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

9
5.3 Cross-Sectoral Instruments for Economic Development –
Municipal and Regional Economic Development in Bulgaria
Karlheinz Zahn
Project background
In the opinion of the EU, the Bulgarian economy will
only become competitive in the medium term. The basic
reasons for the low level of competitiveness lie in the difficulty
of financing necessary investments and in the lack of
economic-development structures, particularly for small
and medium-sized enterprises. Bulgaria’s accession to the
EU will further intensify the competitive situation of the
Bulgarian economy.
The Economic Development and Employment Promotion
Program Bulgaria, implemented by GTZ on behalf
of BMZ, was charged with setting up economic development
agencies in at least three municipalities through its
component Development of Regional and Cross-sectoral
Economic Development Instruments. The task of the
agencies is to support business start-ups, offer advice and
assistance to existing firms, and speed up investment by
marketing of the location.
Approach
Upon application by the oblast (district) administrations
of Haskovo, Kardjeli, and Lovetch, contracts were concluded
between each of these oblasts and GTZ for the
establishment of an economic development center. While
there were already organizational units in Haskovo und
Kardjali (non-governmental organizations) concerned primarily
with regional questions, in Lovetch everything had
to be built from the ground up – also with respect to the
availability of potential staff members.
In the contracts between GTZ and each sponsoring institution
in the oblast, a three-year financing plan was laid
down, in which local inputs and GTZ inputs are individually
listed. Together with GTZ, offices were selected,
the costs of which, as well as heating, electricity, and telephone
costs, were assumed by the respective sponsoring
institutions. GTZ financed the required renovation and
equipping of the offices with furniture and necessary infrastructure
(server, PCs, printer, laptops, etc.). The contracts
also stipulated that a declining percentage of personnel
costs would be assumed in the first three years (1st year
– 100 %, 2ⁿd year – 50 %, 3rd year – 25 %).
Training measures were carried out in all three locations
in order to establish the provision of competent economic
development services. Staff members were intensively
trained in advisory services for business start-ups
and SMEs. Thus, various checklists were developed to give
staff members something to guide them in advisory situ-
ations. The checklists are also useful as guidelines to help
training new staff members.
Additional training measures included balance sheets and
profit and loss analysis, comparison of credit conditions,
investment planning, and cash-flow analysis. Corresponding
Excel programs were developed, which assisted agency
staff members with the work. The advisors also prepared
two brochures (guidelines for business start-ups and preparation
of business plans), which were available when the
centers officially opened.
In all three municipalities, training was given on creation
of an internet presentation. A structure was developed for
this purpose, along the lines normally expected by foreign
investors.
Impact
In all three institutions, the staff members actively and intensively
collaborated and made full use of the existing opportunities.
It proved to be particularly advantageous that
all translations (from English, except in Lovetch, where
it was from German) into Bulgarian – brochures as well
as checklists – were done by center staff members themselves.
This resulted in a fruitful dialogue between the advisor
and the staff members, which helped close the gaps
in understanding that remained after the training.
The development of the center in Kardjeli is particularly
gratifying; seven staff members are now working there,
although GTZ support has been completed. This agency
is not only ISO 9001 certified; it now also offers advisory
services on quality management and certification to
firms in the region. By way of a quarterly newsletter, the
agency maintains contact with firms and associations in
the region.
Despite the advisory services, it has proven difficult in all
three regions to set up a business-related Internet presence,
because GTZ was not able to provide the required
financing and the funds were not made available by the
municipal and regional administrations.
Lessons learned
As already emphasized at the beginning, SME policy in
Bulgaria continues to be uncoordinated and of poor quality,
in comparison to the practice in long-time EU countries.
Even though this task is emphasized in a number of
official government documents, in practice, one detects
little support either at the national or regional level.