OECD Eurasia Competitiveness Programme Eastern Europe and South Caucasus Initiative

Next steps in the Eastern Partnership Enterprise Policy Performance Assessment 27 October 2011, Trento, Italy

OECD Private Sector Development 2

Enterprise Policy Performance Assessment

Next steps in the assessment process

Follow-up: How to implement reforms going forward

OECD Private Sector Development 3

3

Dimensions Sub-dimensions

8 Upgrading of Skills and Innovation

Sub

-Dim

ensio

ns

8.1 Enterprise Skills

8.2 Innovation

5.3 ACAAs

Sub-dimensions Indicators

8.2 Innovation

Ind

icators

8.2.1 Delegation of competencies and tasks

Indicators Level of Reform

Ind

icators

1 2 3 4 5

Strategic approach to broad innovation policy

Establishment of innovation and technology centres

Innovation support services

Assessment of priority areas has been completed

OECD Eastern Partnership SME Policy Performance Assessment 2012

Covering priority dimensions related to the EU Small Business Act:

Entrepreneurial Learning

Enterprise Skills

Policy co-ordination

Access to Finance for SMEs

Administrative Simplification

Company Registration

Public Private Dialogue

SME Support Services

Public Procurement

Innovation

SME Export Capabilities

Green growth

Technical standards

OECD Private Sector Development 4

Strengthening public-private

dialogue

Developing business support services for

innovative SMEs

Promoting entrepreneurial

learning and skills

Improving access to finance for SMEs

Adapting policy design to the needs

of SMEs

Measures need to be developed to further support access to credit (micro financing, credit guarantee schemes, local currency lending etc.)

Consider formalising dialogue between key stakeholders of SME policy and the private sector in a council / representative body to increase transparency of consultations in policy making

Entrepreneurial learning not sufficiently addressed in school curricula, available skills do not match labour market requirements

Improve inter-government co-ordination in SME policy implementation and take an SME perspective in reform implementation looking beyond simplification of administrative regulations and procedures

Focus business support services on SMEs with high growth potential (innovative activities and export) rather than micro company promotion

Eastern Partnership SME Policy Performance Assessment Initial findings

Source: OECD assessment based on government self-evaluation and independent experts

OECD Private Sector Development 5

Assessment of three remaining SBA principles

Principle II – Ensure that honest entrepreneurs who have faced bankruptcy quickly get a second chance

Bankruptcy is among the main risks that entrepreneurs may have to face. Ensuring that the bankruptcy procedures are effective and balanced can foster entrepreneurship. Moreover, measures to limit the stigma attached to business failures may be needed to help re-starters get a second chance.

Principle VII – Help SMEs to benefit more from the opportunities offered by the Single Market

In order to trade across borders, SMEs need to comply with a number of standards and technical regulations. SMEs have limited capacity to deal with the adoption of certification and standards which may represent significant obstacles to their ability to export their products. Governments can support SMEs who want to export by adopting internationally recognized standards.

Principle IX – Enable SMEs to turn environmental challenges into opportunities

As increasing emphasis is being put on environmental sustainability, SMEs can benefit from green growth opportunities if they adjust their business model. However, most SMEs rarely acknowledge the need to do so. Governments can help SMEs change practices and adapt to the challenges linked to environmental change.

Introduction of new principles at Trento Centre Capacity Building Seminar

27 October 2011

Second assessment cycle to be completed by 15 December 2011

OECD Private Sector Development 6

Bilateral stakeholder meetings to be held in every partner country to discuss and validate findings

Half-day meeting per country to be held in January/February 2012

• Discussion of the main findings and key conclusions

• Agreement on draft country report

• Identification of the main priorities for policy reform

Proposed dates for validation with SME co-ordinators:

Armenia: Tuesday, 24 January 2012

Ukraine: Friday, 27 January 2012 Georgia: Tuesday, 12 February 2012

Azerbaijan: Thursday, 14 February 2012 Republic of Moldova: Tuesday, 28 February 2012

Belarus: Thursday, 1 March 2012

Private sector

associations

Government

assessment

International

organisations

assessment

Independent

consultant

OECD

EBRD

ETF

European

Commission

Ministries

Agencies Public

authorities

Consolidation of findings at the regional level in March/April 2012

OECD Private Sector Development 7

Timeline for next steps

10 17 24 31 7 14 21 28 5 12 19 26 9 16 23 30 6 13 20 27 5 12 19 26

October November December January February March

OECD to present to SBA co-ordinators: 1) Draft indicators on three new assessment principles 2) Questions regarding SBA assessment

Finalise draft thematic chapters and send to SME co-ordinators for review

Send draft country chapters and individual score sheets to SME co-ordinators for review

Provide feedback on new indicators and questions

Complete assessment on three new principles

Proposed dates for stakeholder meetings: Armenia: Tuesday, 24 January 2012 Ukraine: Friday, 27 January 2012 Georgia: Tuesday, 12 February 2012 Azerbaijan: Thursday, 14 February 2012 Republic of Moldova: Tuesday, 28 February 2012 Belarus: Thursday, 1 March 2012

Completing assessment on three new principles 15 December 2011

Bilateral stakeholder meetings in every country February – March 2012

Workshop to agree on final scores and weighting of indicators March 2012

SME co-ordinators

OECD

Regional Workshop to validate results

Official launch of final report in June 2012

OECD Private Sector Development 8

Enterprise Policy Performance Assessment

Next steps in the assessment process

Follow-up: How to implement reforms going forward

OECD Private Sector Development 9

Agribusiness ICT Transport & Logistics

Tourism Construction Textile

Entrepreneurship Promoting an entrepreneurial culture

Think small first Taking an SME approach to policy making

Responsive administration

Reducing the administrative burden on doing business

Second chance / Bankruptcy

Services / Public procurement

Access to Finance

Standards and technical regulation

Skills and innovation

Environment and green growth

Internationalisation

SBA

Po

licie

s

(Ho

rizo

nta

l ap

pro

ach

)

Key SME Sectors (Vertical approach)

Typical policy barriers to address through targeted intervention

Moving towards targeted implementation of reform Based on typical SME policy barriers to address

Typical policy barriers to address horizontally

OECD Private Sector Development 10

• Lack of qualified staff

• Lack of financial resources to purchase adequate domestic machinery and equipment

Identifying policy barriers and financial impact on SMEs Through an activity based analysis in priority sectors

Company Set-up

Research & Development

Source Make

• Lack of qualified staff, especially management and technical

• Administrative burdens to open and operate an SME

• Lack of standard quality certifications and low quality of goods compared to production requirements • Limited adequate infrastructure leading to need to collect raw products directly from farmers

• Lack of qualified resources especially at the junior level (limited attractiveness from young graduates to work in this sector)

• Low quality of transport infrastructures

• Imports of substitute goods at a higher price than locally produced

• Disproportionate import of foreign technologies and equipment

•Capital investment in large farms and machinery

• Company sponsored professional training for local managers and technical staff

• Current trend towards ownership of a distribution subsidiary to ensure on-time supply to retailers

• Significant recruitment or posting of highly remunerated foreign specialist and expatriates

• Extra-time and transaction costs

PO

LIC

Y B

AR

RIE

RS

FIN

AN

CIA

L IM

AC

T O

N

SMEs

Deliver

Activity based analysis in agribusiness

Source: OECD interviews with foreign investors in agri-business

• Lack of access to international markets

Example

OECD Private Sector Development 11 Source: OECD analysis

12 months 2 years 3 years Moderate

Good

High

Very High

The size of the bubble reflects the

estimated financial costs of the policy

Low

High

Timeline for pilot

implementation

Estimated

final impact High impact Longer term

gains

Potential impact, timing for implementation and estimated cost

Supply-Chain Financing

Investment Policy & Promotion

Guarantee Schemes

Retail Development

Special Economic Zones

Producers' Organisations

Extension Programmes

Quick implementation

Prioritising policy reforms to improve SME competitiveness Based on economic analysis

Example

OECD Private Sector Development 12

Supporting the implementation of policy reform Through multi-stakeholder dialogue and policy advisory services

Example of governance system at the country level

Ministry representatives and government

agencies

SME Representatives

Policy/Sector Working Groups

Steering Committee

International organisations

• Plan the project • Analyze data and develop materials for Working Group

meetings • Identify key insights and proposes road-map / action-plan

for implementation • Present regular project update to the Steering Committee • Provide coaching in the implementation of policy reforms

Experts

OECD

• Provide feedback • Collect data (e.g. data request,

questionnaires) • Co-operate in analysis

development • Review materials • Provide experts’ contacts

• Take decisions on reform implementation

OECD Private Sector Development 13

Country-specific SME Competitiveness Reviews

And ensuring policy dialogue at the regional level Through peer review and monitoring performance

Policy Working Group on Competitiveness

and Enterprise Policy Development

Eastern Partnership SME Competitiveness Strategy

Based on:

Strong political commitment from all six partner countries

Sound OECD policy recommendations

Established framework for co-operation with partners:

EU, EBRD, ETF, GIZ

Collaboration with OECD members, such as:

Austria, Czech Republic, Netherlands, Poland, Sweden

Applied OECD Instruments Database Capacity Building for policy

makers

Azerbaijan Armenia Belarus R. of Moldova Georgia Ukraine

Identification of policy barriers

Monitoring performance Exchange of best practices

Regional Approach Components

1-2 Sector and/or Policy Working Groups

1-2 Sector and/or Policy Working Groups

1-2 Sector and/or Policy Working Groups

1-2 Sector and/or Policy Working Groups

1-2 Sector and/or Policy Working Groups

1-2 Sector and/or Policy Working Groups

Eastern Partnership Enterprise Policy

Performance Assessment

Forthcoming 2012

OECD Private Sector Development 14

Annex

OECD Private Sector Development 15

Actions Q3 11 Q4 11 Q1 12 Q2 12

Governance and co-ordination with partners

21-22 July Stakeholder Meeting in Torino (OECD, EU, EBRD, ETF)

February: OECD Steering Committee meeting

Regional events

24-28 October: Policy Seminar • SME Policy Tools • Three additional principles

March Workshop for SBA co-ordinators to validate rankings, weighting and draft report (TBC)

April/May: Working Group meeting and SME Panel • Presentation of findings • Next steps

June: Launch of Report

Policy assessments

July - October Analysis of country assessments, preparation of draft thematic chapters

November - December: Second round of data collection with support of local consultants (principles 2, 7, 9) December Finalisation of thematic chapters (principle 3, 4, 5, 8, 10) and draft country profiles

January - February: Finalisation of thematic chapters (principle 2, 7, 9) and country profiles March – April: Quality check + printing

Country missions

February – March Country-specific stakeholder meetings

Other key dates

29-30 September Eastern Partnership Business Forum, Sopot

13 October: EU Platform 2 meeting

Overall Road-Map for 2011-2012 Action Plan

OECD Private Sector Development 16

Contact details

ORGANISATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT

Daniel Quadbeck Policy Analyst, OECD Eurasia Competitiveness Programme Tel: + 33 1 45247522 Fax : + 33 1 45249335 e-mail: daniel.quadbeck@oecd.org