USAID Small Business Expansion Project

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March 2016

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USAID Small Business Expansion Project

  1. 1. SMALL BUSINESS EXPANSION PROJECT
  2. 2. SMALL BUSINESS EXPANSION PROJECT March, 2016  Funded by USAID and co-funded by the Government of Switzerland  Implemented by CARANA Corporation  Four-year project (2012-2016)  Overarching goals: stimulating economic growth, catalyzing job creation and mobilizing regional funds for economic development  Operates in the Polog, Pelagonia, Vardar and Northeastern regions of Macedonia, but has a spillover effect into the rest of the country
  3. 3. Project Regions Northeastern Vardar Pelagonia Polog SMALL BUSINESS EXPANSION PROJECT March, 2016
  4. 4. SMALL BUSINESS EXPANSION PROJECT March, 2016  Stimulating economic growth through:  Optimization of assets  Supply chain interventions  Import substitution  Public-private partnerships  Six key initiatives:  Implementation of the LEADER Approach  Grow More Corn  Macedonia Adventure Travel  Collection of Wild-Gathered Products  Women in Business  Light Manufacturing  Aims for a real catalytic effect on the targeted sectors through leveraging of funds from the public, private and civic sectors partners
  5. 5. LEADER APPROACH | RESULTS 2012-2015 2016 • 5 pre-Local Action Groups (LAGs) registered (3 in Pelagonia and 2 in the Northeastern region); • 5 LEADER pilot projects initiated: • Vegetable seedling production in Bitola; • Kokino tourism destination development in Staro Nagoricane; • Osogovo tourism destination development in Rankovce, Kratovo and Kriva Palanka; • Prespa tourism destination development in Resen; • Paragliding site development in Krivogashtani. • +5 pre-LAGs registered; • Network of pre-LAGs made operational, leading toward the formation of a National Rural Network as proposed by the EU; • Lobbying Ministry of Agriculture to establish Register of Pre-Lags and announce measure in National Program; • 2018-2021: Expected $10 M leveraged funding for LEADER development projects (2.7% SBEP cost-share).
  6. 6. LEADER APPROACH | CHALLENGES • SBEP is working with the Government to facilitate the efficient implementation of the LEADER approach, but there is a risk that the pace of policy implementation will slow significantly without further support from SBEP; • Because of an unsuccessful attempt to implement the LEADER approach in 2007- 2008, there is a risk that local stakeholders will lose their interest in participating if the current implementation process proves unsuccessful; • The Local Action Groups need further donor support to develop their institutional capacities, including their project management capacities, to build up their credibility and credit rating and not least to strengthen their capabilities to administer/implement public (national) funds before LEADER is accredited as an IPARD Measure by the EU. • The local population, especially the private sector, need to witness the successful implementation of LAG projects to become full convinced in the benefits of the LEADER approach. The LAG members understand the benefits, but lack the practical experience needed to take full advantage of them at this time.
  7. 7. ADVENTURE TRAVEL | INTRODUCTION • The adventure travel market was valued at 263 billion USD in 2013 and is growing rapidly (the market’s estimated value was 89 billion USD in 2009); • This niche market of travelers leaves on average 65 cents of every dollar in the destination, compared with an estimated 8-17 cents on every dollar for the mass tourism market; • Adventure travel consumers also place a high importance on responsible and social development when planning their trips; • Macedonia is perfectly positioned to take a piece of this market because examples of adventure travel are prominent in Macedonia’s popular tourism offerings, including hiking, horseback riding, mountain and road biking, and paragliding.
  8. 8. ADVENTURE TRAVEL | INTERVENTION • SBEP’s strategy for the development of the adventure travel industry in Macedonia is based on the idea that the quality of the destination increases in parallel with the quantity of tourists who visit it; • The most cost-effective approach to attracting tourists to a destination is to advertise to the members of the global adventure travel trade community. To that end, SBEP partnered with the Adventure Travel Trade Association (ATTA) in order to promote Macedonia and the Western Balkans as the new European frontier in adventure travel; • To support this process, SBEP is also helping local tourism service providers improve the quality of their service and promotion with a focus on adventure sports clubs who bring in a significant number of tourists through their international networks of athletes and sport enthusiasts; • This process is complementary with IME’s work on destination management, risk management and service excellence on the side of inbound tour operators.
  9. 9. ADVENTURE TRAVEL | RESULTS 2014-2015 2016 • 3 paragliding sites equipped; • 3 AdventureEDUs held; • 1 AdventureWeek FAM tour held, bringing 20 international tour operators and media to Macedonia; • 1 new adventure tour; • Generated $1.6 M in international media exposure; • 10 adventure events supported, increasing the number of visitors by 30% (total of 2,000 visitors). • +1 paragliding sites equipped; • +4 new adventure tours between 2016- 2017; • In May, AdventureNEXT~Balkans will bring 300 tourism leaders to Macedonia for the first time; • $10 M in expected media exposure; • Official launch of the Via Dinarica Macedonia during AdventureNEXT; • Promotion of Prilep and Krushevo as a regional paragliding hub; • Expected 2016 leverage: $390,370 (28% SBEP cost-share).
  10. 10. Prilep Open, a new paragliding competition organized on Treskavec, one of the 4 take-off site equipped by SBEP
  11. 11. Tour operators and travel journalists hike to the village of Galicnik as a part of the AdventureWeek FAM tour of Macedonia
  12. 12. Travelers from the U.S. hike up Mount Treskavec as a part of the first Bike Tours Direct tour in Macedonia – a result of AdventureWeek
  13. 13. Over 500 cyclists participated in the Mariovo Off-road event – one of 10 outdoor adventure events supported by SBEP in 2015
  14. 14. Hikers on the Shar Mountains – a new addition to the Via Dinarica multi-country hiking trail
  15. 15. AdventureNEXT~Balkans • From 10-12 May 2016, Ohrid, Macedonia will host the first-ever regional adventure tourism conference in Europe: AdventureNEXT~Balkans; • AdventureNEXT~Balkans is expected to attract approximately 300 tourism leaders and decision makers. This group will include 45 of the world’s most promising international buyers (outbound tour operators and specialty travel agents) and about 20 journalists; • The event also aims to attract representatives from the entire tourism supply chain in Southeastern Europe, including leading tour operators and travel agencies, hotels, associations, active clubs, governmental and non- governmental organizations, development agencies, media, etc; • AdventureNEXT is an excellent example of regional tourism cooperation on the Balkans with the governments of Macedonia, Kosovo and Albania co- financing parts of the conference.
  16. 16. AdventureNEXT~Balkans • The goal of the conference is to foster the development of adventure tourism on the Balkans by: • Advertising its destinations directly to industry representatives from all over the world, • Holding the biggest business-to-business (B2B) marketplace for adventure travel businesses on the Balkans • Building the capacity of adventure tourism businesses through educational workshops and panel discussions with leading industry professionals. • In essence, AdventureNEXT~Balkans is a foreign direct investment (FDI) conference because the biggest benefit for Macedonia and the region will come from successfully attracting foreign investors in the adventure tourism sub-sector.
  17. 17. ADVENTURE TRAVEL | CHALLENGES • The sports clubs SBEP has been working with bring in a steady stream of tourists to Macedonia, but they need further technical assistance if they are to improve the quality of their services and increase the number of tourists they can service; • SBEP and the National Tourism Agency have been successful at bringing almost all local tourism stakeholders together behind adventure tourism development, but the National Tourism Agency still lacks the reputation and capacity to manage this process on their own; • Local tourism service providers will need to keep improving their service quality and outreach efforts to take full advantage of Macedonia’s emergence as a new adventure travel destination. This process is likely to slow down without further donor support.
  18. 18. GROW MORE CORN | INTRODUCTION • Macedonia’s low average corn yields of 4.3 t/ha of grain and 30 t/ha of silage put the country at the bottom of productivity in both European and regional contexts, resulting in 50,000 tons of imported corn annually (35% of the total consumption), in addition to a deficit from related food products, such as meat, eggs and dairy; • The main corn-dependent supply chains are the focus of SBEP’s intervention because they all suffer from a farm-level inefficiency that has a relatively simple technological solution; • The economic growth potential of this initiative became apparent during SBEP’s early work with corn farmers and dairies in the Polog and Pelagonia regions. Pelagonia, known as “Macedonia’s bread basket”, stands to gain the most from a more efficient corn supply chain because agriculture and dairy production significantly contribute to the region’s economy.
  19. 19. GROW MORE CORN | INTERVENTION • By helping corn farmers to improve their production efficiency with the use of SBEP-financed drip irrigation systems and good agricultural practices, the Project initiated a catalytic reaction that is moving Macedonia towards full import substitution of corn and the potential creation of more than 7,000 new jobs; • SBEP is on the path to leveraging $24 million from farmers, the Ministry of Agriculture and a new Development Credit Authority (DCA) Loan Facility by 2021, resulting in 43 hectares of drip irrigation being installed for every hectare financed by SBEP (the current ration is 1:1); • To support the adoption of drip irrigation on corn, SBEP assisted the Government in the process of modernizing Macedonia’s irrigation infrastructure by commissioning feasibility studies for the irrigation systems “Strezevo” and “Lisiche”, leading to an increase in the total agricultural area where water from these systems can be accessed, as well as in the payment rate for their services.
  20. 20. Hectares of corn and sunflower under drip in Macedonia (end of 2015) Farmers using drip 300+ SBEP investment 281 ha 50/50 subsidy 114 ha Private investment 276 ha Total 661 ha 2016 potential expansion
  21. 21. The difference between drip (right) and furrow (left) irrigated corn fields – 126 vs. 50 t/ha of silage
  22. 22. GROW MORE CORN | RESULTS 2012-2015 2016 • At least 661 hectares of corn and sunflowers under drip irrigation (9.6% of the 7,000 hectares goal for full import substitution*); • 210% increase in yields from national average; • Records: 18 t/ha grain, 126 t/ha silage and 4 t/ha sunflower seeds; • 900 new and retained jobs. • +900 hectares of corn and sunflower under drip (50/50 + own investment); • National program applications and DCA facilitation; • IPARD farm expansion applications; • ~20% increased yields; • +1,200 new and retained jobs; • Provide technical support for the use of drip irrigation on a national level in cooperation with all drip irrigation suppliers in Macedonia; • Expected 2021 leverage: $34,183,528 (2.4% SBEP cost-share). 4.2 t/ha 13 t/ha
  23. 23. Record Yields Grain Silage 18 t/ha 126 t/ha Average Yields (t/ha) Over Time Silage Grain 2012 (no DIS) 2013 2014 2015 Dairy farmers who adopted drip irrigation on corn were able to enlarge their herds by approximately between 2012 and 2015 24%
  24. 24. GROW MORE CORN | LEVERAGE 2012-2015 2016 2021 $825,000 $825,000 $825,000 $400,000 $300,000 $7,700,000 $3,222,941 $9,668,823 $25,783,528 SBEP 50/50 Farmers (SBEP) (SBEP) (SBEP)(50/50) (50/50) (50/50) (farmers) (farmers) (farmers) $3,622,941* (18.5% cost-share) $ 9,968,823* (7.4% cost-share) $34,183,528* (2.4% cost-share) *cumulative
  25. 25. WOMEN IN BUSINESS • Piloted in 2012 • Focused of women and youth in rural areas – Polog region • Targeting most vulnerable groups – women that do not have access to education nor the labor market
  26. 26. The kindergarten REA, owned by Ms. Qanije Selimi, doubled in capacity and staff thanks to SBEP’s support
  27. 27. The Women’s Advisory Board evaluating businesses that can be supported with small, targeted grants
  28. 28. WOMEN IN BUSINESS 2012-2015 2016 • Accumulated $141.000 for the support of women and youth entrepreneurs in the Polog region; • Supported 20 MSMEs owned by women and youth entrepreneurs; • 40% increase in revenues of supported businesses; • 43 new full-time and 39 new part-time jobs; • Established the Egalite foundation to manage the Fund for Support of Women and Youth Entrepreneurs. • +10 additional MSMEs supported; • +40 new jobs; • Continuous fundraising with public and private sector; • Sustainability strategy (development of new financial products); • Egalite foundation received an institutional grant aimed at building up its organizational and advocacy capacity; • Expected 2016 leverage: $154,282 (32.7% SBEP cost-share)
  29. 29. WILD-GATHERED PRODUCTS 2012-2015 2016 • Over 1,500 collectors trained; • Supported the establishment of 4 new collection centers (1 in Bogovinje and 3 in Mavrovo); • 466 new and retained jobs (the 4 centers can employ up to 1,200 collectors). • +500 collectors trained; • +200 new and retained jobs; • Support for 3 Collection Centers in the Mavrovo National Park; • Expected 2016 leverage: $30,000 (22.6% SBEP cost-share).
  30. 30. LIGHT MANUFACTURING 2012-2015 2016 • 180 companies catalogued in the light manufacturing database; • 95 leads found, 33 qualified and 3 finalized; • $1.3 M in new transactions ($42 K import substitution, $161 K exports per annum and $1,1 M Foreign Direct Investment); • 28 new jobs. • MAMEI – synergies with SIPPO • +60 new companies catalogued in database; • +3 leads finalized; • +100 new jobs (from the InBus bus factory that will become operational in 2016); • B2B light manufacturing conference will reveal new matchmaking opportunities;
  31. 31. $60,950 $75,000 $151,810 $8,750 $282,775 $1,300,000 $154,282 $3,622,941 $390,370 $30,000 $1,719,798 $7,445,882 $23,918,950 $23,114,705 $10,000,000 Light Manufacturing Women in Business Macedonia Adventure Travel Wild-Gathered Products Irrigation Grow More Corn LEADER Approach Leveraged Funds SBEP 2015 leverage 2016 leverage 2021 leverage 2021 Cost-share (cumulative) TOTAL (2021): $10,150,000 2.7% $34,183,528 2.4% $27,559,795 0.3% $30,000 22.6% $390,370 28.0% $154,282 32.7% $1,300,000 4.5% $73,767,975 2.0%

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