SMALLBUSINESSEXPANSIONPROJECT

SMALL BUSINESS

EXPANSION PROJECT

July, 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

Regional approach

Operates in the Polog, Pelagonia, Vardar and Northeastern regions of Macedonia, but has a spillover effect into the rest of the country

Project Regions

Northeastern

Vardar

Pelagonia

Polog

Stimulating economic growth through:

Optimization of assets Supply chain

interventions Import substitution Public-private

partnerships

SMALL BUSINESS EXPANSION PROJECT

SMALL BUSINESS

EXPANSION PROJECT

July, 2016

Six flagship initiatives:Implementation of LEADER Grow More CornCollection of Wild-Gathered ProductsWomen in BusinessLight ManufacturingMacedonia Adventure Travel

Uses bottom up approach / PPD to identify areas of intervention

Aims for a real catalytic effect on the targeted sectors through leveraging of funds from the public, private and civic sectors partners

LEADER APPROACH | WHY?

…to enlist the energy and resources of people and bodies that could contribute to the rural development process by forming partnerships at a sub-regional level between the public, private and civil sectors.

…local empowerment through local strategy development and resource allocation.

The main tool for the application of the LEADER approach is the Local Action Group (LAG) – used as platform for SBEP initiatives (identification and scaling).

"Liaison Entre Actions de Développement de l'Économique Rurale"

LEADER APPROACH | RESULTS

• 10 pre-LAGs registered in 4 regions;

• EU funding expected to become available starting from 2018 (was expected 2014).

• SBEP works to develop, build institutional capacity and motivate the pre-LAGs to remain active while awaiting EU funding.

• Pre-LAGs receive support to design, budget and implement small-scale pilot projects through SBEP.

LEADER APPROACH | RESULTS

• In areas such as agriculture, wild gathered and adventure tourism – cross cutting effect with other SBEP initiatives

• Three regional bazaars (Polog, Pelagonia, Northeastern) with 2 more planned;

• Connecting rural producers with urban market: 64 producers and exhibitors – over 800 US$ in revenue plus over 7 contracted long-term deals with restaurants in Skopje.

9 LAG Pilot Projects

LEADER APPROACH | NEXT STEPS

• SBEP will continue coaching the LAGs on project implementation and financial operations, and, even more importantly, the development of project concepts.

• 5 new projects supported from July through 30 September (1 bazaar and 4 pilots focused on tourism);

• At least 5 more pilots projects planned from September – end of project

In the next 6 months

• The pace of LEADER policy implementation – further support and lobbying with MAFWE;

• Public and members of Local Action Groups must see real results on the ground to be convinced of the value of continuing to work on developing their individual Groups;

• Local Action Groups need further support – institutional capacity building;

• Municipalities lack capacity and resources to support development of LAGs – private and civil sectors require continuous motivation, as they have proven to be the key drivers of development in this area.

LEADER APPROACH | CHALLENGES

• Macedonia imports 62,000 tons of corn (1/3 of current needs)

• Deficit is much higher (import of beef, pork, chicken and dairy products)

• Average corn yield 4 t/ha, some regions even as low as 2 t/ha, EU 28 is 10 t/ha and with good agricultural practices and drip irrigation it has gone up to 17.4 tons/ha with potential to go up to 20 t/ha

• Small parcels and low yields result with lack of feed that prevents farmers from expanding livestock

• As a result, dairies operate with 35-50% of installed capacity ONLY!

AGRICULTURE | WHYAsset optimization thru supply chain intervention geared at import substitution

The difference between furrow (left) and drip (right) and) irrigated corn fields –

50 vs. 126 t/ha of silage

• SBEP supported the institutionalization of drip irrigation as an effective way to grow more corn and sunflowers in Macedonia via grants and lobbying MAFWE and related institutions;

• Drip irrigation leads to higher yields – farmers using the system routinely get over 12 tons of corn per hectare – 300% more than the national average!;

• Direct effect on herd expansion by 37,5% in past 3 years;

AGRICULTURE | OVERVIEWLife of Project

• DRIP IRRIGATION – serious impact on environment & sustainable farming

• 800+ hectares (est. over 450 farming households) have been covered with drip irrigation for corn and sunflowers up until now – from practically 0 in the beginning;

• The Government supports the initiative through subsidies– 4 mil. USD annually for the introduction of drip irrigation (80/20 government subsidy).

AGRICULTURE | OVERVIEWLife of Project

• Continued provision of TA to 300+ farmers – nationwide and expansion in other 4 regions;

• Rice producer competitiveness in serious decline – rely on G’ment subsidies;

• SBEP was approached by GoM to do a pilot on producing rice w/ drip irrigation and to gauge whether drip can mitigate these issues – two pilot fields set up in Cesinovo-Oblesevo and Kocani – synergy with other Swiss funded intiatives;

• SBEP supported a feasibility study for the expansion of the Strezhevo PE, helping to unlock 7 mil USD which will be invested by 2018 to expand the system by 2,000 more hectares (Novaci).

AGRICULTURE | NEXT STEPS

• Further SBEP facilitation needed for strengthening inter- and intra-institutional cooperation (regarding g’ment subsidy program);

• Further SBEP assistance to MAFWE needed to design policies that will move subsidies from social to development measures;

• Further SBEP assistance to MAFWE needed to design, support the implementation and monitor the results of the new drip subsidy measure over the next three years;

• Moving farmers from wheat to corn production as a more competitive crop;

• 22 Million USD for irrigation infrastructure allocated by GoM each year but utilization is dependent on adequately prepared feasibility studies.

AGRICULTURE | CHALLENGES

WILD-GATHERED PRODUCTS | RESULTS 2013-2016

• SBEP supported the stabilization and formalization of the market by providing workshops for collectors and facilitating communication between stakeholders.

• SBEP also supported the development of a model for sustainable use of the WGP products in the Mavrovo NP.

• 1770 collectors trained;• Over 500 contracts between collectors and centers signed

or renewed over life of Project;• 4 collection centers supported over life of Project.

LIGHT MANUFACTURING | OVERVIEW

• Initiative focuses on creating a network of buyers and sellers in the light manufacturing sector;

• Light manufacturing matchmaking database established with 240 companies currently catalogued;

• Interact with domestic and foreign owned manufacturing companies in Macedonia to create growth and import substitution.

LIGHT MANUFACTURING | RESULTS

• $1.3 M in new transactions with more expected in upcoming months, thanks to over 110 leads followed by SBEP;

• Invest in Macedonia & economic promotors heavily rely on SBEP assistance;

• Sustainability provided through MAMEI (Macedonian association of metal and electrical industry)

• MAMEI – synergies with SIPPO and Invest in Macedonia.

LIGHT MANUFACTURING | NEXT STEPSSeptember 2016

• September 15 – B2B supply chain conference to be organized in cooperation with Invest Macedonia, AmCham, the German-MK Economic Chamber and the Dutch Embassy;

• Siemens and Scoutbee (including 5 German companies among which BOSCH) confirmed attendance;

• Conference will reveal new matchmaking opportunities for suppliers and manufacturers – 15 buyers and 50-60 suppliers, expected up to 140 B2B meetings

WOMEN IN BUSINESS

• 25 women and youth-owned businesses were supported in the Polog region with targeted grants;

• $141.000 accumulated from a number of public and private donors;

• 55 new full-time jobs and 45 indirect jobs created, most of them also employing women;

• Egalité, a newly formed Foundation with SBEP support has received a $36,800 grant from the Swiss Civica Mobilitas program, for institutional capacity building;

• Egalité continues to work on the issue as a legacy institution.

Women’s Advisory Board Project Evaluation Session

Overview and results

ADVENTURE TRAVEL | INTRODUCTION

• Rapidly growing industry (valued at 89 bn USD in ‘09 - 263 bn USD in ‘13);

• Direct impact on Local Economic Development – 65% spent in destination compared to max 17% for the mass tourism market;

• Adventure travel consumers = sustainable tourism practices;

• Macedonia is competitive in the industry – optimization of existing assets.

ADVENTURE TRAVEL | HOWThree pronged approach:

•PROMOTION of Macedonia and Western Balkans as adventure tourism destination

•BACKWARDS SUPPLY CHAIN – education of key stakeholders & facilitating market linkages

•EVENTS – sports clubs attract hundreds of thousands visitors from all over the world every year – boldering / paragliding / mountain biking / marathons etc

ADVENTURE TRAVEL | HOW• Promotion: SBEP initiated partnership with Adventure Travel Trade

Association (ATTA) in order to promote Macedonia and the Western Balkans as the new European frontier in adventure travel using a direct marketing channel;

• August 2014 Fam Tour with 15 tour operators and 7 media rep’s (National Geographic, Wanderlust, Yahoo Travel)

• Generated international media coverage for Macedonia as an adventure travel destination in publications such as Lonely Planer, Yahoo Travel and National Geographic valued over 1.6 mil USD.

• Resulted in 3 new adventure tour to Macedonia in 2015/2016, each valued at ~$32,500 (3 more under development for 2017);

ADVENTURE TRAVEL | results

•Education of supply chain: held three AdventureEDU training in Skopje that educated ~100 local tourism stakeholders (from MK and region);

•Supported 15 outdoor adventure travel events, increasing the number of visitors by 20-50%;

•4 paragliding sites equipped for improved quality, safety and accessibility;

•Supporting 5 LAG tourism projects plus 5 more in the pipeline;

ADVENTURE TRAVEL | RESULTS

• Connect Macedonia to Via Dinarica, one of the most popular new multi-country hiking trails in Europe;

• Initiated and organized the first regional adventure travel conference in Europe, AdventureNEXT~Balkans.

• Fall 2016 – final report by ATTA including feedback from buyers to give direction for further development of the destination

ADVENTURE TRAVEL | NEXT STEPS

• Destination development and management with a focus on independent travelers and self-guided tours (increasing availability of tourism info online) – thru LAG projects when possible

• Strengthen links between sports clubs that bring in tourists and other local tourism service providers (e.g. connect paragliding clubs with bike rentals, horse rentals, local artisans, etc.).

RESULTS• Introduced LEADER approach in 4 regions;

• Unlocked huge potential for jobs and sustainable economic growth through drip irrigation (projected up to over 8,147 new jobs, $101,2 million net present value by 2021);

• $20 million DCA Loan facility initiated and secured thanks in part to SBEP efforts in agriculture – unlocking greater access to capital for Macedonian farmers;

• Put Macedonia on the global adventure travel map;

SMALL BUSINESS

EXPANSION PROJECT

RESULTS• Job creation and retention: 1.459 (503 occupied

by women, 341 youth and 312 retained);• Value in dollars of public and private investment

mobilized for economic growth of the regions: $34.285.280;

• Value in dollars of new revenue (sales and exports): $23.276.558;

• Value in dollars of investment (financing, own investment): $9.691.111;

• Number of MSMEs receiving BDS services: 576;• Number of people participating in technical

workshops: 4.805 (1.216 women and 345 youth);

SMALL BUSINESS

EXPANSION PROJECT

ASSOCIATION FOR INNOVATIONS IN RURAL ECONOMIES

Legacy organization• Created to continue the work of SBEP to

ascertain sustainability of the initiatives upon the Projects cessation;

• Able to access funding from multiple donors and ensure financial sustainability of the organization;

• Will continue to support EU LEADER Local Action Groups in the upcoming initiatives and small projects.

ASSOCIATION FOR INNOVATIONS IN RURAL ECONOMIES

Legacy organization• Access to appropriate funding is necessary in order to cater to

stakeholder requests for further support, especially after the great success of the AdventureNEXT Conference and new innovations introduced in the farming sector.

• Takes the EU LEADER approach to attain greater impact on sustainable rural economic growth;

• Composed of SBEP team members – already well aware of conditions on the ground, needs and capacities of stakeholders and partners;

ASSOCIATION FOR INNOVATIONS IN RURAL ECONOMIES

Legacy organization• Will work using already developed network of stakeholders and

information to spend more time on implementing, and less time on scouting and planning;

• Will continue to coach and mentor Local Action Groups and other stakeholders continue managing the initiatives that have had the greatest effect and develop new ones;

• Continue cooperation with ATTA in tourism sector and MAFWE in agriculture and act as facilitator between the pillar organizations and private sector.

2021 Cost-share(cumulative)

TOTAL (2021):

$10,150,000(minimum) 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 (minimum) 4.5%

$73,767,975 2.0%