Transcript No Slide Title

Fostering Responsible Business
in Eastern Europe and the CIS
Pascale Bonzom, UNDP, BRC
Athens, September 12 2008
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Forum Objectives
To provide an opportunity to Greek
businesses and UNDP Brokers to
explore “responsible business
opportunities and investments” in
Eastern Europe and the CIS.
To identify a few concrete opportunities
for follow-up with UNDP Brokers.
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Responsible Business Opportunities :
A Definition
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Business opportunities that include the poor and
vulnerable as consumers:
Delivery of needed and affordable goods and
services
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Packaged goods, financial services, telecommunications and
IT, energy, waste management, etc.
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Business opportunities that include the poor and
vulnerable as employees and entrepreneurs:
Product and service sourcing

Agriculture, forestry, packaged goods, IT services, etc.

Responsible investments in product
manufacturing or employment intensive service
delivery including Public Private Partnerships
(PPPs)
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Agro-processing, wood work, construction materials, roads
and building construction through PPPs and tourism.
Many examples
show that providing
basic goods and
services as well as
income opportunities to the poor can
be a sustainable
and profitable business strategy and
contribute to human
development.
4 characteristics:
Profitability, Participation of the poor,
Sustainability, and Human development impact
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Why engage in responsible business
opportunities?
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To access new opportunities/markets
To develop/test new business models/innovate
To enjoy the first mover’s advantage
To create value chain efficiencies (e.g. sourcing
from small holders)
 To secure the license to operate from local
communities
 To implement a CSR vision/strategy/commitment
 To leverage voluntary labels such as Fairtrade
To do good business
while doing good at the same time
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But barriers to Private Sector Development remain
significant in most transition economies…
The foundations for private sector activity are not in place:
- Unfavorable business environment including weak policies (e.g. competition
policies) and legal and regulatory institutions,
- Limited private sector participation in policy dialogue,
- Lack of access to finance
- Lack of skills and knowledge to respond to market opportunities
- Business value chains and market linkages too weak and unbalanced
- Lack of adherence to principles for responsible investment and business
Leading to….
- High degree of companies operate in the informal sector
- The majority of enterprises are subsistence micro-enterprises, most of which
are concentrated in low value added sectors
- Lack of competition - large incumbent enterprises frequently stifle
entrepreneurial energy
- Local demand and ability to pay is weak
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How can UNDP help Business engage?
 Local knowledge (markets, constraints, service
providers, etc)
 Convening power (local business partners,
governments, civil society and donors)
 Regional network (of partners and expertise)
 Project alliance facilitation
 Feasibility studies/Market research co-funding
 Technical assistance for strengthening local value
chain partners
 Continuous problem solving and facilitation
 Monitoring and evaluation of development impacts
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Business Brokers: our main delivery mechanism
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Dedicated and pro-active
Public and private sector background
On the ground, with local knowledge and contacts
Support of the UN: access to government, donors,
civil society and regional players
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Facilitate business linkages
Provide country and sectoral information
Identify investment opportunities in priority sectors
Assistance with addressing knowledge and skill
gaps among local partners
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Local Manufacturing in Bosnia
 A responsible business case study
Lead company: My Cycle (Slovenian Company)
Innovation: Brokering partnerships for new employment opportunities in Bosnia
Investment: US$ 6.2 million (EUR 4 mm) over 2 years
Challenge
Solution
Business result
• “My Cycle” from Slovenia is
seeking new location for its
factory
•Broker introduces My Cycle to
potential sites and facilitated
contacts with local authorities
•The company’s core
business is manufacturing of
wheel chairs, and over 90%
of the products will be sold
via export
•My Cycle purchases non
producing factory in Srebrenica
for EUR1 mm (US$ 1.5mm) and
renovates it according to their
needs
•The project demonstrates the
relevance of the GSB service
offer and the advantages of
the “on the ground” presence
•Srebrenica, known for the
1995 genocide during
Bosnian war, is an
economically depressed
region
•The company will initially
employ 60 people from the
Srebrenica area, and later an
additional 120 employees will be
added to the workforce
•Factory operations to begin in
2009
Development result
•An opportunity for women
to participate in direct formal
employment in the factory
•Reduced unemployment in
the region
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Wine sourcing from Moldova
 A responsible business case study
Lead company: Svorov, Pucari (Moldovan SME) and Domain Menada (Polish SME)
Innovation: Brokering new relationships to diversify wine export sales
Investment: Modification of manufacturing practices for EU standards ($TBD)
Challenge
Solution
Business result
• Wine accounts for 1/3 of
Moldovan GDP and is a
major export product for
Moldova
• Broker facilitated market
linkages between Moldovan
wine producers (Suvorov Vin
and Purcari) with Domain
Menada, a Polish importer and
wine distributor
• As of 2007, 1.4 million
bottles exported to Poland
• Russia was a key importer,
but in 2006 a ban was
enacted on Moldovan wine
• The industry and the
livelihoods of hundreds of
small farmers are now at risk
• The Moldovan exporters have
also changed manufacturing
practices - such as bottle size in order to comply with EU
standards, therefore opening up
further future opportunities as a
result of this project
• Suvorov Vin has contracts
with 15 large firms
(approximately 1,500
farmers)
Development result
• New markets for smallholder
farmers creating greater
income security and growth
potential for the future
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Local Wool Sourcing in Moldova
 A responsible business case study
Company:
Dari Prirodi and Toplu Yapa – wool collectors
Filatura Ungheni – yarn and carpet producer
Innovation:
Development of a pro-poor supply chain
Challenge
• In 2006 Filatura
Ungheni purchased
97% of its wool from
abroad and only 3%
from local sources
• Out of 10,000 sheep
farmers in underdeveloped rural areas,
around 2,000 in the
supply chain
• Local wool did not meet
quality criteria by
Filatura Ungheni
Solution
• Broker approached Filatura,
wool collectors as well as
USAID (already working with
Filatura) and brokered the idea
of developing a local supply
chain
• UNDP facilitated and cofunded 2 feasibility studies –
one on wool sector in Moldova
overall and the other on
improving the quality of local
wool
• UNDP facilitated access to
working capital loan for wool
collectors
• UNDP and Filatura initiated
quality improvement of the
wool produced by local
farmers
Development result
• Number of farmers
involved in supply chain
doubled
• Quality of wool led to a
price increase from 10 Lei
to 14 Lei/kg
Business result
• Filatura Ungheni
purchases up to 20% of
its wool from local
sources, cost savings app.
1 mil USD
• Wool collectors gained
access to working capital
loan
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Conclusion
Business is good for development
and development is good for
business
Good luck in identifying
responsible business opportunities
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Contact information:
[email protected]
UNDP Bratislava Regional
Center for Europe and the CIS
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