Local/Regional Economic Development in South ... - Value Chains

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60 current loan or new loans even before the term of their first loan had ended as a result of their reliable repayment habits. Relationship bank – small-scale customers: Granting micro credits as an introduction was a valuable contribution to reducing distrust on the parts of the bank, inexperienced borrowers, and bank employees. Many of these micro borrowers are now valued bank customers. On the other hand, the positive experience with loans has led to a business-like manner on the part of the borrowers and a relaxed attitude when dealing with the bank. This change in behavior is striking compared to inexperienced bank customers. Customer qualification for larger loans: The hoped for effect of micro borrowers remaining in the lending business and acquiring larger loans after a positive initial experience has occurred in several cases. Two new customers have already received loans for up to EUR 10,000 and are preparing to apply for a grant from the SAPARD program. Bank’s assessment of micro credits: Although they are time-consuming and of little financial interest for the bank, the bank’s attitude toward micro borrowers has changed. The banks recognize the advertising impact for other loans, which may have a higher credit amount, as well as for attracting new customers. The micro credit is now an established component of the range of loans financed by the bank’s own funds, supplemented by funds from the programs of the KfW, the IFAD, and the World Bank. Despite the very high interest rate (11 %), the micro credit has a regular clientele. This can be attributed to the simple, unbureaucratic conditions for granting micro credits, low requirements for collateral, and fast availability (after 2 days). Improved competitive situation of banks from the perspective of the borrowers: The idea of offering micro credits that are available quickly by way of an alternative credit fund and via an additional bank, primarily evolved in response to the lack of flexibility of the IFAD credit program’s credit fund managed by the Banca Comerciala Romana (high fees, long lead times, excessive requirements for collateral, and high bureaucratic effort). The program had few recipients and as a result, did not make the expected contribution to advancing development of small farming enterprises. The competition for bank customers in micro lending prompted IFAD and its partners, the Banca Comerciala Romana and others, to reconsider their lending conditions. This broke up the monopoly the Banca Comerciala Romana had enjoyed for years and also integrated the IFAD fund into a healthy market competition. Business development: Operational investment assessment assumes that capital and interest payments based on the borrowing can in turn be raised by the increased performance of the enterprise. Examples of this include relative reduction as a result of improved basic feed, higher pre-hectare productivity with no increase in expenditures, or higher milk output. Real results in the investment area included a doubling of the per-hectare productivity for silo corn even beyond the average level in Germany, as well as a 20 % increase in milk output as a result of using energetically higher value silages as the enterprise’s own basic feed, and a reduction of costs for purchasing by covering their needs for basic feed from the farm’s own production. Hence the additional need for feed and land arising from expanding the farm could be offset by purchasing more cows and improving the capital payments of the farms. Short-term micro credit as an introduction for inexperienced bank customers: The micro credit of up to EUR 1,500 with a term of no more than 12 months is well-suited for preparing managers of small farms who are inexperienced in banking in order to prepare them as future entrepreneurs and bank customers. A positive experience helps reduce unfounded fears and reservations. The short term prevents the farm from being held back in its development over a long period in case the borrowed funds are not used effectively. The interest rate is irrelevant to a large extent as long as it is in line with the usual market conditions, but for many new customers it proves to be an irrational obstacle in the decision-making process. For this reason, the discussion with new customers should primarily focus on the actual monthly payments, since paying off the principal poses the real difficulty for the customers and may not exceed 50 % of the actual monthly family income. Business training in developing farming enterprises: Access to loans for business development can easily lead to a reduction in the net income of a farm if loans are not used in a way that enhances income. Examples of this include building barns or purchasing cows without improving the supply of feed or using feed that is too expensive. For this reason, business management training in how to best use loans is essential. Banks are normally not able to provide this advice. Inadequate impact of theoretical specialized courses: A popular instrument in many projects is massive upgrading of advisors and farmers via theoretical specialized courses that have a high standard. Although they are expensive, they are easy to organize with advisory staff and good numbers of participants, and as such are a popular means of attesting to the achievement of a project. The experience of the Apuseni project with participants who have completed such training shows, however, that
the impact of the progress on the practical development of the enterprise is limited if the courses are not accompanied by intensive practical observation and practice. The reason for this is the participants’ lack of ability to visualize the suggestions and their inability to distinguish practical details, which is essential. Complementary cooperation between the bank and the specialized organization in the development of the farm enterprise: Experience has shown that in lending to farm managers who do not have a sufficient level of technical and entrepreneurial know-how, cooperation between the bank and expert advisors is a good idea. The requirements for expert advisors need to be high and need to include their own practical experience as entrepreneurs. Recommendations for similar projects Improving success indicators: Raising income via the additional use of investment capital can only be proven at the enterprise itself. A large number of participants or certificates for supporting activities such as courses are not proof of progress in the expected results. In the case of basic procedures such as cultivating basic feed, producing silage, or using machines, which impact many farms in the same way, a regional impact assessment is enough to provide an orientation. Better elaborated cooperation between the bank and agricultural consulting: Many loan programs require this type of cooperation but still do not achieve the expected results. Potential borrowers are often required to prove that they have participated in technical training in order to qualify for a loan. However, certificates do not substitute for essential entrepreneurial business advice. One way out of this dilemma is the qualification of suitable agricultural consultants with sufficient practical experience in investment consulting and farm development. Recommended reading GTZ, Regional development Apuseni, Rumänien: Betriebswirtschaftliche Analyse von bäuerlichen Milchviehbetrieben in der Region Apuseni, Triesdorf Consult, 8.2003 Contact Dr. Hans J. Jakob, GTZ OE 3111 Romania h.jakob.gtz@rdslink.ro 61
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Division 311 South-Eastern Europe,
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Preface Promoting region-specific d
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.12 On the Path to a Learning Socie
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IHK Chamber of Commerce and Industr
Page 9: 1 Einführung Introduction 9
Page 12 and 13: 12 tively than working in isolation
Page 14 and 15: 1 1.2 Local/Regional Economic Devel
Page 16 and 17: 16 Local/regional economic developm
Page 19: The EU Context for 2 Das EU-Umfeld
Page 22 and 23: 22 As was found within the EU, the
Page 24 and 25: 2 The primary reasons for the posit
Page 26 and 27: 26 GTZ also supports regional devel
Page 28 and 29: 28 ern European partner countries G
Page 31 and 32: 3.1 Slovenia - Strengthening the Ma
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Page 35 and 36: Structure formation: If possible, L
Page 37 and 38: is the Regional Assembly, whose 84
Page 39 and 40: 3. Commercial Land Management - the
Page 41 and 42: The SEE municipalities and regions
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Page 49 and 50: • have the necessary resources av
Page 51 and 52: Success factors and barriers for cr
Page 53: Regional Economic Development and R
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Page 58 and 59: 58 assume that there is any basic k
Page 62 and 63: 62 . Regional Economic Development
Page 64 and 65: 6 .5 Island Development Program Cro
Page 66 and 67: 66 Working with stakeholders at the
Page 68 and 69: 68 propriate and lacking mechanisms
Page 70 and 71: 70 .7 Land and Soil: Valuable Resou
Page 72 and 73: 72 .8 Coastal Protection and Sustai
Page 74 and 75: 7 .9 Economic Development in Bosnia
Page 76 and 77: 76 .10 The Development Corporation
Page 78 and 79: 78 .11 Spatial Planning between Env
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Page 82 and 83: 82 Results of the information netwo
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Page 87: Municipal and Local Economic Develo
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Page 92 and 93: 92 development process. The direct
Page 94 and 95: 9 5.3 Cross-Sectoral Instruments fo
Page 96 and 97: 96 5. Municipal Partnerships - Netw
Page 98 and 99: 98 tre. An organizational chart and
Page 100 and 101: 100 GTZ (2003): Kommunale Entwicklu
Page 102 and 103: 102 use of the Great Lake Park and
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Page 108 and 109: 108 5.8 Yesterday Electrification,
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110 5.9 Technology-Oriented Busines
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6.1 Cluster-Oriented Assistance Str
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6.2 Automotive Suppliers Cluster in
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The analysis of potential was follo
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• • • • • • • • Peo
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• • • • • • Foreign clu
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cluster must be worked out and adop
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6.5 Tourism as the Solution for Poo
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Head office Mostar Regional branche
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Project outputs Use by intermediari
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6.6 Producer Organizations and Mark
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usinesses are unlikely to be in a p
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Impact The projects are working acr
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6.8 Public-Private Partnership in A
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7 Länderübergreifende Ansätze Tr
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1 Direct support to cross-border co
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1 6 jective of the workshops is to
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1 8 7.3 Agricultural Diversificatio
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150 7. Transnational Exchange of Po
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152 and flexibility is of lesser im
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15 Lessons learned • Detailed and
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156 ordinated with important mediat
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158 further and bring in other SEE
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160 that could have provided advice
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162 Recommended reading MAP - Maced
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16 and employment demands is the fo
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166 InWEnt program (2): “Regional
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168 Specific approach Together with
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170 Development of skills and stand
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172 promotion (PACA in Serbia, loca
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17 Branimir Mirtschev, business man
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