the business, she left to work abroad. She worked for 3.5 years in Italy and invested the earned money in agricultural hardware. She says that she worked hardly when abroad, and the 1,500-euro monthly salary was almost fully transferred home and invested in the business. Periodically, she also asked for loans from relatives working abroad, as well as from banks. Compared with 2007, in the opinion of the interviewed entrepreneur, credits became more affordable, from 26% to 10-15%. The period spent abroad was a difficult one, as she had to work hard away from her family and home. She managed to strengthen her business, but failed to keep the family – the woman is telling us. Her former husband has found another life partner while she was away. She admits that she was earning more abroad, but the work she is doing now offers her more satisfaction. Her work in Italy was a memorable experience. There she saw that people benefit from support when starting a business and this has stimulated her to look for financing opportunities in Moldova. This is how she has discovered the PNAET and PARE 1+1 programmes. She is a beneficiary of the PARE 1+1, grant, through which she has purchased a combine. Currently, the enterprise she runs is managing 250 hectares of arable land (17 hectares are her own land, and the rest – rented land). All her family members are involved in business. The son has opened a peasant farm; he is a beneficiary of the PNAET programme, which supported him to purchase a tractor. She is about to purchase some warehouses for cereals and has big plans. She understood that she has to work hard in order to succeed. She appreciates the fact that Italian businesspeople work along with their simple employees. Also, she learnt to be correct with employees, and she requires the same from them. She is optimist, but realist: “I will not become a millionaire; we shall not leave abroad, we shall have a good life here and develop further what we have..., There are years when one has results and years without results, but one cannot invest one million in agriculture and the next day leaves the business.” Barriers in business are first of all related to the limited delivery market and monopoly of prices. This is why it is difficult for her to develop a medium- and long-term business plan. 11
  13. 13. Qualitative survey Case study 2. Agriculture, stock raising (failure) F., 40, higher education, employed within the Local Public Authorities, has worked together with her husband in Italy and Spain for three years. In 2003, the husband left abroad, and 9 months later, she left too. Initially, the husband worked in agriculture, and then he worked as a driver for three years. She worked as housekeeper and babysitter. Their staying was illegal, they could not return to Moldova for four years. But the yearning for their children has determined them to return home in 2007. Before the departure, they were living in the district town, now they live in the home village of the husband. The activity of small enterprises abroad has inspired them to try developing a family business in Moldova. “Everyone was thinking about opening a market, but we always used to say: “Alright, everybody is selling, but who will buy? We thought then about producing something, but it did not work.” They have invested in agricultural hardware and later in cattle breeding. But they gave up these activities. Her husband left abroad again half a year ago. After this failure, they thought they should have invested in growing berries or vine. They have accumulated around 40,000 euro: “We did not repair our house, like others do. Instead, we have purchased a new tractor, MTZ 82, and a smaller tractor, and hardware: cultivators, mowers, and sprinklers for herbicides, a trailer and other hardware.” They built a cow house: “We bought the cattle and purchased a milking device. We built a stable for about 20 heads.” Now they regret they did not invest in improving their living conditions, although, initially, they were having a negative attitude towards people investing in a house their money earned abroad. They produced cereals and milk, but they faced problems when selling the production, as well as very low prices in relation to costs: “Selling your production is a very big problem… A lot of work and investments, but we had to deliver the milk to milk collection units for a very low price...I made cheese and sour cream by myself, in home conditions, I went to the market, but the market was full of people like me. I cannot say there is big competition, I would rather say we do not have a delivery market. Going through all these, I felt into depression… I realised that one can do nothing in our country...” They sold the cattle. They “conserved” the agricultural hardware: they are afraid to lease it, because there is no respect for the property of other people; they hope that maybe their children will use it one day. She also intends to leave abroad once her documents are ready. With the money earned abroad, they want to improve their living conditions and to invest in the education of their children. She is very pessimist, disappointed with the way things are going in Moldova. She would never again invest in business. She does not see any perspectives in Moldova: “Very often, when attending seminars related to work, and when I hear people saying: “invest, convince your relatives returning home from abroad to invest, to do,” it pains me to hear this. I would recommend to people working abroad to stay and work there and to ensure their own future and a better life when they will be old…” Case study 3. Investments in agricultural hardware and agricultural land M., 37, worked for six years in Italy, from 1999 through 2005, in the agricultural area. His wife continues working abroad, and he leaves periodically abroad too. In the past, he worked in the Chisinau trolleybus park. His salary was low in relation to the needs. The family was hardly coping with 12
  14. 14. Qualitative survey the needs financially and could not provide their children with the minimum for a decent living. The wife left first. Her employers helped the husband to come legally to Italy too. He worked in the vineyard and participated in the whole chain of works. He was impressed by the small business in Italy. Influenced by his experience there, he is trying to replicate it in Moldova: “I liked the fact that they have advanced technology. There is no need for a lot of manpower. People do not work with the hoe, they have modern agricultural hardware. I have decided to bring this hardware home.” In 2005, he returned home and purchased land plots and agricultural hardware. Later he went abroad again, for periods of up to a few months, both to work and particularly to buy equipment and hardware from Italy. His wife continues working in Italy, and the earned money is invested in this family business. Apart from the hardware, which is already known and used in Moldovan agriculture, he tried to bring new hardware, less known in Moldova: “We purchased sprinklers, cutters for the vineyard. I have everything for meadows: mowing, hay collecting, packing hardware, etc. Last year I bought 9 hectares of vineyard, now I want to buy the poles and bring them from Italy. I saw how they look after vineyards there, and I want to do the same home.” At present, he has around 25 hectares of land, of which, 11 hectares – vineyard, 2.5 hectares – orchard, and the rest is arable land. The vineyard he bought last year is shabby. He needs to invest about 30,000 euro to buy poles and wire for these 11 hectares. He wants to have up to 100 hectares of vineyard. Two months ago he took a 70,000-leu bank loan: 20,000 lei from one bank and 50,000 lei from another bank. He also applied for the PARE 1+1 programme and hopes to get the grant. Incomes from the agricultural services he provides (from informal discussions, which in the period of agricultural works, account for about 5,000 lei a day), are reinvested in agriculture. He intends to build a mini winery; he even bought the land to build it and brought barrels from Italy. He has some concerns about relationships with state institutions: “The peasant farm was registered in 2006, we registered it fast, but when we will have to pay taxes, it will be hard, as we had no incomes this year.” Case study 4. Goat stable M., 34 , worked for nine years in Portugal and Italy, from 2000 through 2009. He went together with his wife, who almost did not work; she gave birth to and looked after their children. He returned to Moldova with the intention to develop a small business that would bring him some profit. The fact that he could not extend his legal staying in the host country was another important reason he returned home. In Moldova, where he was working as an unskilled worker, he had a very low salary. He left abroad in 2000, aged 23, to run away from poverty. He says that when abroad, he performed all kinds of unqualified jobs, but mostly he worked in constructions. While working abroad, they realised they revenues were decreasing, while maintenance costs were growing. On the other hand, they did not try to do anything in Moldova, and they have decided to return home: “If you stay too much time there, you do nothing at home. At the beginning we were earning better, but later we were earning less and less, so I told my wife to return home. And so we came back home, trying to somehow organize our life.” 13
  15. 15. Qualitative survey They thought about investing the money earned abroad in something that would provide them with revenue. They knew from the beginning they did not want to invest in opening a market, as they believed there were too many markets already in this type of locality. They wanted very much to produce something, being annoyed by the fact that everyone “is selling and buying.” They do not have their own dwelling; they live with the parents with whom they are not getting well. This year they started building a house. They did not want to invest all money earned abroad in building a house and later to be unable to earn their living. “For example, one builds a house. Later, if he has no revenues, he will remain hungry.” After returning home, they bought a tractor and a land plot (3 hectares of vineyard and 5 hectares of arable land), as they had nothing. They thought about stock raising: and decided to buy goats. They purchased about 200 goats, and paid between 600 and 1,100 lei per goat. Altogether, at the start of their business, they invested around 20,000 euro, later they did not count their investments. The selling of dairy products was a constant income source. Goats, unlike caws, do not require need special attention and they need less forage. The first year was a difficult one. They did not know how to correctly look after the goats, and more than half of the goats lost their kids. They also lost the most productive goats, because they were not milked in the correct way. They admit they did not have information and training in the area, although even now they work based on what they hear from others: “At that time we knew nothing: what to give them, when to give them. Now we give them medicines every three months, we treat them better.” Some people traded by their ignorance and naivety. This is how some of the goats they bought were not for the milk production. In order to facilitate their work, they purchased a milking pump, which was not efficient, actually, it was not functioning at all, and paid 700 euro for it (the person who sold them the pump asked for an additional amount of 3,000 lei in exchange of a piece, and during the survey refused to speak to them). They also had difficulties in finding goatherds. They have had several unpleasant situations with them: either because they were neglectful and did not fulfil their tasks, or because they disappear after a certain period of time, taking with them some of their assets: “We had problems. Goatherds got drunk and felt asleep. They lost the control over the goats and they destroyed people’s crops; we had to pay for the destroyed crops.” They also had problems with some of the villagers who were unhappy with the fact that the stable was installed on the place of a former unauthorized garbage area, which they have managed to liquidate. Last autumn, they even had a situation when their stable was burnt. They say there are very few people in the village who really want to work; most of the active population has left the village, either to the district town or Chisinau. The start of this small family activity has made them loose confidence in people. They have no trust in the people who offer them help. Over the first year of activity, they had several intentions to give up their business. But with the time, they have accumulated experience and now they hope to manage to develop their activity. The main barrier they have for the moment is the delivery market. They are also thinking about installing automated units in supermarkets, where people could buy fresh milk, like in Europe. But for the moment, they do not have financial resources for this and a concept for this activity. 14
  16. 16. Qualitative survey 2.2. Commerce and services Case Study 5. Tourism business developed successfully based on remittances M., 24, entrepreneur, has initiated and develops businesses in Work&Travel, tourism and advertising. He left abroad for curiosity, to see another society, modern technologies. For two consecutive years, he went to the US via the Work&Travel programme, his first job abroad, at 18 years (in 2006) was to wash the dishes, then a week later he was promoted to the bar, then he went to work in luxury venues, in the service area. In 2009, he started providing Work&Travel services together with a mate. Later, they also opened a company specialised in advertising. Apart from this, they organise training courses and English language courses for students, beneficiaries of the Work&Travel programme. He could have stayed in the US, but he always wanted to do something in Moldova. He says it is very difficult to work in Moldova – “disappointments here happen every other day, there is always tension on you and you think that every day brings new obstacles, new problems; there is always an attempt to let everything behind and leave.” His optimism helps him a lot in what he is doing. He has been significantly scarred by his experience in the US and considers it more useful than the university he graduated in Moldova. The attitude of people and development opportunities have impressed him the most – “first of all, it’s about people’s mentality, right when you land in that country you start thinking and seeing things in a different way. People, even if concerned about their own problems, they smile, talk to you and are open, they have another education, an education generating positive energy, while Moldovans do not have this, they do not try to hide behind a mask. If they have problems, they externalize them and make you sick with their problems, while there things are different, they do not have this, it’s a society where you have the impression that everything is possible.” He believes in the development of on-line services and tries to apply them as much as possible in his businesses. He considers that the greatest difficulty for Moldovan entrepreneurs is the small delivery market. On-line services offer you the chance to extend the delivery market. Moldovan businesses are facing more problems in their relationship with state institutions – authorities’ attitude towards businesses, who are perceived from the start as entities that have broken the law, disadvantageous tax policy for the newly created and small enterprises, for example – “for travel agencies, when we were not VAT payers, the VAT was in the amount of 3% from the whole working capital of the company, and not from the income, and this was not well thought for us, because travel agencies charge commissions, they work based on commissions, and in our business, given that we had to pay 3% of the total cost, this was taking all the commission we have as profit. But we managed to solve the problem: we became VAT payers, but I cannot imagine what was the solution of those who did not have the possibility to become VAT payers.” He is always searching for something new, he believes that innovative businesses have chances to succeed; he hopes to identify a niche for business development at the international level, where there is a big delivery market. 15
  17. 17. Qualitative survey Case Study 6. Family business – market, pond F., 48, administrates the enterprise opened by her sister, who works in Russia for over 10 years. Her sister has opened there a wood processing enterprise. The latter injects financial resources in her birth village. She tried to develop several activities, which would mainly involve her relatives. The respondent worked for over 20 years as an educator in the village kindergarten. In 2003, her sister asked her to help her administrating the business. The sister together with her husband was working in Moscow, and is still there together with their two children. With the money earner abroad they thought to do something in their birth village, to create jobs in the village, and have gradually opened a market, a mill, bakery, pig farm, tried to lease land from villagers, then they have leased a pond for a period of 10 years. The area around the pond is prone to landslides, but they have bought the land around the pond, planted an orchard – 3 ha (apple, sour cherry and apricot trees), and build a rest house. For the moment, the mill and bakery do not function, although for some years they were profitable. There are several reasons they do not function, but the main is that they have lost the contract with the LPA (providing bakery products to the village school and kindergarten); they have lost the tender because of a financial difference of 3 bani, they could have offer by 5 bani less, but they did not have this information. They build a stable of 90m2 for raising pigs. But they had to give up this business as it was not bringing any profits (high costs in relation to the meat sell price). They intend to demolish the stable and with the remaining construction materials to build a venue for ceremonies in the village – “we were thinking about building a wedding venue in the centre of the village – it will be something beautiful, it could host birthday and other celebrations, because we do not have such a venue in the village.” Her three daughters are currently abroad. The first one is in Italy; she left before the business started, because of some personal problems. She remarried there, has a child and does not intend to return to Moldova. The second daughter is also working abroad, while the youngest one left abroad for a short term visit and will be back to finish her education; but her plans are about migration anyway. At present, the market and the pond are the active businesses. The market is open until midnight, this is for marketing purposes (there are several markets in the village, but they all close before 19.00), as well as for the convenience of villagers, given they are the only ones open so late – “by own experience we know one might have unannounced visitors coming late, and it’s important for the host to have a solution.” Also, she is learning to drive, in order to become more mobile; earlier, her daughters and husband used to help her in this regard – “now I have to go to the pond, to the farm, to control the work and I cannot move without a car, I learn to drive, because I want to manage to do everything by myself, I do not want to depend on others.” She finds difficult to make an estimation of the money invested, given that a significant part of the earned money was reinvested. But her sister did not recover all the invested money. The respondent considers that if she was here, businesses would run better. The main problem is the delivery market and human resources; she says that people are not so keen to work, many of those who work are stealing – a habit from Soviet times, she says; “it’s hard to work when you have no people to trust, we have had different cases of thefts, we caught keepers selling fish in the village.” 16
  18. 18. Qualitative survey Case Study 7. Venue for ceremonies, bar F., 22, parents are working in Ireland. Initially, the father left with the intention to earn abroad a certain amount of money needed to start a business in Moldova. He stays and works in Ireland legally for ten years already, and his mother for eight years (she stays legally in the country, but works illegally). They have invested remittances in a venue – a bar on the first level, and a wedding hall on the second level. For the moment, only the bar is open. They also have a sauna, which functioned until last year, when one of the pumps went out of order; they have decided to leave it as it is for a while, as the demand for this service is low in relation to the maintenance costs. The construction of the venue lasts for seven years already. When they opened the bar, they took a loan for five years, and parents will continue working abroad until the loan is paid off. About 70% of the investment represented the money earned abroad, and 30% - the loan. All members of the family are involved in this business, the brother together with respondent’s husband are in charge to supply the bar with the needed products, while the respondent keeps accounting records (she attended bookkeeping courses in order to avoid spending additional financial resources for employing an accountant). They have faced several problems related to the issue of construction authorisations, commissioning documents, etc. They have fewer customers than expected. They recommend people who want to invest money to better consider their idea, to analyse potential clients and needs to invest. If they could turn back the time, they would have never invested in the construction of this venue, and would have rather preferred to buy a few flats to rent them – “it’s easier and with less risks.” For the future, they are thinking about opening in this venue a hairdresser’s, and maybe a swimming pool. But for the moment, their main concern is to pay off the bank credit. Case Study 8. Pizza, fitness hall M., 35, he went to the US via the Work&Travel programme for three months, and worked there for 3.5 years. With the earned money and on the land plot offered by his parents, he built a venue hosting several entrepreneurial activities. At present, he has 14 employees. Remittances account for 30% of the invested money. When his contract expired, he remained to work in the US. After 3.5 years he had to return to Moldova. He admits that if there were no personal problems, he would have not returned home. He considers that the US is the country of all possibilities, of dreams that come true and of wonders. At the beginning, he worked in various areas: housekeeping, construction, catering, hotel services, etc... A year later, he opened a company providing services in various areas. When he had to return to Moldova, he left the company to be administrated by his mate, later, the company became insolvent. In the US he learned that money must be invested to bring other money, so that later one can buy personal stuff without significant financial efforts. He cannot understand those who work abroad and invest all their 17
  19. 19. Qualitative survey incomes in the acquisition or construction of a dwelling, in arranging their flat/house, buying cars, and later they cannot make a living. When he returned to Moldova, he had two options for investing remittances: to build a resort station in Romania, or to build a venue in his birth village, located at less than 30km from Chisinau. He preferred the second option, because he was afraid of nostalgia, homesickness, and because he considers himself a patriot. He appreciates the business environment in the US as being more favourable in comparison with the Moldovan one. When he started his business there – “on the internet I got in touch with a company dealing with the opening of all sorts of businesses, providing support for this, so I sent it all my data and one month later I received the package of documents with stamp, acts that we are issued from the licensing and others.” He says that in Moldova he spent one month on the roads to get all the documents. The tax policy in the US a clear for everyone, no interpretable nuances – “and it’s very simple to calculate: income, profit, money in, money out, then you pay 15% federal and 10% state. That’s all. While here the system is so complicated that I even do not try to get into the essence of it, as I get to have headache, therefore we have to employ accountants. I think that even accountants do not understand everything and sometimes make mistakes, because it’s complicated indeed.” In the US the activity is more flexible, the cash` flow is larger. The activity he has in Moldova allows him to make a living, but he consider that the profit he is making is low, compared to his efforts and labour. However, in Moldova he benefited from two grants offered by the ODIMM within the PNAET programme. To make sure he’ll have incomes, he has diversified the business, and apart from the pizzeria he also opened a disco and fitness hall. Over the time, he had to give up some of the activities, because they were not profitable, like for example the hairdresser’s. The bar is more profitable in the summer time, particularly due to the terrace. In winter time, his business is more relying on the sheyping. While the disco brings him more or less constant incomes during the entire year. Businesses are mutually compensating themselves. He also has a gym room for kids, but it does not function for the moment – there is no coach, besides the demand for this service is not that high. In general, human resources are insufficient, particularly in the rural environment, and this represents an obstacle for the business development. He is trying to invest in the professional training of specialists, but the underdeveloped infrastructure is a barrier too – “our sheyping coach is from the neighbour village. I invested a lot in her, took her to courses; she was a simple student, but with good capacities. I took her to professional courses, paid them for her; she comes to the village for the lessons, then I have to take her home to her village, three times a week, as she has no other possibilities to go home – this is a discomfort...” At the same time, he considers himself a lucky person as he is born in a village that is so close to the capital, adding that for the others life could be ever harder. He thinks about changing the profile of his business into a “quieter” activity – “I want to switch to another area. I don’t know what area yet, but I want it to be a quiet one and with better prospects.” He recommends to all those who invest money to carefully analyse the risks and the delivery market, potential clients – “for the fitness equipment only, without including the reparation and doors, I spent about 24,000 euro and I think I need about 4-5 years to get the money back, if not even more.” 18
  20. 20. Qualitative survey Case Study 9. Patisserie M., 31, worked for five years in Great Britain. He returned home because he was feeling like a stranger, while his health problems due to the climate were worsening. He opened the patisserie at the suggestion of his wife. He considers his story a successful one. He was educated in a one-parent family, with three children; his mother was suffering from serious health problems. A friend, to whom he is grateful, took him to study at the sport lyceum. After graduating it he already knew he would leave to Great Britain; his mate/blood brother went to this country to participate in a sport competition and did not come back. He left on foot, having with him only his birth certificate, his journey was very difficult, with hard to imagine experiences. In Great Britain, he did all kinds of jobs. But the wet climate was not good for his health, and after being unable to get out of bed for a week, he decided to return home and try to do something in Moldova. In Great Britain he met his future wife, also from Moldova. They thought about buying flats, repairing and reselling them, or purchasing land plots, etc. His wife likes baking, and she was the one who suggested him this area. The idea was also supported by one of their relatives, a co-owner of a developing chain of markets. This investment was considered as a long-term one, with potential for development. The patisserie extended together with the extension of the market chain. When they opened the company, they had 16 employees, now they have around 100 persons working for them. For the future, they are thinking about developing other concepts for the extension of their business. They have invested all the money they had, sold the apartment purchased after their return, and also borrowed around 30,000 euro. While developing the business, they needed more financial support, and always found it at their relatives, friends, acquaintances. They consider that many business people in Moldova are expecting to quickly recover their investments and that is why they lose a lot. Banks apply exactly the same principle, they do not want to undertake any risks – “they take your umbrella when it’s raining and offer it to you when the sun is back.” They consider that migrants working abroad will continue doing so, because in this way they have an acceptable income without risks. To those who have decided to invest in Moldova, they recommend to appeal to specialists with experience in the area. They consider that the state should make these services known and affordable – “When I returned, somebody proposed to sell me his turn key business, for 60,000 euro, but this meant I had to give all they money I had, and I would had to stay somewhere for about five years, to develop it.” He believes the money should be invested to bring other money, those who have purchased flats and now rent them, or those who have bought cars and now provide certain services with them, etc. He perceives the dwelling, the vehicle as a need, not as something taking a lot of money, which in fact could be invested and generate income. Case Study 10. Construction materials market M., 32, together with his wife worked in Portugal for six years. He mainly worked in constructions, while his wife worked as a housekeeper, then she worked in a trade centre and restaurant. After discovering his organizational capacities, he thought about coming back to the country and starting up a business. He pleaded for opening a market of constructions materials, since he 19
  21. 21. Qualitative survey was familiar with this field. He opened the market in 2006, within an old building, which over the years was repaired and some new extensions were added. Apart from selling construction materials, he also provides transportation services (he has three trucks) to people who have no such possibilities. The market was awarded two diplomas by the Supraten Company for offering its clients the widest spectrum of the Supraten products. He serves 10-12 villages, located on a distance of up to 25 km from the market. Difficulties mentioned by him are mainly related to human resources, particularly the quite high staff turnover: “Our most serious problems were related to workers, in the first four years we did not have any employee working with us for more than 3-4 months without breaks; they were coming and going.” They could not find staff to work according to the established schedule and to undertake certain responsibilities. Another problem was the fact that state institutions do not correctly and sufficiently inform businesses about rules and conditions they should observe: “The Tax Inspectorate does not provide you with sufficient information; while other institutions do not explain you the whole picture; you feel like a fish in the ocean.” They do not want to extend their current business; they would rather prefer to start up a new business, in a field without any connections with their current business: “There are many things which are not brought to Moldova yet, or they are delivered to Moldova, but have not arrived yet to our locality.” The main reasons are the competition and the growing number of markets for construction materials opened in the neighbour villages. He is unhappy with the fact that Moldovans are not trying to identify new business ideas, to try new activities and services in their natal locality, but rather prefer to copy an existing business: “You know how people are, if one plants cabbage, next day everyone will plant cabbage; and if one plants onion, everybody will plant onion.” In Portugal he saw the correct way of working, how people observe schedules, undertake responsibilities and are willing to achieve themselves on the professional plan, etc. To a certain extent, he blames Moldovans for the fact that they are waiting for help, rather than trying to solve their problems by themselves, and they do not have the habitude of working. Case Study 11. Wood processing and welding (iron) M., 36. He spent five years working legally in Italy. He performed various works: welder at a factory, manufactured shelves for clothes storing. In Italy he followed welder training courses. Before leaving abroad, he used to be a teacher in his village school; wages were paid with delays, and these delays and the need to support his young family have determined him to leave abroad. The main reason he came back to Moldova were his three children, although his documents were alright and he could have worked for another two years. After returning home, he went in for wood processing and iron objects welding. He spent 15,000 euro to buy wood processing equipment. The share of the money earned abroad in his business represents 30%. Initially, he did not have an individual enterprise, which was causing him several problems: “When it came to paying taxes for services, I was having problems, now I am legal... I try to do everything in line with the law, thus I avoid all problems.” He works since 2008 and has two employees. He considers he was successful namely because of his serious attitude towards work and his clients: “If you promise your client that the order will be ready on the 10th, then you must call him on the 9th and do not wait for him to call you.” 20
  22. 22. Qualitative survey When comparing the attitude of the Italian state with the Moldova one, he mentions that the first one has a more caring attitude towards small enterprises, including by the fact that these enterprises are tax free in their first year of work, while in Moldova, the enterprise has to pay taxes right from the first day. His slogan is: “Working abroad is like going to your neighbour and trying to be a householder in his yard. One must be a household in his yard.” The experience he gained abroad helped him to organize his own business, first of all, he learned several trades (welder, carpenter, he learned to operate an excavating machine), and determined him to change his behaviour with work and people. Case Study 12. Construction materials market M., 52, together with his wife spent abroad about eight years. He lost his job when the plant he was working for closed down. Unstable incomes determined him and his wife to leave for Greece and earn their living there. They left as tourists, with visas opened for ten days, hence at the end of this period, their staying in Greece was illegal. Because of the illegal staying, he was arrested, later, his staying was legalised. He did all sorts of works, from orange harvesting and help around the house, to constructions. He had to return home because of delays in the preparation of documents to make his staying legal further and because of difficulties to find a job. The idea to start a business on the construction materials market came from his elder son. Parents contributed with money, and the son deals with the organisational side. Currently, the firm’s director is the elder son, who is a lawyer by profession and who deals with all administrative procedures related to the conclusion of contracts, credits, bookkeeping, and agreements with construction materials distributors. To open the market, they had to rent the space, but for the future they intend to buy a land plot and build a larger building. They work for three years. They consider their business is a stable source of income sufficient to cover the strictly necessary staff. Case Study 13. Market, wedding house, bar M., 36, beneficiary of remittances. His business was opened with the support of his sister working abroad for ten years and who keeps sending money home to support the business. The sister worked in Switzerland and France, and now she is in Italy, looking after an old person. In 1996, he opened a small shop, in another area of the village, later the activity of this shop was suspended, because it was not profitable, but the business was not liquidated from the legal point of view. Five years ago, with financial support from his sister, he decided to open a food market, as that region of the village had no markets at all. Later, he also opened a bar, and two years later he opened a wedding venue. Currently, the business is stagnating, and the income he has is used to cover expenditures, like taxes, utilities. The wedding venue is more profitable, since he rented it and does not have to pay utilities. The bar functions together with the food market, as he has no clients. Dissatisfactions are due to the fact that Moldova approves new laws very often, while businesses are not informed about changes and often they wake up with heavy fines: “Moldova has a new law approved today and another new law approved tomorrow. But I do not sit with the Official Monitor in front of me, as I am not a 21
  23. 23. Qualitative survey boyar, we have to work, every day... Another problem is the tax, considered to be too high in comparison with incomes: All these payments should be calculated depending on the incomes; if I earn 5 lei, then I should pay the state 1 leu, and not earn 5 lei and pay the state 10 lei.” He believes it is more reasonable to invest in agriculture, although he admits this is a field with very high risks. He planted a small walnut orchard and hopes this plantation will bring him better incomes then the shop, bar and wedding venue: “I have planted by myself 80 walnut trees, on the land plot that my father in law gave me. I have studied this area and in theory, it is a profitable one, now I want to see how it is in practice.” III. Case Studies: Entrepreneurs who participated in the grant contest within the “Remittances Developing Moldovan Communities” Project, but who did not benefited from funding Case Study 1. On-line services M., 38, rural, worked in several countries, both in the East and West He left abroad because he could not find a job in Moldova. He worked in several countries: Russia – in constructions, Turkey – at a furniture factory, the Czech Republic – constructions, Great Britain – at a factory producing objects from plastic, worked on a golf field, etc.. He migrated without documents and labour contract, in each of these countries he was asking for political asylum and in this way he was obtaining the necessary documents for a certain period of time. He invested the money earned abroad in the construction of a real estate where he lives with his family. When he returned home, he knew how to apply his knowledge and skills he had learned abroad and opened a small business bringing him profit. Thanks to his knowledge of the English language and to the fact that he got to know about the programming system, he tried to create websites that would bring him a monthly stable income. He opened a firm, and currently he is an agent delivering goods at home in the district of Rezina, being a partner of the Dostavka.md firm. He works for a year; his work is very well organized. As a rule, he distributes parcels on Saturdays and Sundays only, when he knows exactly people are home and he will not have to visit them several times. He has a wellestablished itinerary, to avoid wasting too much time and fuel. At the beginning, when he did not have so many orders, he used the public transport to distribute parcels, but later, he bought his own car, as the number of orders was increasing. To buy the car, he borrowed money from his friends, as he would not have been able to pay back the 20% to the back, which he considers is too high. He wants to have a business related to terminals and he applied to several projects in order to identify funding for this area. Case Study 2. Production of organic vegetables M., 26, rural He left to Italy aged 18, abandoning the university, and worked there for two years. Before learning Italian, he had to perform several unqualified jobs. Then he worked in agriculture, initially as ordinary worker, then 22
  24. 24. Qualitative survey as specialist in treating and preventing diseases at plants. He returned home because he was feeling as a stranger abroad and wanted to achieve something in Moldova. In 2009, he opened his own business in the agricultural field. He installed a modern drip irrigation system, which at that time, was the only one in Moldova, in order to rationally consume water. He applied to the PNAET programme, providing credits to young entrepreneurs, and benefited from 250,000 lei, of which 40% was offered as a grant. He grows organic vegetables in greenhouses without using chemical substances. He employs three seasonal workers, and the work starts at the end of February. For the future, he plans to develop his business and produce vegetables in extra-season, when there are fewer vegetables on the market and prices are high. Another goal is to sell his production to kindergartens, since they are organic. The money earned abroad was not invested in the business itself, but was used for self-training. He went to Poland for an exchange of experience, where he learned about vegetable growing practices, and thanks to this experience, he considers himself two steps ahead other entrepreneurs in this area. For the winter time, he wants to work with several friends and start the activity of a business centre or business incubator, where they will produce seeds and seedlings and to provide consultation to those who want to start up a business: “I want to promote further what I started... in Moldova, it is worth investing in the agricultural industry, only if you take into account all factors.” Case Study 3. Agriculture M., 30, worked in Russia He started going occasionally to Russia to earn his money since he was 17. Together with his wife he thought it would be better to employ than to be employed and decided to open a business. For two years they were growing roses and sword lilies on an area of 60 ha, but they had to give up this business when bigger competitors came to the market. After this, advised by a friend, he decided to grow mushrooms, and took three credits for this business. The mushroom business was bringing him daily incomes, but because he did not know certain market strategies, had no experience and was not correctly administrating the money, the business was not a profitable one. Currently, he has an apple orchard and “Arcadia” and “Codreanca” grapes, all registered as a peasant farm. He has three permanent employees for the orchard, and employs seasonal workers when needed. Apart from the orchard, he has a farm and 220 sheep and 60 goats. He has a room for the production of cheese and a cellar for storing it. He considers the livestock business as a profitable one, this year he produced 5 tons of milk, but this quantity was not enough to cover the needs of his clients, hence next year he intends to produce 10 tons of milk. Case Study 4. Wood processing M., 30, worked in Great Britain for 1.3 years He left for the first time abroad at the age of 20. At present, he keeps going abroad periodically, usually to 23
  25. 25. Qualitative survey work in constructions, for short periods of time, to different countries. He is a carpenter. He opened a peasant farm for the processing and production of wooden objects; after this activity has been withdrawn from the statute of peasant farms, he opened a LLC. He regrets he made his business official, because this brings him only problems and virtually no benefits. He is unhappy with the fact that he has to submit declarations and pay certain taxes even if his enterprise does not function for two years already. When the enterprise was working, he used to have 5-8 employees. For the moment, he is disappointed. He invested around 15,000 euro to organize a shop in an old building and with a too big area (he did not manage to bring it into a good conditions), a wood drying room – 5,000 euro, 2 wood processing machines – 7,000 euro and other tools for which he spent another 5,000 euro. He intends to sell the facility to cover some debts. But he does not want to give up this activity; he will keep the hardware and will build a smaller shop. His activity was affected by the development of the double glazing business, which determined a significant decrease in the demand for wooden doors and windows. Also, the furniture assembling is no longer rentable, because of the competition with the Ukrainian furniture, which is cheaper, although the quality is under question. He took loans from banks, at various stages, but he says that under the current conditions he will not resort to bank loans, because they are exaggeratedly expensive. For a credit of 15,000 US Dollars, for a period of 36 months, he has been calculated an extra amount of 4,720 US Dollars. He regrets he did not invest the money in starting up a business abroad, he intuits he would have had more opportunities there and the business would have been more rentable. Case Study 5. Car service centre M., Great Britain, urban In 2006, he left for Great Britain through the Work&Travel programme, for a period of six months. He worked as a simple worker in agriculture, then as a manager with 19 employees under his subordination. He returned to Moldova to complete his education and implement his ideas into practice: “I had to complete my higher education, this is first thing, and the second – we should to something here, as abroad we are not home.” He is the owner of a car service centre, opened in 2009, with the money he earned abroad. First, he bought a land with old buildings that he repaired, and then he purchased the necessary equipment. About 20% of the money invested in the business was the money he earned while working abroad. He did not resort to credits, but if he decides in the future to develop the business, he will take a credit. At present, he has two employees: “People, as usually, are sometimes late for work, it is not possible to discipline them, because if they don’t like it, the following day they do not come to work at all.” The main problem he is facing in the development of his business is related to finding specialists to work permanently and according to the schedule. For several years has faced problems like high staff turnover, lack of responsibility towards work from employees. Earlier, he wanted to open a wholesale warehouse for food products storage, and he even installed the refrigerators, but because of the 2009 crisis, he did not risk to open this business. He wants to have a new business in the agricultural field – a drying plant for fruits to be exported. He has applied to several projects to get a grant for starting up this business. 24
  26. 26. Qualitative survey IV. Entrepreneurs whose microprojects have been financially supported within the “Remittances Developing Moldovan Communities” Programme 4.1. Microproject “Technical installations for the wrought iron processing” – ”Zmuvinadorvic-Metal” SRL (Negureni, Telenesti) Victor Zmuncila likes working, and his painting education helps him make artworks from iron. He periodically worked in Russia. In 2002, he went for the first time to work in Russia in order to earn money for the daily needs of his family and also to accumulate capital to start up a business. His first activity as a small entrepreneur was the gardening, which he practiced for 4 years. Later, he decided to choose an activity he would both like and bring him profits. He chose the wrought iron processing, because he knows well this trade he learned from his father. He has a small workshop at home and plans to open a larger one in the near future. With financial support from his brother, who works in Russia, he bought a building that he recently repaired and refurbished and intends to use it to extend his business. In 2012, he worked on patent basis; he changed the statute of his firm into a SRL so that he is allowed to employ new workers. His future employees are trained by the respondent, who is passing them over his professional skills. Victor invested 700,000 lei in his business, of which 370,000 is his personal money, earned while working abroad. He did not apply for bank credits, as he considers that the interest rate, estimated at 25%, is too high; at the same time, conditions provided by banks are not convenient either: “I intended to take a credit for a year and to reimburse it in two months, so that the bank cancels the other interest rates; but it does not matter how fast you reimburse the credit, as the interest rate remains the same.” He hopes to open a new workshop for manufacturing windows, pressed pavers. But he also believes in the development of the wrought iron business. For it to grow further, he needs new and efficient installations. He believes new installations will help him increase productivity. As for the customers, he says there is demand for his products, given the high quality of them; he always has orders for a few months in advance; he offers 25
  27. 27. Qualitative survey discounts to his permanent customers. He mainly manufactures products for the regional customers, but he also had orders from other regions of the country. Victor Zmuncila is proud of his works, and one will notice a lot of his works in the locality. He says he prefers to use national elements in his works, as this gives them a special charm. The pictures below contain a few of the works produced for a house in Negureni. The village of Negureni is a commune centre. It is located at 19 km from the town of Telenesti and at about 70 km from the capital. According to the 2004 census, the village counted 2,860 residents. 26
  28. 28. Qualitative survey 4.2. Mictoproject “Beekeeping. Purchase of a mobile laboratory for extracting honey” – ”Fagaras de aur” SRL (Sipca, district of Soldanesti) Stefan, 29, worked five years in the Great Britain After he graduated from the State Agrarian University of Moldova in 2005, he was planning to continue his education and apply for the doctor’s degree. Wages in Moldova were very low, he did not have a place to live, and he had no money, hence he decided to work abroad. He went to Great Britain as a student; after a while, he managed to find a job in the light industry. He returned to Moldova because he wanted to have a family, a house, and a warmer environment; life there was monotonous. It was difficult for him to readjust himself to conditions in Moldova. Stefan considers he has a good CV. Over six months, while he was trying to find a job, he had several opportunities. But conditions offered by employers and the absence of clear game rules were the main barriers on the way of his employment on the Moldovan labour market. This has determined him to open his business. There were a lot of difficulties, particularly in the initial stage; he thought about giving up, and decided that if in three years he fails to start up a business, he will emigrate with his family to Canada. He chose beekeeping because he is born in the countryside. He considers that for the moment, this area is an underdeveloped niche, but with a big potential. He likes beekeeping, this is an occupation transmitted from generation to generation: both his grandfather and father were beekeepers. Hence, he is familiar with this field and intends to upgrade it, bring it to another level. Another aspect was his will to recharge life in his native village. In parallel with the business, he gets involved in community projects, provides informational and logistic support to the LPA in order to attract grants to his village. His first contract with a potential funder was the one concluded with the Organization for Small and Medium Enterprises Sector Development (ODIMM). The amiability of the ODIMM employees, along with the opportunities offered by this institution inspired him and gave him new business development possibilities. He benefited from a 10-day entrepreneurship training within the PARE 1+1 programme, and later he was a 27
  29. 29. Qualitative survey beneficiary of the PNAET project. This experience has determined him to search for new funding opportunities; he is permanently looking for new opportunities in order to develop and extend his business. He states that any new project offers him new capacities and visions. He appreciates a lot the entrepreneurship training, as we as the seminars, conferences focussed on practical things, on establishing new relations. He mentioned that seminars and discussions within the “Remittances Developing Moldovan Communities” Project were welcome, particularly for those without experience. He considers the 22-March even in Rezina as a useful experience: he had the chance to directly interact with employees from the Labour Protection, Employment Agency, as well as with other civil servants, who answered questions from entrepreneurs and gave them useful advice. He considers it is difficult to run a business in Moldova, because quite often, people, institutions he cooperated with, are not responsible and punctual. Hence, it is difficult to forecast activities on short and medium term. He has four employees. His Moldovan experience taught him to create as many as possible social relations, to go beyond certain principles of fairness, in order to reach his goal. At the same time, he believes that one cannot develop a prosperous business when acting alone: the market demands high quantities and producers should cooperate with each other, it is necessary to create cooperatives. He convinced his brother working in the Czech Republic to return home and invest in beekeeping. At present, they are five cooperating entrepreneurs; four of them are former migrants. 28
  30. 30. Qualitative survey In the respondent’s opinion, his countrymen are first of all missing the organization and initiative spirit. Information about opportunities provided by various projects is at a low level. Those who worked abroad lost contact with reality from the native country and are facing difficulties when trying to readjust themselves; many give up in the first two years, preferring to leave abroad again. His business is based on the belief that one must offer a qualitative product at low production costs: „We want minimum costs and maximum quality, but for this, we need advanced technologies.” Therefore, he intends to upgrade his business and invest in new technologies. He plans to buy a laboratory in the near future. Stefan considers there is demand for qualitative products of beekeeping, both on the internal and external markets, but these must be provided with industrial qualities and with well-trained people. He wants his business to become a business model. In this regard, he cooperates with scientists from the Academy of Science of Moldova (ASM) and with members of the National Association of Beekeepers (ANARM). Stefan’s business is located in the village of Sipca, which is at 3 km from the town of Soldanesti and at 120 km from Chisinau. The village counts about 900 residents. Every fourth villager of the 300 employable residents is working abroad. Another about 50 people work in Soldanesti. According to the LPA representatives, the most stringent problem of the village is the lack of working places. 29
  31. 31. Qualitative survey 4.3. “Construction, setup and outfit of an agricultural hardware repair workshop” – SC ”MCN-Curchi” SRL , Mitoc village, Orhei district Efim, 45, worked in Poland, but because he did not have a stable job, he returned to Moldova. Currently, he is financially supported by his brother, who left 10 years ago for Span, and by his mother-in-law working in Italy. Before 2005, he owned a market, but later he decided to move to live in the district town. Because his business was no longer bringing profits, he decided to leave for a job abroad. However, he did not liquidate his enterprise and reorganized it after a while. He purchased two minibuses working on an international route. Currently, his business is not that profitable, because people travelling abroad prefer more and more other types of transportation, considered as being more comfortable than minibuses. While he was abroad he learned, first of all, to be punctual - a job must be performed within the established terms: your client must be satisfied with your services. The day when he learned from the local newspaper about the small grant programme within the “Remittances Developing Moldovan Communities” Project coincided with his birthday. One of the contest’s conditions was that applicants should be aged between 20 and 45 years. He was very happy to find out that he could participate although he was 45 already and said that this opportunity was one of the best presents for his birthday. He proposed himself to initiate a new business, a family one, given that his relatives from abroad want to return home: “We thought about launching together a family business, so that everyone could come back home.” The idea of organizing an agricultural hardware repair workshop came from the fact that he has acquaintances in this area, and he also knows from the daily reality that a significant part of agricultural hardware is used from the Soviet era and is out of service or is abandoned. He says that agriculture needs new technologies, but agricultural hardware is very expensive and there is a high demand for the repair of old hardware, particularly during the growing and harvesting periods. About 90% of the money invested in the business was earned abroad: 90% of the total amount was offered 30
  32. 32. Qualitative survey by his brother, and the remaining 10% - by his mother-in-law. By last autumn (2012), over 15,000 euro was invested in the organization of the territory. He purchased the land plot with his own money, 7 years ago, being confident it was good for his plans. The location of the land on an international road, on the OrheiBalti highway, is appreciated by the respondent as strategic. Currently, his service is specialized on the reparation of big wheels, a service that is almost missing in the region: to repair wheels from agricultural hardware, farmers have to cover a long distance, either going to Chisinau or to Balti. He is satisfied with the informational and logistic support he had from the small grant programme, as well as from the LPA representatives. He considers that the mayor is encouraging people to invest in the locality, and he is trying to promote and stimulate entrepreneurs in this regard. Part of the hardware requested within the grant have been delivered to him already, the remaining has to reach him soon. He is very happy with his cooperation with funders in order to select the hardware supplier. Also, he appreciates the fact that his employees will benefit from a 7-day training provided by the supplier. He sees his experience within the “Remittances Developing Moldovan Communities” as a new launch in the business world. Within the project he had the opportunity to meet new people, to learn new information and to develop new skills. The most useful skills and knowledge acquired within seminars and trainings are those related to the use of informational technologies. He developed a website to promote his business. 31
  33. 33. Qualitative survey The respondent is developing his business on the territory of the Mitoc village, located at 4 km from the town of Orhei, and at a distance of 37 km from Chisinau. The village counts 3,800 residents. 32
  34. 34. Qualitative survey 4.4. Microproject “Rabbit farm” – ”Casa iepurilor” SRL, Mandresti village, Telenesti district Roman, 23, worked 20 Months in Portugal. The wage of 2,000 lei offered him by employers after he has graduated from the transportation College of Transport, was perceived by the respondent as very low compared to the daily needs. In 2010, he decided to leave abroad. His Romanian citizenship has facilitated his departure to Portugal, where he was employed with an iron bridges construction company. His work required a significant physical effort from him. He always wanted to start up a business in Moldova. Initially, he was thinking about opening a shop to sell clothes from Europe, as he considered them of a better quality and cheaper in comparison with what was available on the local market. After an analysis of import fees and costs, he understood this was not a profitable business. Then he thought about stock farming, but at the end he decided to open a rabbit farm. This idea came from a friend, besides he liked this occupation from his childhood. He started organizing the territory for his future rabbit farm in 2011. He applied to the small grant programme „Remittances Developing Moldovan Communities” at the suggestion of his friends, who read about it in Internet. In August 2012, he registered his enterprise - „Casa Iepurilor” SRL. He says that he has calculated all costs related to the investment, but he has focused less on costs related to documents, bank account and other business start-up procedures. Because of these underestimated expenditures, he had to borrow more money. So far, he invested over 30,000 euro in his business, of which, 23,000 euro – earned abroad, and 7,000 euro – borrowed from his friends. He is only at the start of this business; he bought 53 rabbits he looks after by himself. For the future, he has some arrangements with a restaurant and two markets in Telenesti that will buy meat from him. He notes the fact that many people from his environment advised him not to invest in this business, because although it is profitable, it is also a risky one, due to the breeding technology and rabbits’ sensitivity to various factors that could cause their morbidity. However, Roman is sure about his success and adheres to 33
  35. 35. Qualitative survey strict hygiene and nutrition rules for rabbits. He says that when abroad he learned several skills: “First of all, I learned a few trades: bricklayer, welder, etc.,” which are now helping him to organize his rabbit farm. He considers that many employees in Moldova do not have the sense of responsibility and respect for private property; often people do bad quality work. He wants to have a modern, clear and organized farm, to impress people visiting it. The village of Mandresti is located at 8 km from the town of Telenesti and at 90 km from Chisinau. The village has 4,833 residents, according to the 2004 census. 34
  36. 36. Qualitative survey 4.5. Microproject “Business development: Production, packing and marketing of corn flour” – SC ”Venera” SRL Ion, 32, worked abroad for six years (2003-2009). All his family left abroad in order to work and pay off a debt related to a bank loan; his parents are still there. In 2010, he obtained the Romanian citizenship, which allows him to leave abroad and return to Moldova without restrictions. Ion graduated from the law department and followed a master’s degree programme in law. He works as a teacher at the European Education Department. He admits that teaching activity is poorly paid, but it offers one opportunities to develop, the satisfaction to contact with people from various fields, to increase the social network. He intends to relaunch the enterprise opened by his parents in 1995, which was dealing with the processing of cereal products, from fodder grains to baking bread. They had a cereal mill, and later they opened a bakery. The activity of their enterprise was stopped for a period of five years, due to a significant decrease in the demand for milling services, and the enterprise was not profitable. To open the bakery, they had to take a 700,000-leu loan for a 5-year term, but this failed to improve the situation. The enterprise, which was due to provide hardware for the bakery, exceeded the deadlines by 6 month, a period in which they had to start reimbursing the loan. His father was the first who went to Italy, and then he was followed by his mother, himself and his sister. They have reimbursed to the bank almost one million lei for that loan. The family invested 25,000 euro in the bakery: transportation, installation and development costs. His parents, who are still abroad, continue investing in this business. But Ion returned home, after the loan was fully paid. He saw the advert about the small grant programme in the district newspaper and he was matching all the criteria. He was also encouraged by the authorities, who, in his opinion, have simplified and modernized services and the mode of interaction with the state: “The book-keeper sends the information to the Tax Inspectorate in electronic format. There is no need to go to a bank and pay for certain services, hence bureaucracy has been significantly reduced. Also, the cadastre services improved its activity. Earlier, one had to queue two days to authorize a land plot, now all one has to do is to submit the application and they tell you at what time to come for a reply.” 35
  37. 37. Qualitative survey Within the small grants programme, he has requested hardware for processing and packing corn flour that he intends to produce, pack and sell. He believes this will be a profitable business, moreover that part of the raw material can be supplied from his production. Now he is trying to conclude corn acquisition contracts with farmers in the region, to make sure he will be supplied with raw material, as well as to avoid additional transportation costs, etc. He is also thinking about restarting the bakery and focusing on culinary products, which are less widespread or even inexistent on the Moldovan market. He intended to apply to the small grant programme with a project on producing vegetable oils from corn, walnuts, and berries. But he considered the corn flour packing will be a more profitable business, given than the production of oils, which are very beneficial, would not have a sufficient delivery market; there is not high demand yet from the population for these products, and their promotion requires time. He thinks it would be good to have crediting funds for entrepreneurs, which would provide for a grace period of 1-2 years and would offer business people the possibility to obtain profits from the activity they start up. According to the respondent, in Moldova there are too many holidays, „occasions to celebrate,” due to which people do not work. Part of citizens is trying to take advantage from the others and this is felt in the national economy. He appreciates that fact that projects oriented on production are supported. At the same time, he considers that, unlike the EU countries, Moldova has a lot to work in the service provision area, particularly concerning the quality of services: “In Moldova, people come to work with their problems from home; this is not accepted in Europe; there, one enjoys nice serving, whether you buy something or not.” At the same time, he considers that people should be more responsible in relation to the State. A large part of the population is shrinking from paying takes, working illegally or abroad, but they expect the state to pay them good pensions and allowances, they want to have a developed infrastructure: all these things can be achieved only with citizens’ contribution. Tahnauti is a village within the commune Tareuca, located at a distance of 10 km from the town of Rezina, 12 km from the Soldanesti railway station and 110 km from Chisinau. According to the 2004 census, the village counted 1,449 residents. 36
  38. 38. Qualitative survey 4.6. Microproject „ETL-10 cables electrotechnical mobile laboratory” – ”Erstelab” SRL, Orhei Roman, 34, worked in Italy in 2003; most of the money invested in the business belongs to his sister, who works for three years already in Dubai, United Arab Emirates. At present, he works in the banking sector, keeps accounting records for several companies, and provides consultation to entrepreneurs. He graduated from the Economy Department, promotion 2000. In 2001, he was employed in the banking sector, and in 2003 he went to work abroad with the intention to accumulate resources to start up a business. It was a hard time, as he found a job only after 3 months of staying in the host country; he worked illegally. He missed his family and friends very much. He has several business ideas. According to him, the lack of own financial resources and of some items that he could pledge for a loan were an important obstacle on the way of implementing these ideas. He wanted to apply to the PNAET Programme, but he did not fit within the provided age category. He saw in a newspaper the advert about the small grant programme and decided to apply to the project „Remittances Developing Moldovan Communities”: He did not face any problems with this. His experience in developing and submitting business plans helped him a lot. The idea of having an electrotechnical mobile laboratory on ETL-10 cables came from one of his friends, a former classmate, who is familiar with this area and noticed that such a service was absent in the region. Hence, the two of them have established a partnership: his friend will deal with the technical part, given his knowledge and relations in the field, while the respondent will deal with the economic-financial side of the business. The minibus from the picture will be equipped with the electrotechnical laboratory installations in Ukraine. In the respondent’s opinion, state institutions should be more flexible and more open-minded to new technologies: “In Moldova, there are problems with technical regulations; some of them are valid from the Soviet era. If we want to bring equipment from Germany, for example, then standardization costs us a lot.” He said that equipment delivered from Russia, Ukraine or Romania does not imply the standardization procedure. Only Moldova 37
  39. 39. Qualitative survey has this problem related to modern equipment that is not certified on the internal market. He also says that he found on the internet equipment which is smaller and has a lower price, but it is difficult to import them if these are not included in the Nomenclature, and the registration procedure is expensive and takes time. Because of these, the two preferred to buy equipment from Ukraine, taking into account the necessary technical parameters. Since these services are mainly developed in Chisinau, Roman hopes this business will be a successful one. In other regions of the country, these services are virtually missing, and enterprises, institutions have to sometimes ways for a few days until their problem is solved. The two partners plan to employ at least 4 skilled persons with specialized education in the field; they have already identified their future employees. He says these are four young professionals, who will have a job in Moldova and will not have to leave abroad to work. As for the earthworks they will employ unskilled workers. On medium term, they intend to open an office; therefore they will also employ an operator. The respondent considers that in Moldova, people make excessive investments in real estate, in purchasing and repairing them; he recommends those who have accumulated resources, to invest them in activities bringing them profits. Roman considers that many young people are lacking the courage to invest. This project inspired them courage and confidence in themselves. He thinks there are several areas the young people and migrants could invest in, and the implemented programmes are not sufficiently capitalized, because some people do not know about them, while others are just lazy. He participated in a contest of business plan for the youth, the PARE 1+1 project, but he became aware of the number of development 38
  40. 40. Qualitative survey opportunities only after this project. It’s important to try, and not to sit and wait. In the future, they think about also purchasing an optical laboratory, because the information technologies field is increasingly developing, and the availability of a wider spectrum of services would represent an advantage in the cooperation with clients, who, thanks to the specificity of provided services, will mainly be legal persons. Roman’s activity is based in Orhei, a town located in the central part of Moldova, at 48 km north from Chisinau. This is the administrative centre of Orhei. Orhei counts about 30,000 residents (according to the 2004 census). 39
  41. 41. Qualitative survey 4.7. Microproject “Growing and selling currant and gooseberries” – Peasant Farm ”Gaina Petru Dinu,” village of Chitcanii Vechi, district of Telenesti Aliona has never worked abroad, but her husband worked in Russia and her son also worked abroad during the summer holidays, two years in a row. The idea of growing and selling currant and gooseberries came from her son. They saw the ad about the “Remittances Developing Moldovan Communities” in the local newspaper. Later, they found out more information from LPA representatives. Her son registered himself to participate in the project, but because he was under 20, she was the one who applied. Growing vegetables and greens is a tradition in her locality. Given that, they are land owners, they try to have profits from agriculture, by growing parsley, onion seeds and others. Respondent’s son, from discussions with some friends, concluded that growing berries is a less widespread occupation in Moldova and he could make a successful business of it. He analysed with his parents this opportunities, collected information about varieties, about where to buy seedlings, about delivery market, etc. Hence, in the autumn of 2011, they planted 0.25 hectares of blackcurrant, and in the autumn of 2012 – 17 areas of gooseberries. Aliona worked as a teacher for a few years only, then she gave up this profession because of the low salary, and together with her husband they started developing their land. She enthusiastically speaks about the business they develop, mentioning that this is a long-term investment, and the first results are already on the field: “This year we expect to have the first harvest of blackcurrant, and next year – of gooseberries. We think the blackcurrant harvest will be very good, as bushes are full of flowers. We hope that at least 70-80% reaches the harvesting.” The support of the small grant programme provided by the Representation of the Public Association Hilfswerk Austria in the Republic of Moldova will enhance their confidence that the investment made is protected. Within the project, they have requested anti-hail net - a layer protecting crops against hail, UV rays, as well as against spring frosts. The net has a validity term of 10-15 years, while the poles are an investment for an even longer period. All reserves accumulated from the work of 40