Table of contents appendixes
Appendix I: Information sources A: Bibliography; alphabetical order B: Bibliography; sorted by topic C: Useful web-site addresses
Appendix II: Development banks and donor organizations and their activities in the three selected countries
Appendix III: Detailed description of characteristics IFOM-facility Appendix IV: Model of Westerman on mix of financing instruments
Appendix V: Loans and leasing available in Russia, Ukraine and Kazakhstan Appendix VI: Outline of forum discussion
Appendix VII: Questionnaire used for case-studies
Appendix VIII: Questionnaire loans for local commercial banks Appendix IX: Questionnaire leasing for local leasing companies
Appendix X: Questionnaire venture capital for local venture capital firms
Appendix I: Information sources
A: Bibliography; alphabetical order
Baarda, B. and M. de Goede, Basisboek methoden en technieken: praktische handleiding voor het opzetten en uitvoeren van onderzoek, Culemborg: Stenfert Kroese, 1997
Berggren, B. and C. Olofsson, “Control Aversion and the Search for External Financing in Swedish SMEs”, Small Business Economics, 15, (2000) p. 233-242
Bouma, J.L., Financieringsinstrumenten voor ondernemingen in Nederland, ‘s Gravenhage: Delwel Uitgeverij B.V., 1996
Brealey , R. and S. Myers, Principles of Corporate Finance, United states of America: Mc Graw-Hill higer education, 2002, 6th edition
Bruno, A.V., T.T. Tyebjee, “The entrepreneur’s search for capital”, Journal of business Venturing, (Winter 1985)
Buiter, W., Exeter, J., Hexter, D. and A. Rousso, Transition report 2003, integration and regional cooperation, London: the stationary
office publication center, 2003
Buren, H. van, Nieuwsbrief Kazakstan, Den Haag: Nederlands Centrum voor Handelsbevordering, February 2004
Buren, H. van, Russia Bulletin, Den Haag: Nederlands Centrum voor Handelsbevordering, January 2004
Caproni, R. Leasing in Ukraine, manual by IFC Ukraine, leasing advisory project, Kiev: IFC, 2000
Carrico, F., U.S. and Foreign Commercial Service and U.S. Department of State, Ukraine Country Commercial Guide, FY 2004, US: U.S. and Foreign Commercial Service and U.S. Department of State, 2003
Cleasby, G., U.S. and Foreign Commercial Service and U.S. Department of State, Russia Country Commercial Guide, FY 2004, US: U.S. and Foreign Commercial Service and U.S. Department of State, 2003
Cook, P. of University of Manchester, “Issues in finance and SME development”, In: ADB/OECD Workshop on Small and Medium size Enterprise financing in Asia, Manila: 2000
Cowling, M. “Is the small firms loan guarantee scheme hazardous for Banks or helpful to small business”, small business economics, 21, (2003), p. 63-71
Cressy, R. and C. Olofsson, “European SME Financing”: An overview, Small Business Economics, 9, (1997), p. 87-96
Fluker, J., U.S. and Foreign Commercial Service and U.S. Department of State, Kazakhstan Country Commercial Guide, FY 2004, US: U.S. and Foreign Commercial Service and U.S. Department of State, 2003
Forster, S., Greene, S. and J. Pytkowska, The state of microfinance in central and Eastern Europe and the New Independent states, Poland: Microfinance center, 2003
Freeman, R., Leasing in Central Asia, a snapshot of the leasing market in central Asia, Almaty:IFC, USAID, SECO, 2004
Fridman, M., Russian Banks: contribution to growth still low, presentation on Russian Banks, Moscow: Alfa bank, 2003
Fries, S., Lysenko, T. and S. Polanec, The 2002 Business Environment and Enterprise Performance Survey: Results from a survey of 6100 firms, working paper no. 84.,London: EBRD and WB, 2003
Gidaspov, A., How do companies in Eurasia finance their trade and investment deals, Moscow:
U.S. Department of Commerce, 2003
Hall, G., “Lack of finance as a constraint on the expansion of innovatory small firms” in: Barber, J., Metcalf, J. and M. Porteous, Barriers to growth in small firms, London: Routledge, 1989
Hamilton, R. and M. Fox, “The financing Preferences of Small Firm Owners, International,
“Journal of Entrepreneurial Behavior and Research”, 4, (1998), 239-248
Hartford, D., “How to work with a venture capitalist”, In: EVCA, A unique reference work on venture capital, Moscow: EVCA, 1998
Hofstede, G., Allemaal andersdenkenden: omgaan met cultuurverschillen, The United States Of America: Mc Graw Hill, 1991
Hubert, F. and Astrid Matthey, New strategies to finance small enterprises in Russia, Moscow:
Humboldt University Berlin and Higher school of economics Moscow, 2003
Kadrzhanova, A., BISNIS Representative, How do companies in Kazakhstan finance their trade and investment deals, Almaty: U.S. Department of Commerce, 2003
Kumar, A.V. and M.N. Kaura, “Venture Capitalists' Screening Criteria”, The Journal for Decision Makers, Vol. 28 Issue 2, (2003), p 49
Klapper, L., Sarria-Allende, V. and V. Sulla, Small and Medium size enterprise financing in eastern Europe, policy research working paper 2933, development research group finance, Washington DC:
World Bank, 2002
Klein, D of Deutsche Bundesbank, “Life cycle needs for financing, development of efficient credit systems for SMEs: an overview”, In: ADB/OECD workshop on Small and Medium size Enterprise financing in Asia, Manila: 2000
Kobsev, O and V. Yakubovich, specifics of farm produce processing and marketing in Ukraine, Kyiv: IFC, 2004
Laar, M. van de, Dutch direct investments in Central and Eastern Europe and Central Asia, Maastricht: Maastricht University Dissertation, forthcoming 2004
Langer, R.E., Gold, M.E. and M.A. Stoleson, “Private equity investing under Russia’s amended law on joint stock companies”, the metropolitan corporate counsel, 1 (2002), p. 6
La Porta, R. “ legal determinants of external finance”, Journal of Finance, 52 (1997), p. 1131-1150
Leeuw, A.C.J. de, Bedrijfskundige methodologie, management van onderzoek, Assen: Koninklijke van Gorcum B, 1996
Lijn, N. van der and I. Mikhalkin, Russian SME observatory Report, Tacis Project SMERUS 9803 of European Commission, Moscow: Russian SME Resource Center 2002
Lind van Wijngaarden, K. de, Strategies and characteristics of SME entrepreneurs going international, small business research and consultancy, Zoetermeer: EIM, 1997
Ministry of Economic affairs of the Netherlands, Emerging Markets, developments and perspectives, The Hague: Ministry of economic affairs, 2003
Moyart, M. of Bannock Consulting, Commercial Bank Intermediated Financing for SME development tin Central Asian Region: Issues and constraints, Workshop on Small and Medium sizeEnterprise financing in Asia, Manila: 2000
Nigrni, M. and A. Schoombee, “Credit guarantee schemes as an instrument to promote access to finance for small and medium enterprises: an analysis of Khula enterprise”, Development Bank of Southern Africa, 19, (2002), p.5
Nikkonen, A., The venture industry in Russia, prospects and realities, Moscow: Russian Venture Capital Association, 2003
Pissarides, F., “Is lack of funds the main obstacle to growth? EBRD’s experience with small and medium size business in Central and Eastern Europe”, Journal of business venturing, 14, (1999), 519-539
Pleitner, H, “Globalisation and entrepreneurship: entrepreneurs facing the ultimate challenge”, Journal of enterprising culture, 1, (1997), p. 27-55
Ross, S., Westerfield, J. and J. Jaffee, Corporate Finance, International Edition, The United States Of America: Mc Graw Hill, 2002, 6th edition
Russian-Ukrainian Legal Group, Chronicle of recent developments in Ukrainian legislation, Kiev:
Russian-Ukrainian Legal group, 2003.
Sarkisov, O., Leasing services in Russia, industry sector analysis, Moscow: U.S. & Foreign Commercial service and U.S. department of state, 2004
Scholtens, B., “Analytical Issues in External Financing Alternatives”, Small Business Finance, 12 (1999), p. 137-148
Shanmugam, B. and P. Bourke, “Biases in appraising credit worthiness”, International journal of bank marketing, 10, (1992), p. 10-16
Svejnar, J. “Transition Economies, performance and challenges”, Journal of economic perspective, 1, (2002), p. 3-28
Timmons, J. and W. Bygrave, “Venture capital: Reflections and projections” In: Sexton, D. and R.
Smilor, Entrepreneurship 2000, Chicago: Upstart Publishing, 1997
Unit Financial advisory Services, IFC SME financing needs and supply study, assessment of Albania, Bosnia and Herzegovina, Rotterdam: Ecorys-NEI 2000
Verheul, J. Rabo: Nederlandse bedrijven kiezen strategische markten in Oost-Europa, Doetinchem:
Agrarisch Dagblad, part of Reed Business Information, March 24, 2003
Verschoor, H., Policy recommendations for the sustainability of agricultural leasing in the Russian federation, Rotterdam: Ecorys-NEI, 2004
Verschoor, H., Policy paper on Venture Capital, Tacis SMERUS 9803 on support to the development of Small entrepreneurship, Rotterdam: Ecorys-NEI, 2002
Vorobyov, A., BISNIS representative in Ukraine, How do companies in Ukraine Finance their trade and investment deals, Kiev: U.S. Department of Commerce, 2003
Voronina, S., Commercial News Update Kazakhstan, Almaty: BISNIS, March 31, 2004
Wengel, J. ter, The facilitation of SME finance, review of the papers presented at the ADB/OECD workshop on Small and Medium size Enterprise financing in Asia, Amsterdam: Free University of Amsterdam, 2001
Westerman, W., Hollands glorie gaat Europees, financieel management bij directe buitenlandse investeringen in Europa, Groningen: Rijksuniversiteit Groningen, 2003
Winborg, J. and H. Landstrom, “Financial bootstrapping in Small Business, a research-based view on small business finance”, Frontiers of entrepreneurship research, USA: Babson Collage, 1997
Wijbenga, F., Strategy and performance of venture capital backed SMEs, entrepreneurial locus of control, and the role and influence of the venture capitalist, Capelle a.d. Ijssel: Labyrint Publications, 2004
Yegorov, I., Venture capital industry in Russia, a regulatory framework, Moscow: BISNIS, 2002
Yin, R., Case Study Research, Design and Methods, Newbury Park: Sage Publications, 1994.
Zwaan, A.H. van der, Organisatie-onderzoek, leerboek voor de praktijk: het ontwerp van onderzoek in organisaties, Assen: Koninklijke van Gorcum BV, 1990
B: Bibliography; sorted by topic
For all provided information sources counts: only those sources of which information is actually used in the report are named here.
Topic Main written documentation Border crossing
information about the three countries
Buiter, W. a.o., Transition report 2003, integration and regional cooperation, London: the stationary office publication center, 2003
Fries, S. a.o., The 2002 Business Environment and Enterprise Performance Survey:
Results from a survey of 6100 firms, working paper no. 84.,London: EBRD and WB, 2003
Ministry of Economic affairs of the Netherlands, Emerging Markets, developments and perspectives, The Hague: Ministry of economic affairs, 2003
Russia Buren, H. van, Russia Bulletin, Den Haag: Nederlands Centrum voor Handelsbevordering
Cleasby, G., U.S. and Foreign Commercial Service and U.S. Department of State, Russia Country Commercial Guide, FY 2004, US: U.S. and Foreign Commercial Service and U.S. Department of State, 2003
Ukraine Carrico, F., U.S. and Foreign Commercial Service and U.S. Department of State, Ukraine Country Commercial Guide, FY 2004, US: U.S. and Foreign Commercial Service and U.S. Department of State, 2003 Russian-Ukrainian Legal Group, Chronicle of recent developments in Ukrainian legislation, Kiev: Russian-Ukrainian Legal group, 2003.
Kazakhstan Buren, H. van, Nieuwsbrief Kazakstan, Den Haag: Nederlands Centrum voor Handelsbevordering
Fluker, J., U.S. and Foreign Commercial Service and U.S. Department of State, Kazakhstan Country Commercial Guide, FY 2004, US: U.S. and Foreign Commercial Service and U.S. Department of State, 2003
Financing instruments for SMEs in general and border crossing
Bouma, J.L., Financieringsinstrumenten voor ondernemingen in Nederland, ‘s Gravenhage: Delwel Uitgeverij B.V., 1996
Cook, P. of University of Manchester, “Issues in finance and SME development”, In:
ADB/OECD Workshop on Small and Medium size Enterprise financing in Asia, Manila:
2000
Cowling, M. “Is the small firms loan guarantee scheme hazardous for Banks or helpful to small business”, small business economics, 21, (2003), p. 63-71
Nigrni, M. and A. Schoombee, “Credit guarantee schemes as an instrument to promote access to finance for small and medium enterprises: an analysis of Khula enterprise”, Development Bank of Southern Africa, 19, (2002), 5
Unit Financial advisory Services, IFC SME financing needs and supply study, assessment of Albania, Bosnia and Herzegovina, Rotterdam: Ecorys-NEI 2000
Klapper, L. e.o., Small and Medium size enterprise financing in eastern Europe, policy research working paper 2933, development research group finance, Washington DC:
World Bank, 2002
Klein, D of Deutsche Bundesbank, “Life cycle needs for financing, development of efficient credit systems for SMEs: an overview”, In: ADB/OECD workshop on Small and Medium size Enterprise financing in Asia, Manila: 2000
La Porta, R. “ legal determinants of external finance”, Journal of Finance, 52 (1997), p.
1131-1150
Moyart, M. of Bannock Consulting, Commercial Bank Intermediated Financing for SME development tin Central Asian Region: Issues and constraints, Workshop on Small and Medium sizeEnterprise financing in Asia, Manila: 2000
Ross, S. a.o., Corporate Finance, International Edition, The United States Of America:
Mc Graw Hill, 2002, 6th edition
Leasing for SMEs Ross, S. a.o., Corporate Finance, International Edition, The United States Of America:
Mc Graw Hill, 2002, 6th edition, p. 587-605
Leasing for SMEs in Russia
Gidaspov, A., How do companies in Eurasia finance their trade and investment deals, Moscow: U.S. Department of Commerce, 2003 Verschoor, H., Policy recommendations for the sustainability of agricultural leasing in the Russian federation, Rotterdam: Ecorys-NEI, 2004
Lijn, N. van der a.o., Russian SME observatory Report, Tacis Project SMERUS 9803 of European Commission, Moscow: Russian SME Resource Center 2002
Sarkisov, O., Leasing services in Russia, industry sector analysis, Moscow: U.S. & Foreign Commercial service and U.S. department of state, 2004
Leasing for SMEs in Caproni, R. Leasing in Ukraine, manual by IFC Ukraine, leasing advisory project, Kiev:
IFC, 2000
Ukraine Vorobyov, A., BISNIS representative in Ukraine, How do companies in Ukraine Finance their trade and investment deals, Kiev: U.S. Department of Commerce, 2003
Leasing for SMEs in Kazakhstan
Kadrzhanova, A., BISNIS Representative, How do companies in Kazakhstan finance their trade and investment deals, Almaty: U.S. Department of Commerce, 2003 Freeman, R. a.o., Leasing in Central Asia, a snapshot of the leasing market in central Asia, Almaty:IFC, USAID, SECO, 2004
Loans for SMEs Forster, e.a., The state of microfinance in central and Eastern Europe and the New Independent states, Poland: Microfinance center, 2003
Loans for SMEs in Russia Fridman, M., Russian Banks: contribution to growth still low, presentation on Russian Banks, Moscow: Alfa bank, 2003
Gidaspov, A., How do companies in Eurasia finance their trade and investment deals, Moscow: U.S. Department of Commerce, 2003 Hubert, F. and Astrid Matthey, New strategies to finance small enterprises in Russia, Moscow: Humboldt University Berlin and Higher school of economics Moscow, 2003
Lijn, N. van der a.o., Russian SME observatory Report, Tacis Project SMERUS 9803 of European Commission, Moscow: Russian SME Resource Center 2002
Loans for SMEs in Ukraine
Vorobyov, A., BISNIS representative in Ukraine, How do companies in Ukraine Finance their trade and investment deals, Kiev: U.S. Department of Commerce, 2003
Loans for SMEs in Kazakhstan
Kadrzhanova, A., BISNIS Representative, How do companies in Kazakhstan finance their trade and investment deals, Almaty: U.S. Department of Commerce, 2003
Venture capital for SMEs Hartford, D., “How to work with a venture capitalist”, In: EVCA, A unique reference work on venture capital, Moscow: EVCA, 1998
Kumar, A. a.o., “Venture Capitalists' Screening Criteria”, The Journal for Decision Makers, Vol. 28 Issue 2, (2003), p 49
Wijbenga, F., Strategy and performance of venture capital backed SMEs, entrepreneurial locus of control, and the role and influence of the venture capitalist, Capelle a.d. Ijssel:
Labyrint Publications, 2004
Verschoor, H., Policy paper on Venture Capital, Tacis SMERUS 9803 on support to the development of Small entrepreneurship, Rotterdam: Ecorys-NEI, 2002
Venture Capital for SMEs in Russia
Gidaspov, A., How do companies in Eurasia finance their trade and investment deals, Moscow: U.S. Department of Commerce, 2003
Lijn, N. van der a.o., Russian SME observatory Report, Tacis Project SMERUS 9803 of European Commission, Moscow: Russian SME Resource Center 2002
Nikkonen, A., The venture industry in Russia, prospects and realities, Moscow: Russian Venture Capital Association, 2003
Venture Capital for SMEs in Ukraine
Vorobyov, A., BISNIS representative in Ukraine, How do companies in Ukraine Finance their trade and investment deals, Kiev: U.S. Department of Commerce, 2003
Venture Capital for SMEs in Kazakhstan
Kadrzhanova, A., BISNIS Representative, How do companies in Kazakhstan finance their trade and investment deals, Almaty: U.S. Department of Commerce, 2003
Needs for financing instruments of SMEs
Berggren, B. a.o, “Control Aversion and the Search for External Financing in Swedish SMEs”, Small Business Economics, 15, (2000) p. 233-242
Ross, S. a.o., Corporate Finance, International Edition, The United States Of America:
Mc Graw Hill, 2002, 6th edition, p. 438-440
Unit Financial advisory Services, IFC SME financing needs and supply study, assessment of Albania, Bosnia and Herzegovina, Rotterdam: Ecorys-NEI 2000
Scholtens, B., “Analytical Issues in External Financing Alternatives”, Small Business Finance, 12 (1999), p. 137-148
Wengel, J. ter, The facilitation of SME finance, review of the papers presented at the ADB/OECD workshop on Small and Medium size Enterprise financing in Asia, Amsterdam: Free University of Amsterdam, 2001
Westerman, W., Hollands glorie gaat Europees, financieel management bij directe buitenlandse investeringen in Europa, Groningen: Rijksuniversiteit Groningen, 2003
The selected group of SMEs in the three countries
Ministry of Economic affairs of the Netherlands, Emerging Markets, developments and perspectives, The Hague: Ministry of economic affairs, 2003
Kobsev, O and V. Yakubovich, specifics of farm produce processing and marketing in Ukraine, Kyiv: IFC, 2004
Laar, M. van de, Dutch direct investments in Central and Eastern Europe and Central Asia, Maastricht: Maastricht University Dissertation, forthcoming 2004
Lind van Wijngaarden, K. de, Strategies and characteristics of SME entrepreneurs going international, small business research and consultancy, Zoetermeer: EIM, 1997 Verheul, J. Rabo: Nederlandse bedrijven kiezen strategische markten in Oost-Europa, Doetinchem: Agrarisch Dagblad, part of Reed Business Information, March 24, 2003
C: Useful web-site addresses
Only the most frequently used website addresses are presented here:
www.export.gov Market research of the US commercial service on all countries www.bisnis.doc.gov BISNIS, research on the NIS countries, US founded
www.evd.nl PSO projects, market reports
www.ifc.org Activities IFC as well as financial reports on diverse countries www.ebrd.com Activities IFC as well as financial reports on diverse countries www.dnb.nl Statistics on FDI
www.ez.nl Ministry of economic affairs with research reports
Appendix II: Development banks and donor
organizations and their activities in the three selected countries
All information obtained from contacts with external communication managers of the organisations, web-sites of the organisations and through information from the following source: Forster, e.a., The state of microfinance in central and Eastern Europe and the New Independent states, Poland:
Microfinance center, 2003 (marked with *)
• Asian Development Bank (ADB), not active in Russia and Ukraine*
• Bank for International Settlements (BIS) only funds central banks, no private banks and individual companies
• Black Sea Trade and Development Bank (BSTDB), only focussed on Russia and Ukraine.
Mainly focussed on helping SMEs through financial intermediaries. Mail send to Miss Milena Markova, she will send an additional list of SME projects in the countries.
Information on the credit lines and other financial products are available on the internet through financial intermediaries In Russia KMB, Probissiness and ZAO Delta Leasing, Micro finance bank in Ukraine
• Blue Orchard Finance SA, not interesting focuses on funding micro finance programs only, not growth of small to medium sized enterprises, not operating at grass root level*
• Canadian International Development Agency (CIDA), Russian business Development Program, (AiDA, development gateway), not directly supporting SMEs
• Catholic Organisation for Relief and Development (CORDAID) has chosen the theme access to markets in selected developing countries, but not in Eastern Europe. They finance three kinds of investments under which the private sector. This private sector is elected to get finance if they invest it in the development of the core business group of CORDAID, for example poor local farmers. *
• Consultative Group to Assist the Poor (CGAP), focuses on micro finance only*
• Commerzbank AG, not lending directly to SMEs. Only refinancing Russian banks that lend to SMEs*
• DEG Deustche Investitions- und Entwicklungsgesellschaft m.b.H (DEG) funds start-ups as well as expansion, rationalization and modernization investments. DEG can also financially help Dutch companies to invest in emerging markets.
DEG is helping SMEs in two ways. Firstly, it directly finances SME projects and secondly it starts up long term projects with banks in emerging markets to make bank products
accessible to SMEs. DEG works in Russia, Ukraine and Kazakhstan and is shareholder of KMB bank in Russia and Turan Alem Bank in Kazakhstan.
• Department for International Development (DFID), sponsoring EBRD and EC Development programs, but no individual programs. Are generally doing research and giving advice and training.
• European Bank for Reconstruction and Development (EBRD), funding SMEs both directly and indirectly in Russia, Ukraine and Kazakhstan
• European Commision (EC), mainly directly financing TACIS program; technical assistance.
Not directly financing SMEs
• European Development Finance Institutions:
- AWS Austria Wirtschaftsservice Gesellschaft m.b.H., only supporting foreign investments of Austrian companies
- BIO Belgian Investment Company for Developing Countries, only in Kazakhstan possible to obtain funding. Special focus on SMEs in least developed countries - CDC Group, venture capital predominantly for SMEs, in general not investing in
Eastern Europe and central Asia, partly owning two umbrella venture funds - COFIDES Compañía Española de Financiación del Desarollo, only focussing on
Spanish companies
- DEG Deustche Investitions- und Entwicklungsgesellschaft m.b.H., see previous - FINNFUND Finnish Fund for Industrial Cooperation Ltd., only focussing on Finnish
companies or companies related to Finnish companies
- FMO Netherlands Development Finance Company, supporting SMEs in all three emerging countries
- IFU, IØ, IFV Danish International Investment Funds, only for partly Danish companies
- NORFUND Norwegian Investment Fund for Developing Countries, mainly focussed on providing venture capital to SMEs, but not really focussing on Eastern Europe and central Asia, partly owning two umbrella venture funds
- PROPARCO Société de Promotion et de Participation pour la Coopération Economique, not active in Eastern Europe, all kinds of financial products, also for other nations companies
- SBI-BMI Belgian Corporation for International Investment Belgian corporation of international investment, only for subsidiaries
- SIMEST Società Italiana per le Imprese all'Estero, only focussing on investments of Italian companies
- SWEDFUND Swedish Investment Fund for Developing Countries, mainly working with Swedish companies, many financial products
• Hivos Triodos Fund, active through KMB Bank. Venture capital fund under management, but this fund is not accessible SMEs.
• International Bank for Reconstruction and Development (IBRD), institutional lending, no direct financial products for SMEs
• International Finance Corporation (IFC), both active indirectly and directly in funding SMEs in all three countries
• International Fund for Agricultural Development (IFAD), not in Russia and Ukraine, only lending to Kazakhstan, but only lending to the government.*
• International Fund for Agricultural Development (IFAD), supporting rural finance locally, only active in Kazakhstan
• KFW entwicklungsbank; DEG is part of this German bank.
• Norwegian Agency for Development Cooperation(NORAD), mainly for Norwegian companies, not investing in selected countries*
• Oikocredit is not yet active in Russia, Ukraine and Kazakhstan, but is going to work in Ukraine on short term. Oikocredit normally provides credits to groups of people, such as groups of farmers. This is on small scale. Furthermore, Oikocredit provides credits to micro credit organisations and alternative trade organisations that promote trade of products of the underdeveloped countries.*
• Organisation for Economic Cooperation and Development (OECD), only research, no financial aid
• SINE, venture capital for Dutch companies, is currently not active, but negotiations are ungoing on succeeding the activities by the end of this year, or the beginning of next year *
• Small Enterprise Assistance Funds (SEAF) active in Kazakhstan, not in Ukraine and Russia.
• Swedish International development Agency (SIDA), two sectors private development and financial support, predominantly funding financial institutions.*
• Swiss Agency for Development and Cooperation (SADC). Small actions credit line in Russia and Ukraine, ongoing (AiDA development gateway)*
• UN Capital Development Fund, micro finance focus
• United Nations (UN), not directly financing SMEs
• US Agency for International Development (USAID), ongoing programme for the new independent states on accelerated growth of private enterprise sector and improved environment for Small and Medium sized enterprises in Ukraine, Russia and Kazakhstan
• US Department of Agriculture (USDA), credit through banks, no direct support*
• USDA, critical private markets expanded and strengthened in Russia, Ukraine and Kazakhstan (AiDA, development gateway)
• World Bank, no direct support to SMEs
Those development banks and donor organisations with activities in Russia, Ukraine and Kazakhstan focussed on giving (the focus group of ) SMEs access to finance are summarized in the following table:
Russia Ukraine Kazakhstan
EBRD IFC USAID KFW/DEG FMO SADC BSTDB
Hivos Triodos Fund
EBRD IFC USAID KFW/DEG FMO SADC BSTDB
Oikocredit (going to work in Ukraine)
EBRD IFC USAID KFW/DEG FMO IFAD SEAF ADB
Development banks and donor institutions active in the three selected countries focussed on giving (the focus group of) SMEs access to finance
Source: Work from author (2004)
Appendix III: Detailed description of characteristics IFOM-facility
Characteristics of the subordinated loan
Minimum amount 45.783 Euro
Maximum amount 2.300.000 Euro
Maximum % of total costs of investments funded 67%
Minimum pay back period 3 years
Maximum pay back period 12 years
Pay back schedule Linear, instalments per semester
Grace period Maximally 3 years
Interest rate Market conform (fixed for max. 5 years)
Nature of assets funded Tangible fixed assets Eligibility requirements
o Subsidiaries/joint ventures of Dutch SMEs; company maximally 250 employees, annual turnover < 40.000.000 Euro, total assets < 27.000.000 Euro
o Risk-capital of parent company in subsidiary/joint venture minimally 40% and minimally 50% of requested amount of IFOM-loan
o Value of the subsidiaries/joint ventures minimally 15% of total assets of the parent company including its affiliates
o The loan must be part of the business plan focussed on profitability and sustainability in the emerging market
o Companies involved must be profitable or expected to become profitable on short term o If the subsidiaries/joint ventures are not sufficiently independent, mother company has to
take financial responsibility, during the first two years (required corporate guarantee of two years).
Appendix IV: Model of Westerman on mix of financing instruments
Source: Westerman, W., Hollands glorie gaat Europees, financieel management bij directe buitenlandse investeringen in Europa, Groningen: Rijksuniversiteit Groningen, 2003, p. 84, figure 9
Appendix V: Loans and leasing available in Russia, Ukraine and Kazakhstan
The tables presented in this appendix show the availability of loans and leasing (IFOM-loan and venture capital excluded) represented in three categories, which are:
1. Amount of funding available 2. Period of funding available 3. Fundability of assets
The extent to what loans and leasing are available is shown by the gray-scale, which ranges from white to black. A lower gray-scale equals lower availability of loans and leasing instruments in the categories.
Amount of funding available Loans Leasing
Ru Uk Ka Ru Uk Ka 0 -100.000USD
100.000-200.000USD 200.000-300.000USD 300.000-400.000USD 400.000-500.000USD
Amount of funding available Loans Leasing
Ru Uk Ka Ru Uk Ka 500.000 -1 million USD
1 million -1,5 million USD 1,5 million -2 million USD 2 million -2,5 million USD
Terms of funding available Loans Leasing
Ru Uk Ka Ru Uk Ka 3 years
4 years 5 years 6 years 7 years 8 years 9 years 10 years
Fundable assets Loans Leasing
Ru Uk Ka Ru Uk Ka Re-deployable assets; equipment
Non-re-deployable assets; equipment Real estate
Appendix VI: Outline of forum discussion
Outline of forum discussion on financing instruments in Russia Date: Monday 26th of July
Place: Conferentiehotel Kontakt der Kontinenten in Soesterberg Time: 16.00-18.30 hour (drinks till 19.30 hour)
Present: Chairman and six participants
Structure of this outline:
-summary of the discussion of the participants structured by propositions -summary of discussed side topics
-short reflection on reaction of participants on presentation information material Mrs. Kloosterboer
Proposition 1:
Funding with a term of over 1 year is not accessible to my company in Russia
o Movable assets can be funded for terms > 1 year, for example with financial leases provided by Raifeissen leasing. The cost of leasing is high, mostly some 5-10% higher annually than bank loans with an effective yearly interest-rate of 33% counted some years ago. However, tax-advantages can be obtained. Other participants agree costs of funding in Russia are high.
o Fixed assets can hardly be financed, because of not well defined and effectuated property rights, which makes fixed assets less liquid and because of big differences between book value and fair value of fixed assets in Russia. Both these reasons make banks not eager to fund fixed assets. The mortgage market is however developing, but only in those more developed areas such as Moscow and St Petersburg.
o All participants agree on too high costs of local funding and therefore all represented firms fund their investment with means from Holland.
o In the primary agricultural sector companies have problems with finding funding locally.
Since all participants’ companies are directly supplying their products to this sector, they face clients in need of funding, rather than they need funding for investments themselves.
The competition position on the market is therefore to great extent influenced by the financial products a company can offer with its products. This is illustrated by the Danish machinery producers that say they can sell their products in Russia together with a financing construction. These products can be bought by Russian clients under a construction of paying 20% of the cost of the machinery upfront and paying the other 80% in equal annual payments in 4 years time. The Danish government is guaranteeing these loans of the Danish producers.
o All participants agree a guarantee fund provided by the Dutch government would be much more effective than subsidies such as PSO, because of the multiplier effect.
o Programs such as milk-loan project of Rabo Invest, where milk can be used to repay loans are accessible to larger size companies with a continious milk stream. This is similar for EBRD warehouse receipt programs in Russia and Ukraine.
Proposition 2:
My company is willing to pay interest rates of 12% on hard currency loans and of 20% of rouble denominated loans
o All participants agree that their companies do not want to fund investments with the expensive local means and rather fund with means from the Netherlands.
o Participants acknowledge that there is a big difference between funding the Dutch company in Russia and finding funding for the Dutch companies’ clients in Russia. Dutch companies mostly have financial alternatives in the home-country. Participants bring up the point that in Holland it is difficult to find means at financial institutions, because Dutch banks are not eager to fund investments for a company established in Russia. But, still own means (retained earnings) of the Dutch mother company can be used. The Russian client companies do not have such alternatives and actually use the expensive funding, although for them there is a real shortage of sufficient accessible funding. Russian companies therefore make most of their investments with grey and black money from the informal money market. Participants are guessing what part of the investments would be funded with this kind of money.
Numbers of around 70-80% are brought up. According to participants it is the government’s job to reduce money transactions in the grey and black circuit.
Proposition 3:
My company is willing to offer collateral of between 100-150% if this will give access to local funding
o This proposition is not dealt with, because local capital was considered to be too expensive and therefore local set requirements with regard to collateral do not by itself influence financing instruments used.
Proposition 4:
In Russia, movables can be financed, but construction of buildings cannot o All participants agree with this proposition
o Buyers credits secured by Artradius, are not considered to be of interest because of Artradius’ conditions. According to participants Artradius is not willing to secure investments in Russia, because it puts the country still in a very high risk category (category 7, which does not apply anymore). An example of uninteresting conditions is that when clients do pay one day late, Artradius wants to know this immediately and wants the money immediately as well. In this way companies can easily lose clients. Therefore a number of participants argues that it would be better for companies to use retained earnings for this purpose, but this is more difficult in the current situation in Russia, because prices have become more market conform.
o Three of the six participants were familiar with the IFOM-facility
Proposition 5:
Currently, my biggest financing problem is getting access to working capital funding and not to funding for capital investments
o All participants agreed on this proposition. In the stage of operation they are now, participants are not yet ready to make expansion investments, because they still have difficulties funding their daily operations. Competition position depends to large extent on
the funding facility companies can offer to their clients, which is highly related to the access companies have to
working capital. This working capital would preferably be obtained in the host country, since cash flows are often the host-countries’ currency.
o The expansion investments companies make are funded with retained earnings. Growth is slowed down by this kind of funding, but fast growth is not what the companies want especially not in this political unstable environment.
Proposition 6:
The mother company may never cover full risk of the Russian company, therefore a corporate guarantee is out of the question.
o A number of participants answer that because normally Russian activities are only small compared to mother’s companies activities a corporate guarantee would relatively be too heavy.
o Linked to this aspect one of the participants argues that for Dutch entrepreneurs it is very important to keep in charge, to keep control over the (money streams in the) company.
Therefore often-used constructions are partnerships with Russian companies, in which the Dutch partner holds around 67% of the shares and the Russian partner around 33%. The profit can than be divided as 50-50%. The Dutch partner brings in the money and the Russian partner takes care of operational management. The Russian partner needs to be involved to have a “roof”, which means to pay a fee for security of the company, often to policemen, who are backed by a broader network. All participants agree such a “roof” is essential.
Proposition 7:
When selling shares and therewith losing a part of the say in the company gives my company access to funding, I would consider it to be a potential funding opportunity.
o One of the participants makes a distinction between family owned companies and public owned listed companies. Other participants do not fully agree this distinction is correct. All participants agree however that giving away control over the companies is out of the question. One of the participants adds that management in Russia has much more power related to the money stream than is common in the western world. So, it should not be so much control on paper that matters but control in practice.
o Participants come to the conclusion that it is now up to the government to get investment out of the gray and black circuit to stimulate formal financial institutions. One participant adds his experience with going to court 4 times, winning 4 times and still having received no money after a long period. This money is even non-indexed. Therefore, companies prefer to arrange collection of the money through their own contacts, which is far more effective, but keeps the vicious cycle closed.
Side topics discussed
The current situation in the banking sector
o Participants argue they do not expect same crisis as in 1998, because the financial situation is currently far more normalized than it was in 1998, with a rouble rate representing fair value.
But, since the financial sector in Russia has always been full of surprises, all participants
show fear that some of their clients cannot pay-off their debts, because they have banking accounts in black listed and to be closed banks. This could lead to their companies running into liquidity problems.
When would local financing instruments be of interest to the participants’ companies?
o Number of participants starts to answer this question with remarks on both lack of trust in the banking system and lack of trust in the political and economical situation of the country, rather than speaking about the price of the instruments they argued to be too high in previous discussion. One of the participants has heard bad stories about local banks. Therefore, participants are not actively building up relationships with local banks.
Reaction of people in this Russian environment is twofold; one group expects Russia to improve even more and waits with investing till financing instruments are cheaper than they have become until now. And one group of people is insecure about the future and postpones investments till the climate has bettered.
o Participants agree the high risk investment climate makes entrepreneurs in Russia very careful with making investments. All participants are scared to face negative surprises.
Is there a difference between access to finance for fully western owned companies in Russia, half Western and half Russian companies in Russia and fully Russian owned companies and does the relationship with banks matter in this respect?
o Participant answer that in the beginning the western company will probably be better treated, but when it comes to business, all companies have to offer similar guarantees to obtain a loan. Other participants fully agree.
o There is a difference in size and reputation of the company and access to finance. For example the large Dutch company Profimi has access to credit facilities from local producers, because Russian companies trust this company according to the participant better than banks. Profimi can therefore offer its clients credit facilities as well.
Discussion of the information provided by Mrs. Kloosterboer Reactions:
o Companies active in the agro (processing) business can obtain subsidies on their loans. These subsidies are provided from money from the oblasts. This money is indeed used for agricultural investment subsidies. However, connections with subsidy providers are very important in this respect. Not all other participants were familiar with these subsidies.
o A number of the participants adds the submitted information is correct in their perception.
o Few of the participants seemed to be aware of the money streams of for example EBRD and IFC to local banks.
Appendix VII: Questionnaire used for case-studies
Interview met ondernemers van Nederlandse MKB-bedrijven met een dochteronderneming of joint-venture in Rusland
Datum:……….………
Starttijd interview:……… Eindtijd interview:……….
Naam:………
………..
Functie:………Uitgevoerd sinds:……….
Loopbaan:………
………
Onderdeel I:
Kenmerken van het moederbedrijf
1. Wat is de historie van het Nederlandse bedrijf (jaartal van opstart, doorgemaakte groei, aard van het bedrijf)?
……….
……….
………
2. Wat zijn de doelen en de strategie die het Nederlandse bedrijf nastreeft?
……….
………
3. Wat is de core competence van het Nederlandse bedrijf?
………
………
4. Hoe staat het Nederlandse bedrijf juridisch gezien in relatie tot de Russische onderneming (hoofdelijke aansprakelijkheid, andere lasten/plichten)?
………..
………..
……….
5. Hoe staat het Nederlandse bedrijf organisatorisch gezien in relatie tot het Russische bedrijf?
……….
……….
……….
6. Wat was de totale omzet, de winst en het aantal werknemers van het bedrijf in Nederland in de laatste drie jaar?
Year Turnover before tax (in Euro’s)
Profit before tax (in Euro’s)
Number of employees
2003 2002 2001
7. Worden de beslissingen om in het buitenland te investeren geheel of gedeeltelijk bij het Nederlandse bedrijf gemaakt?
1 [] Ja, geheel Nederlandse beslissing
2 [] Ja, beslissing van Nederlands bedrijf in overleg met
overige eigenaren
3 [] Nee, de beslissing wordt door onze buitenlandse partners gemaakt.
Indien dit antwoord gegeven wordt, alternatieve vragen stellen.
Onderdeel II:
Algemene kenmerken van de Russische dochteronderneming of joint-venture
1. Wat is de historie van het Russische bedrijf (jaartal van opstart, doorgemaakte groei, aard van het bedrijf)?
……….
……….
………
2. Waar is het Russische bedrijf gelokaliseerd en waarom in Rusland op die locatie?
………..
………..
………..
3. Wat zijn de doelen en de strategie die het Russische bedrijf nastreeft?
……….
………
………
4. Wat is de core competence van het Russische bedrijf?
………
………
………
5. Welke producten worden door het Russische bedrijf vervaardigt?
………
………
6. Van welke technologie wordt hiervoor gebruik gemaakt (bedrijfs-specifiek, afschrijvings-periode, land van oorsprong)?
………
………
………
7. Onder welke juridische structuur opereert het Russische bedrijf?
………
………
8. Welke wetgeving is op het Russische bedrijf van toepassing?
………
9. Wie zijn de belangrijkste eigenaren van het Russische bedrijf?
………
………
10. Hoe is het Russische bedrijf georganiseerd en waar liggen de (financiële) verantwoordelijkheden, zowel operationeel als strategisch?
………
………
………
11. Welke loopbaan hebben de financieel verantwoordelijken doorlopen?
………
……….
………
12. Wat was de totale omzet, de winst en het aantal werknemers van uw bedrijf in Rusland in de laatste drie jaar?
Year Turnover before tax (in Euro’s)
Profit before tax (in Euro’s)
Number of employees
2003 2002 2001
13. Welke mate van (winst)groei streeft het Russische bedrijf na (%)?
……….
……….
Onderdeel III:
Financiële kenmerken van de Russische dochteronderneming of joint-venture 1. Wat zijn de voornaamste inkomstenbronnen van het Russische bedrijf?
……….
………..
2. Wat zijn de voornaamste uitgavenposten van het Russische bedrijf?
………..
……….
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3. Hoe ziet de (vrije) cash-flow stroom eruit (wanneer, groote)?
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……….
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4. Hoe groot is het risico van uw bedrijfsinkomsten en waarop baseert u dit risico (seizoens-gebondenheid, afhankelijkheid in waardeketen)?
………
………..
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Onderdeel IV:
Financiering van de Russische dochteronderneming of joint-venture
1. Welke manieren van financiering zijn onderzocht om destijds de initiële investering in Rusland te kunnen financieren?
……….
………
……….
2. Wie heeft bij de initiële investering beslist over het financieringsvraagstuk en hoe kwam deze beslissing tot stand?
………
………
3. Voor welke bron van financiering is gekozen en waarom?
………..
………..
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4. Voor welke vorm van financiering is gekozen en waarom?
………
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5. Was dit ook het type financiering dat aanvankelijk gewenst was, zo nee waarom niet?
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Onderdeel V:
Financiering van de (potentiële) uitbreidingsinvestering van de Russische dochteronderneming of joint-venture
20. Heeft u reeds een (kapitaal-) uitbreidingsinvestering in Rusland gemaakt?
Zo nee, zie vraag 21 Zo ja,
a. Wanneer heeft u deze investering gedaan?………
b. Wie heeft beslist over het financieringsvraagstuk en hoe kwam deze beslissing tot stand?………
………
c. Waarom heeft u de investering gedaan (strategische waarde)?
………..
……….
………
d. Wat was de aard van de investering (met inbegrip van risico en IRR)?
……….………
………..
………
e. Welk bedrag was gemoeid met de investering?
………
f. Voor welk bedrag en deel (activa/werkkapitaal) werd externe financiering gezocht?
………
………
g. Welke zekerheden kon het Russische bedrijf de financier bieden?
………..
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h. Welke zekerheden bood de moeder de financier?
………..
………
i. Voor welke periode was financiering nodig?………..
………..
……….
j. Voor welke bron van financiering werd gekozen om de uitbreidingsinvestering te financieren en waarom?………
………
………
k. Welk financieringsinstrument is gekozen om de uitbreidingsinvestering te
financieren……….
………..
l. Waarom is gekozen voor dit financieringsinstrument?………
………
….………
…….………
……….………
m. Welke andere financieringsmogelijkheden zijn bekeken?……….
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………
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n. Waarom heeft u niet voor andere financieringsinstrumenten gekozen? Let op control/risk behavior
………..
…….……….
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21. Zo nee,
a. Waarom is er nog geen uitbreidingsinvestering gedaan?……….
………..
………...
Indien dit niet gelukt is om financieringsredenen of indien er plannen zijn om op korte termijn een uitbreidingsinvestering te doen, ga verder met vraag b
b.1 Wie beslist er/ zal er beslissen over het financieringsvraagstuk en hoe komt deze beslissing tot stand?
………
………
……….
b.2 Wat is/was de aard van de investering (met inbegrip van risico en IRR)?
………..
………
………
b.3 Was deze investering van strategische waarde/ zal deze investering van strategische waarde zijn, waarom wel/waarom niet?……….
………
b.4 Welk bedrag was gemoeid met de investering/ zal gemoeid zijn met de investering?
………
b.5 Voor welk bedrag en deel (activa/werkkapitaal) werd externe financiering gezocht/
zal externe financiering gezocht worden?
………
………
b.6 Welke zekerheden bood het Russische bedrijf de financier/ zal het Russische bedrijf kunnen bieden?
………..
……….
b.7 Welke zekerheden bood de moeder de financier/ zal de moeder de financier kunnen bieden?
………..
………
b.8 Voor welke periode was financiering nodig/ zal financiering nodig zijn ?……
………..
……….
b.9 Voor welke bron van financiering werd gekozen/ zal gekozen worden om de uitbreidingsinvestering te financieren en waarom?………
………
………
b.10 Welk financieringsinstrument is gekozen/ zal gekozen worden om de uitbreidingsinvestering te financieren?
………..
b.11 Waarom is gekozen/ zou gekozen worden voor dit financieringsinstrument?……
……….
……….
……….
………
b.12 Welke andere financieringsmogelijkheden zijn bekeken/ wilt u nog andere financieringsmogelijkheden gaan bekijken?……….
………
………
b.13 Waarom heeft u niet voor andere financieringsinstrumenten gekozen/ wilt u niet voor andere financieringsinstrumenten kiezen? Let op control/risk behavior
……….
………
………
……….
………. …
Onderdeel VI:
Overig
22. Heeft het Russische bedrijf contacten opgebouwd met lokale financiers (credit history)?
……….
………
……….
23. Vraag om : de jaarrekeningen (balans +resultatenrekening) van de afgelopen drie jaar van het Russische bedrijf kunnen verkrijgen om de verhouding VV/EV, de reserves en de aanwezige activa te kunnen bekijken?
Einde
