36493 CONTENTS IFC Directors' Message 2 General Manager's Message 4 Overview 6 Highlights 8 Access to Finance 12 SEDF Annual Report Calendar Year 2003 Access to Business Services and Sub-Sector Development 16 Business Enabling Environment 26 Special Projects, Linkages, and Sustainability 32 Acronyms 35 Financial Report 36 Summary of Results 38 2 IFC Directors' Message As in other parts of the world, South Asia's small and medium enterprises SMEs are also often cut off from necessary information, leaving them in great (SMEs) are at the heart of economic growth, creating economic opportunity and need of performance-enhancing services. SEDF is doing much to widen the reducing poverty for millions. Their vitality is all the more impressive in the impact of local service providers such as those from the Bangladesh University light of the constraints that they face in this region-heavy regulations, difficulty of Engineering and Technology (BUET) and others that target the vital ready- in raising financing, lack of professional services to support their growth, made garment sector, which provides more than 1.5 million direct jobs in barriers to entering markets, and lack of infrastructure. Bangladesh. By strengthening the skills of local consultants, SEDF is helping garment producers grow more competitive in the key areas where buyers judge Our goal, through SEDF, is to help reduce those constraints so that SMEs benefit them against foreign rivals: price, quality, and speed of delivery. from improved access to capital, higher quality and more appropriately priced business services, and a more favorable business environment. Simultaneous On the business enabling environment front, SEDF's initial efforts include work progress in these three areas is critical to creating jobs, raising income, and to identify key obstacles to increased trade between SMEs in Bangladesh and improving productivity. North East India and to find ways to address them, and work with regulatory agencies to reduce the time taken to register new businesses. The agenda begins with financing. Banks are often reluctant to lend to smaller firms. Viable new formulas must be developed that work well for lender and borrower alike. For example, SEDF is partnering with five leading banks in Bangladesh to provide an integrated package of training in key functions like credit analysis and scoring, human resources, portfolio management and others. Exposing banks to proven leaders in this field from outside the region such as the Philippines is another way in which SEDF is encouraging new approaches to SME lending that will enable many local entrepreneurs to gain greater access to capital. IFC DIRECTORS' MESSAGE 3 Harold Rosen Dimitris Tsitsiragos We see SEDF as an important component of IFC's larger program of work in the The common aim of all these activities is to tackle the constraints that hold back region­investing in private financial institutions, private infrastructure projects, the small business sector from reaching its full potential. By doing so, small microfinance, and larger companies that provide opportunities for small businesses can make an enormous contribution to reducing poverty and business in their supply chains. IFC in turn is part of the overall World Bank improving the quality of life throughout the region, generating income and Group effort in the region to encourage the creation of a business environment employment in big cities and remote rural areas alike. conducive to private enterprise. World Bank lending, research and policy advice to governments; IFC loan and equity investments and technical assistance; and SEDF technical assistance come together as complementary activities towards the same end. Through SEDF, we are able to combine resources with other donors, which will allow us to achieve many important results. HAROLD ROSEN DIMITRIS TSITSIRAGOS Director, Director, Small and Medium South Asia Department Enterprise Department International Finance Corporation World Bank Group World Bank Group 4 General Manager's Message SEDF team with donor representatives. I am extremely pleased to write this message at the end of SEDF's first 15 months SEDF's response has been multi-pronged, using strategies to improve the of operations which have been very productive. In economies dominated on the business enabling environment and improve access to capital and business one hand by vast numbers of low-productivity informal enterprises and the services. The ultimate goal is to strengthen these enterprises and develop them other by a handful of large enterprises that receive the lion's share of existing into effective, profitable entities. resources, we are promoting broader-based economic growth by encouraging the growth of the `missing middle': small and medium enterprises. What makes us different from others in this field? The key distinction lies in the partnership between development agencies which underpins SEDF. We are There are approximately 27,000 medium and 150,000 small enterprises in proud of the combined commercial and developmental mindset that comes Bangladesh. In North East India, the missing middle is represented by with being part of IFC's South Asia Department with support from the World approximately 18,000 medium enterprises (assets larger than US$450,000) and Bank Group's SME Department. They provide us with expertise and 47,000 registered small enterprises (assets less than US$450,000 ­mostly at the international best practices, including access to a longstanding global network smaller end). Nepal has approximately 4,000 registered enterprises that employ of client relationships and acceptance in the financial and corporate worlds as ten or more workers mostly at the small end while Bhutan has roughly 200 well as the development community. We feel IFC brings a business-like mostly small, registered companies. approach to development, one that is pragmatic, promotes lasting homegrown solutions and delivers measurable results without distorting the marketplace. These enterprises have the potential to create jobs and livelihoods, and provide We judge our work's bottom line by impact on companies, industry sub-sectors, products and services to their communities, but need help getting there. SEDF and ultimately the SME sector through a continuous process of monitoring and intends to bring well-targeted forms of support that have been shown to work tracking of projects. in other markets and can be adopted and transferred to this region, preferably for long-term delivery by local players according to market principles to these enterprises. GENERAL MANAGER'S MESSAGE 5 Anil Sinha We also receive invaluable support from the Royal Netherlands Government, SEDF DONORS the UK Department of International Development (DFID), the European Commission (EC), CIDA of Canada, NORAD of Norway and the Asian Development Bank, all of whom have committed funds for five years of SEDF's operation and participate in the oversight of SEDF's work. We have been very SEDF ADVISORY PANEL 2003 fortunate to have advice from a distinguished panel of advisors. I am most To make sure its work is well grounded in local realities, SEDF has been receiving strategic grateful to them and to the various ministries and statutory bodies in guidance from an advisory group of Bangladesh business leaders: Bangladesh, Bhutan, India and Nepal for their cooperation. Finally I must Anisul Haque Chowdhury Secretary, External Resource Division, Ministry of acknowledge the efforts of my dedicated team who have made it possible to Finance (retired), Government of Bangladesh achieve so much already. Syed Manzoor Elahi Chairman, Banker's Association of Bangladesh (BAB) I realize that there is still some ways to go before we can realize all our goals, Yusuf A. Harun President, Federation of Bangladesh Chamber of but all indicators show that SEDF will be able to add value to this important Commerce & Industry (FBCCI) (Former) sector which has potential to bring about economic gains and raise the income Rokia A. Rahman Chairperson, Women's Entrepreneurs Association (WEA) of the people of South Asia. Amjad Khan Chowdhury Chief Executive, Bangladesh Agro Processing Association (BAPA) Amir Humayun Mahmud Chowdhury President, Chittagong Chamber of Commerce and Industry (CCCI) C.M. Alam Managing Director, Industrial Promotion and ANIL SINHA Development Corporation (IPDC) General Manager, SEDF Hafeezuddin Ahmad Resident Representative, IFC 6 Overview The SME sector in Bangladesh and the surrounding region is for the most part still underdeveloped and uncompetitive internationally. SEDF's over-arching objective is to strengthen it through the introduction of international best practices--and thus contribute to reduction in poverty. Strengthening the `Missing Middle' The biggest challenge for developing countries in today's highly competitive Currently, SMEs in our region (as in many other lower-income areas) are limited and increasingly globalized world is in fact a three-fold one: accelerating to a handful of industries with low value-added activities and that use very economic growth, creating lasting jobs, and reducing poverty. These countries basic technology. These enterprises face many obstacles including limited have economies characterized by low foreign investment, high formal sector access to finance, lack of management skills, a fragmented regulatory and unemployment and underemployment of existing human resources. Much of policy framework, and growing international competition. their economic future revolves around stimulating domestic private sectors largely made up of small and medium enterprises (SMEs), the key source of SEDF, with the help of its partners in the public and private sector, responds by employment growth. providing SMEs with: These smaller firms often have great potential that has rarely been realized. For · Access to finance the most part, SMEs are still underdeveloped and represent the `missing · Access to business services and development of key sub-sectors such as middle' in the structure of the developing world's private sector. Business garments, light engineering, agribusinesses and information technology environments in many countries usually still work against them and the financing and performance-enhancing business services they need are often not · Support for an improved business enabling environment readily available. In response, the World Bank Group, through IFC, has recently accelerated its efforts to create better environments for small businesses in its · Assistance on special projects, including those involving linkages with member countries by increasing the number of multi-donor SME facilities it larger firms operates in frontier market regions around the world. As part of this global program, SEDF was launched in October 2002. OVERVIEW 7 Increase Access to Finance Increase Access to Business Services and Sub-Sector Development SEDF SME Performance and Competitiveness Increased Economic Growth Poverty Reduction Improve Business Environment Special Projects -Linkages -Sustainability While the primary thrust of SEDF's work is in Bangladesh, in keeping with ACCESS TO FINANCE donor requirements, we also operate smaller programs in Nepal, Bhutan and North East India. SEDF does not provide direct financing to SMEs. Instead, it helps local financial institutions make financing more readily available to SMEs. This is mainly done SEDF has been funded for five years by IFC, the Royal Netherlands through (i) assistance in training program for banks and other financial Government, Department of International Development of UK, European institutions; (ii) technical assistance to partner financial institutions (PFIs); Commission, CIDA of Canada, NORAD of Norway, and the Asian (iii) development of new financial products; and (iv) direct assistance to SMEs Development Bank. We operate with helpful input from an advisory panel that referred by PFIs. includes senior representatives from Government, banks, business associations, and private companies. ACCESS TO BUSINESS SERVICES AND SUB-SECTOR DEVELOPMENT These services include providing access to information, marketing, The Three Pillars of Small Business Development management, technology and strategic planning assistance as well as IFC's experience shows that SMEs in the developing world have three basic developing linkages with large companies (tapping into the vast potential of requirements for growth. They are: access to finance, an improved business business and community development opportunities posed by major enabling environment, and access to business development services. SEDF's investment projects). strategy follows these three pillars of small business development to strengthen BUSINESS ENABLING ENVIRONMENT SMEs and ensure their sustainable growth. All SEDF projects fall under these broad categories. Under this pillar, SEDF tries to remove some of the constraints that are harder for small and mid-sized firms to overcome compared to their bigger counterparts. This can be in the form of research and advice to identify and help overcome the key obstacles in business formation, operation and expansion. 8 Highlights A summary of SEDF's achievements during its first 15 months of operations. Mr. Dimitris Tsitsiragos, Director South Asia IFC (right) and His Excellency the Ambassador and Head of Delegation of the EC, Mr. Esko Kentrschynskyj (left), exchanging documents to commemorate EC as SEDF's donor. This is the first time that IFC and the EC have joined hands in SME development. Others from right: Mr. Anil Sinha GM SEDF, Mr. Suhel Ahmed Chowdhury, Secretary, Ministry of Commerce, Mr. Yusuf Abdullah Harun, President, FBCCI, Mr. Matiur Rahman, President, DCCI, and Mr. Hafeezuddin Ahmad, Resident Representative, IFC. Bangladesh ACCESS TO BUSINESS SERVICES AND SUB-SECTOR DEVELOPMENT ACCESS TO FINANCE · SEDF is working directly with about 60 companies and also implementing integrated sub-sector development programs in garments, agribusiness, · Direct assistance is being provided to nine Partner Financial Institutions information technology, and light engineering. (PFIs). New products like factoring and credit scoring have been introduced. Five of the PFIs have reported the following improvements in · Following up on the successful negotiations of the Minister of Commerce, SME lending over the past 12 months: Mr. Amir Khosru Mahmud Chowdhury, leading to a free trade agreement between Bangladesh and Canada in January 2003, SEDF worked together - Additional SMEs financed: 6,055 with Canadian trade bodies, Federation of Bangladesh Chamber of - Increase in term loans to SMEs: Tk. 3,007.60 million Commerce & Industry (FBCCI) and Dhaka Chamber of Commerce & (US$52 million) Industry (DCCI) to make the private sector in Canada and Bangladesh aware of this opportunity. - Increase in staff handling SME portfolio: 81 persons · The first Bangladesh garments fair was organized in Montreal and Toronto · Training of local financial institutions: 424 bankers trained. Joint training to capitalize on Canada's quota free status. Orders worth about US$100 program with Bangladesh Bank (the central bank) underway in five core million are under discussion. Bangladesh Garments Manufacturers & risk areas. Plan is to train about 1,000 bankers by 2005. Exporters Association (BGMEA) and the Ministry of Commerce have complimented SEDF for this intervention. BGMEA expects exports to · Corporate governance workshop organized with the Netherlands Canada to double in the next year. Development Finance Company (FMO), recommendations accepted by the Bangladesh Bank and new law passed, including some of these · A Canadian trade mission of eleven Canadian firms signed Memorandum recommendations. of Understandings (MoUs) worth in excess of US$11.5 million with Bangladeshi companies. TradeHIGHLIGHTS Gothic 12pt 9 SEDF is working with Pran Group to reduce post-harvest losses in cereal production. · Technical assistance to improve productivity provided to foundries and · The first international seminar and trade fair "Agri-Invest 2003" was machine shops using a group of local consultants supported by SEDF organized in partnership with the Ministry of Agriculture and Board of experts. The savings already realized by four foundries in one quarter Investment. This initiative was recognized by the Honorable Prime alone is BDT 1 million (US$167,000). Minister Begum Khaleda Zia and key stakeholders. In addition, 10 agribusiness companies are being assisted to develop their business. · Examples from the IT sector: · SEDF sponsored women entrepreneurs for international training and training - Millennium Information Solution Ltd (MISL) supported in obtaining new contracts worth US$1,900,000 of trainers programs in Thailand which helped them expand their product lines and train others. SEDF assisted the Chittagong Women Entrepreneurs - Technical Assistance provided to CSL Software Resources Ltd in MIS Association (CWE) to organize a month-long trade fair for SMEs in software implementation capacity, thereby enhancing their ability to Chittagong in December 2003. The trade fair resulted in sale of about BDT 20 execute additional business worth US$100,000 million (US$334,000) of which about BDT 13 million (US$217,000) was from companies owned by women entrepreneurs. - 1800 hours of training to develop animation skills has enabled Globekids Ltd to successfully bid for new contracts in local and foreign · Twenty-five local case writers trained at a Case Method Workshop on the markets case writing and teaching methodology of Richard Ivey School of Business, · SEDF has assisted Superior Footwear Co. Ltd. (SFL), obtain European Canada, to meet the need for developing local context based case studies in certification for selling its products in the European Union. SFL is the first Bangladesh. Other achievements: company to do so in the personal protective equipment (PPE) sector. · Management training for SMEs: 140 persons paid for SEDF/local partners' courses · 10 Business development service providers being assisted 10 HIGHLIGHTS BUSINESS ENABLING ENVIRONMENT · Joint finalization and dissemination of Investment Climate Assessment (ICA) with the World Bank and the Bangladesh Enterprise Institute (BEI). Follow-up activities: (i) Semi-annual surveys of SMEs (ii) Improvement of company registration process ­ first phase completed. At the request of Ministry of Commerce, second phase, to automate Registrar of Joint Stock Companies underway · Joint FIAS ­ SEDF study to review investment incentives at the request of Board of Investment (BOI) and review of VAT in agribusiness sector with National Board of Revenue (NBR) is underway. Some useful VAT policy changes announced in last budget. · SEDF is also supporting the launch of the SME task force which will review and make recommendations on SME issues such as definition of SMEs, promoting access to technology and finance, and institutional support. Mr. Anil Sinha GM SEDF speaking at the Inaugural Ceremony of the Agri-Invest 2003 Bangladesh. Begum Khaleda Zia, Dr. Kamaluddin Siddiqui, Principal Secretary Prime Ministers' Office, chairs a seminar organized by SEDF. The panel Hon'ble Prime Minister of Bangladesh, Mr. M. Saifur Rahman, Hon'ble Finance Minister, Mr. Mirza Fakhrul Islam included Mr. Zakir Khan, Secretary of Finance, Mr. Mahmudur Rahman, BOI Executive Chairman, Mr. Mirza Fakhrul Islam Alamgir, Hon'ble State Minister of Agriculture and Mr. Mahmudur Rahman, BOI Executive Chairman (first left) are Alamgir, Hon'ble State Minister of Agriculture, Mr. Anil Sinha GM SEDF, and other members of the committee. seated on the dais. HIGHLIGHTS 11 North East India ACCESS TO FINANCE BUSINESS ENABLING ENVIRONMENT Training programs and training of trainer programs organized for 30 persons Study on constraints to trade between North East India and Bangladesh from 10 Financial Institutions in Assam, Meghalaya and Tripura. Training of conducted for the Chambers of Commerce on both sides of the border, Tripura Trainer programs held in the Indian Institute of Bank Management (IIBM) in and Chittagong. Recommendations accepted and under implementation by the credit analysis, reconstructions of financial statements and introduction to authorities. Follow-up report on constraints to financing trade also well credit scoring. Cooperation agreements finalized with North East received. Programs to implement recommendations underway. Development Financial Institution (NEDFI) and Small Industry Development Bank of India (SIDBI). Bhutan ACCESS TO BUSINESS SERVICES ACCESS TO FINANCE Program underway with Indian Institute of Entrepreneurs to provide them Training programs on SME credit analysis conducted for 49 bankers in two access to training and business development service tools. Working with six cities, Thimphu and Phuentsholing. The courses gave loan officers in these selected local private consultants and supporting them to provide consulting remote areas access to international-standard industry knowledge on services to private companies. evaluating SME financial risks, with or without reliable company accounts. It also enabled them to understand and apply key concepts such as cash flow and budget analysis when considering loan applications. Seminar delegates and SEDF officials at a meeting organized by India's North East Chamber of Commerce & Industry (NECCI) in collaboration with SEDF to promote trade between North East India and Bangladesh. 12 Access to Finance Limited access to finance, specially medium-term loans, is a major constraint for SMEs in Bangladesh and the surrounding region. SEDF puts its major emphasis on building the skills of local private sector financial institutions so they can lend profitably to SMEs--easing entrepreneurs' capital crunch. Making Finance SME-Friendly Access to capital, especially term financing is a major obstacle facing the SME Most financial institutions in Bangladesh have a poor track record when it sector in Bangladesh and SEDF's other target countries. Small firms may have comes to efficiency of operations and loan recovery. SEDF's target is to increase the right combination of entrepreneurial drive, skilled staff, and market operational efficiency and introduce a modern approach to lending. This will receptivity, yet they can still be hindered by local financial institutions that benefit both the institutions in terms of performance and lending portfolio and consider them too risky and will not finance their start-up or expansion more importantly, the client SMEs. activities. But so long as the local financial sector invests only in large enterprises and remains reluctant to venture into the SME sector, there will be PARTNERING WITH LOCAL FINANCIAL INSTITUTIONS no significant progress in developing the domestic economy's entrepreneurial To begin the process of strengthening a local institution's delivery of SME potential. finance products, SEDF performs an initial `diagnostic' (an analysis of the This is why SEDF devotes most of its resources to increasing SMEs' access to institution's capacity.) A report is then submitted to the institution consisting of finance. We work closely with private sector financial institutions as well as possible strategies to make SME lending efficient and rewarding. non-banking financial institutions to make them more SME-friendly by Once the diagnostic and strategy sessions have been completed, SEDF bringing about a change in their culture and performance in serving SME implements its support through an integrated process: clients. Much of this involves transferring successful models and expertise from other markets, such as those that we have recently brought to Bangladesh from Generic Financial Training IFC-investee institutions such as Planters Bank in the Philippines and Lanka Sector Assistance SME FINANCE Policy Advocacy Orix Factoring in Sri Lanka, as well as from other international experts. ACTIVITIES Specific FI Capacity Technical Assistance Building New Products/Processes ACCESS TO FINANCE 13 Performance Summary of Bangladesh Partner Financial Institutions Description Dec-02 Dec-03 Growth No of SME Clients 3,383 9,438 179% SME Portfolio (BDT million) 7,817.60 10,825.20 38% (US$135 million) (US$187 million) Loan Processing Cycle (Days) 29 26 11% Dedicated SME Staff in PFIs 56 137 145% Participants from local banks at a workshop held in Bangladesh Bank's offices organized in collaboration with SEDF. 1) GENERIC TRAINING TO FINANCIAL SECTORS We help train groups of local 3) NEW INITIATIVES AND PRODUCTS By channeling international best practices bankers using proven modules and courses from other financial institutions and emerging trends in SME financing, SEDF helps partner institutions develop with a good track record of profitably serving SMEs. Training is provided in new financial instruments, products and services that will deepen the SME numerous areas such as corporate governance, industry analysis, financing market. Credit scoring, for instance, is an innovative method used reconstruction of financial statements, credit scoring and credit risk and lending worldwide to efficiently screen and rate reliable borrowers. to the SME sector. 2) SPECIFIC TECHNICAL ASSISTANCE TO PARTNER FINANCIAL INSTITUTIONS SEDF signs partnership agreements (MOUs) with interested and qualifying financial institutions that have shown their commitment to providing loans to SMEs. Initial baseline data is collected and clear targets set so that success can be monitored, after which customized technical assistance is provided on a cost- sharing basis. Financial institutions share parts of the cost of the technical assistance, which adds value to the program with greater involvement and commitment on the part of the client. Specifically, SEDF's technical assistance concentrates on formulating SME strategy, and assists in implementing these strategies through tailor-made technical assistance programs. These include: (i) developing a Management Information System (MIS), (ii) implementing credit scoring, and (iii) improving human resource management. A workshop on Asset Liability Management organized by SEDF for Partner Financial Institutions. For such workshops, international consultants are hired who share their expertise on specific subjects and train trainers. 14 ACCESS TO FINANCE Extending the Reach of Financial Services FACTORING ­ ACCESS TO WORKING CAPITAL NORTH EAST INDIA Once a popular locale favored by the British, Shillong is no In addition to being denied access to term financing, SMEs are also constantly longer just a bustling tourist spot but also the seat of government for the State plagued by lack of adequate working capital for daily requirements of raw of Meghalaya, one of the "seven sisters" of the Indian North East. Within India, materials, labor payments, and general administration. To address this need, it can only be accessed by road from Guwahati, which is approximately four SEDF has now introduced to the Bangladeshi financial sector a proven hours drive. Many branches of government banks and regional banks operate product known as factoring that allows small firms to obtain cash against bills in and around Shillong, but are cut off from global knowledge on modern tools owed to them by large corporations. of SME lending. Factoring improves SMEs' cash flow, allows them to reap the benefits of the good rating of their large clients, and eliminates the need for collateral and SEDF conducted workshops on `Reconstruction of Financial Statements and other conditions related to SME lending. Credit Scoring', with participants from five financial institutions comprising regional banks, the State Bank of India, and private banks in Guwahati and This year, SEDF completed a project to develop the local and international Shillong. factoring capabilities of a leading leasing company, IFC-investee Industrial Development Leasing Company of Bangladesh Ltd. (IDLC). SEDF conducted SEDF also trained two faculty members of the premier bank training institute in a diagnostic study and drafted a strategy paper as well as a detailed plan to North East India, the Indian Institute of Bank Management (IIBM). These implement the factoring process. This formed the basis for further practical faculty members were involved in supervising the above training workshop. implementation assistance to IDLC in this area. The CEO of Lanka Orix Factoring, a well-reputed Sri Lankan factoring company and also an IFC SEDF training programs in NEI have three main components: investee visited IDLC and his hand-on advice proved extremely helpful. · Evaluating risks associated with the financial situation of SMEs through an The impact of the project is already visible. IDLC has now started factoring. analysis of qualitative and quantitative verification, with or without Its total disbursement in factoring has already amounted to about US$3 reliable company accounts. million, most of which went to SME clients. · Understanding and applying the key concepts of financial analysis to SME KEY RESULTS risk, particularly through cash flow and budget analysis. · Motivating the existing banking culture to be more SME-oriented · Identifying viable projects and/or viable SME clients through use of modern screening tools. · Introducing a modern approach to banking in Bhutan and North East India · Introducing new banking techniques such as credit scoring using interactive (DVD) The training was the first of its kind and enthusiastically received by participating learning tools bankers. Such practical, results-driven training programs for bankers are rare in Meghalaya and SEDF's training program attracted bankers from not only · Introducing new SME lending products, such as factoring and credit rating Shillong itself but also from other townships within the Meghalaya region. ACCESS TO FINANCE 15 Bhutan Thimphu, Bhutan's capital city, is a two-hour drive from the nearest airport, a journey requiring slow travel up winding mountainous terrain. Thimphu is difficult city to reach and international-standard training opportunities for bankers have been quite limited. This year, SEDF sent a team of consultants and staff members to Thimphu, to conduct an intensive workshop on `Credit Analysis of Small and Medium Enterprises' for 27 Bhutanese bankers. As with the program in Shillong, here too the training was aimed at evaluating risks associated with lending to SMEs. Again an analysis of qualitative and quantitative information, with or without reliable company accounts was presented. Courses were provided to help bankers understand and apply the key concepts of financial analysis to SME risk, particularly through cash flow and budget analysis. In response to demand, this training program was repeated in Phuentsholing, an even more remote area of Bhutan that borders India. Twenty two bankers took part in this workshop and from feedback received, appreciated the training. In both cases, the training aims to make local banks more aware of and amenable to SME financing. Bhutan is IFC's newest member and a target country for SEDF's bank training programs. KEY RESULTS--BHUTAN Training program in Thimphu, Bhutan Course Title: Credit Analysis of Small & Medium Enterprises in Bhutan Participating Institutions: Bank of Bhutan (BOB), Bhutan National Bank (BNB), Bhutan Development Finance Corporation (BDFC), Royal Insurance Corporation of Bhutan (RICB) and the Royal Monetary Authority (RMA). The objective of the training program was: 1. evaluate risks associated with the financial situation of SMEs through an analysis of qualitative and quantitative information, with or without reliable company accounts; and 2. understand and apply the key concepts of financial analysis to SME risk, particularly through cash flow and budget analysis. Training program in Phuentsholing, Bhutan Course Title: Credit Analysis of Small & Medium Enterprises in Bhutan Participating Institutions: Bank of Bhutan (BOB), Bhutan National Bank (BNB), Bhutan Development Finance Corporation (BDFC), Royal Insurance Corporation of Bhutan (RICB), the Royal Monetary Authority (RMA) and the National Pension and Provident Fund Board (NPPFB). The objective of the training program was: 1. evaluate risks associated with the financial situation of SMEs through an analysis of qualitative and quantitative information, with or without reliable company accounts; and 2. understand and apply the key concepts of financial analysis to SME risk, particularly through cash flow and budget analysis. 16 Access to Business Services & Sub-Sector Development An important way to improve the competitiveness and performance of SMEs is to increase their access to performance-enhancing business services. To do so, SEDF follows a market-driven approach, providing training and technical assistance to SMEs. SEDF has also adopted a sub-sector development approach providing identified sub-sectors with specific interventions in areas such as business services, market access, productivity improvement, access to finance and policy advice. Business Know-How for SMEs Creativity, good business sense and adequate start-up capital are essential SEDF provides local service providing firms and training institutions with the elements to start a small enterprise. But to succeed over the long term, tools and training that will be relevant and helpful to SMEs. Activities include: developing strong management skills is equally vital, and too often efficient training services; business development products and services; sub-sector ways of doing so are hard to find in the local market. While from time to time development; and Internet/information technology usage programs. SEDF has we will work directly with individual firms in this regard, SEDF's best way of facilitated the formation of a local consortium of service providers and is helping fill this gap lies in strengthening the many organizations that can developing their capacity to provide services to our target sectors. support them: local business associations, training institutions, consulting companies, entrepreneurship programs and other service providers. Our goal is Training is targeted at various levels of a company-owners, managers, to make them better equipped to serve small firms. supervisors and workers. Interactive methods are used such as class room training, workbooks as well as audio-visual and multi media techniques, SEDF follows a market-driven approach in providing training and technical depending on the aptitude of the targeted audience. To make sure that such assistance to SMEs, in line with the current principles adopted by the donor capacity building is beneficial to SMEs, SEDF evaluates each delivery program community. The emphasis is on stimulating both the supply and demand for to see how many people actually took the courses and whether the learned key non-financial services needed by SMEs. skills have been applied, resulting in the desired effect on the performance of the SME. There are a limited number of service providers of international standard in Bangladesh as well as a low level of interest among the SMEs to buy such At this initial stage, SEDF is focusing on four sub-sectors. These are garments, services. SEDF tries to develop local consulting firms or companies providing agribusiness, information technology/software and light engineering. These sub- business development products and services such as company diagnostics, sectors have great affect on growth and poverty reduction. local management information systems packages, quality improvement systems, marketing, and export assistance and so on. ACCESS TO BUSINESS SERVICES & SUB-SECTOR DEVELOPMENT 17 Export items from SEDF's client Surjomukhi. With SEDF's assistance, the company has obtained new export orders worth US$20,000. To understand each sector's characteristics, SEDF has undertaken studies, SEDF also assists companies in improving their business performance through surveys, diagnostics and focus group discussions with companies and better use of IT. This includes assisting IT providers to expand operations. associations. Sub-sector maps has been prepared to include bench-marking and SEDF, for example, may assist companies in advertising their products on the potential growth areas. The various assistance programs/interventions are then web or source information on products or raw materials and to enter designed and provided at various levels. e-business. SEDF in addition, helps in developing consultants who would act as associates in introducing and developing IT usage in SMEs. KEY RESULTS · Formulating a self-study workbook on RMG sector management and assisting a number of RMG companies improve productivity and quality · Mapping of the Light Engineering Sector to identify bottlenecks and possible interventions · A map showing strengths and weaknesses of the Agribusiness sector · Introducing Bangladesh's underdeveloped light engineering sector to modern methods in efficiency and productivity improvement with very good results · Providing international training for women entrepreneurs through associations to improve their management skills, improve quality and access to international markets · A study on the prospects of biotechnology in Bangladesh · Assisting RMG sector get new orders from Canada worth approximately US$100 million · BIFT/SEDF Job Fair: eight companies and 60 students of BIFT participated Workers at a local garments factory located in Dhaka's Mirpur area. SEDF has provided TA to a number of garment companies to improve shop-floor productivity. 18 ACCESS TO BUSINESS SERVICES & SUB-SECTOR DEVELOPMENT Garment Sector Assistance MAKING THE RMG SECTOR MORE COMPETITIVE The Bangladesh ready-made SEDF places major emphasis on this sector and has initiated several projects to garment industry is the most successful sector in the country, bringing about identify the training needs of the industry, provide such training and improve revolutionary changes in employment and the economy. It currently employs efficiency of production, and tap new markets. These included the following over 1.5 million people, most of them women. In the last decade this sector has completed and ongoing projects: experienced rapid export growth partly due to the Multi-Fiber Agreement TRADE FAIR IN CANADA IN COLLABORATION WITH BGMEA SEDF organized which has regulated international trade in garments with a system of quotas. a single-country Trade Fair with BGMEA in October 2003, the Canadian Countries like Bangladesh, which directly supply to the US and EU, benefited Manufacturers and Exporters (CME) Association, and the Trade Facilitation from these quotas. Bangladesh has high quality, low cost labor and a garments Office of Canada (TFOC). Forty companies were selected by BGMEA and industry that has proved to be adaptable to change to meet compliance norms SEDF to participate at the fair. This provided an opportunity for Bangladeshi and standards set by buyers in the US and Europe. Bangladesh was, for companies to capitalize on the quota-free status already effective in Canada example, the first country to sign an agreement to eliminate child labor from its and to expand their markets. Business worth US$100 million is under garment factories. discussion. The Bangladesh garment industry, however, is faced with tough competition BIFT/SEDF JOB FAIR In May 2003, SEDF organized a Job Fair, the first of its from other countries, in particular China. The phasing out of the Multi-Fiber kind in the RMG sector in Bangladesh. Eight top ranking companies Agreement in 2005 will mean even greater challenges. Competitors like China have the advantage of higher labor productivity, more reliable power, easier participated along with 60 students from both BIFT (Bangladesh Institute of access to infrastructure and more efficient ports and customs. These impending Fashion Technology) and BUET (Bangladesh University of Engineering and developments therefore, call for major changes in Bangladesh's RMG sector. Technology). On average, each company gave job offers to two students. A garment worker cutting a collar at Misami Garments. This is one of Mr. Quazi Moniruzzaman, President-BGMEA, Mr. Mohsin Ali Khan, His From left: Mr. Ronald Berlet, Consultant from TFOC, Canada, Mr. Anil Sinha GM SEDF's garment sector client who has received TA from SEDF to Excellency the High Commissioner of the People's Republic of Bangladesh to SEDF, and Mr. Amir Khosru Mahmud Chowdhury, Hon'ble Minister of Commerce, improve productivity. Canada, Mr. Murray Calder, Parliamentary Secretary to the Minister of seen at the MOU signing ceremony with Canadian and Bangladeshi companies. International Trade, Government of Canada and Mr. Mac Harb, Hon'ble Senator, Canadian Government at the Bangladesh Trade Fair 2003 in Toronto, Canada. ACCESS TO BUSINESS SERVICES & SUB-SECTOR DEVELOPMENT 19 Management Training and Development CASE METHOD WORKSHOP AND PUBLICATION OF LOCAL SME CONTEXT BASED entrepreneurship training and effective counselling specific to agribusiness CASES The Management Training and Development component of SEDF sub-sectors like poultry, livestock and fisheries in Bangladesh. This training is organized a Case Method Workshop between 14-22 October 2003 to bring in expected to enable participants to better understand the technical and the internationally recognized concepts, tools and process of effective case managerial issues of agribusiness. BASC is a member of the Consortium for writing and teaching of Richard Ivey School of Business, Canada in Business Development Services (CBDS) which is a partnership firm promoted Bangladesh. The objective of conducting the workshop jointly with a local by SEDF to evolve as a `one stop shop' for management development services consortium of BDS providers was to develop at least 25 qualified local case for business enterprises in Bangladesh. writers whose expertise would be used in developing field-based, decision oriented cases for training, education and consulting purposes, currently CASE STUDIES ON PERFORMANCE IMPROVEMENT IN RMG COMPANIES AND scarce in Bangladesh. An outcome of this workshop, in tandem with LIGHT ENGINEERING FOUNDRIES Two case studies have been developed on development of local case writing capacities, is a published volume of the local SEDF's interventions and their impact on RMG companies and Light context based SME cases developed by the workshop participants. These cases Engineering Foundries. Case studies of this nature have the potential to cover a wide range of managerial challenges in small business management stimulate both the demand and the supply side of performance improvement and entrepreneurial start-ups and are expected to make a valuable addition to consulting amongst SMEs. Firstly, such case studies, by demonstrating the the existing learning materials on various SME related issues including economic gains by concerned SMEs can sensitize demand for such consulting finance, operations, marketing and human resource management. services to others in the sub-sector. Secondly, such case studies can also stimulate the supply side by serving as reference materials for service AGRICULTURAL ENTREPRENEURSHIP TRAINING MODULE An agricultural providers to learn about the approach, tools, and process of performance entrepreneurship training module has been developed in partnership with improvement consulting services specific to the sub-sector. Business Advisory Services Center (BASC) to address the problem of Ms. Afreen Huq, BDS Consultant SEDF, making a presentation on the business consortium to local service providers. Case method workshop jointly organized by SEDF and a local BDS consortium. Twenty five local case writters were Seen on her right: Mr. Anil Sinha GM SEDF, Mr. Deepak P. Adhikary, Program Manager BDS and sub-sectors with developed/trained at the workshop. participants. 20 ACCESS TO BUSINESS SERVICES & SUB-SECTOR DEVELOPMENT Light Engineering Sector Bangladesh's Light Engineering Sector (LES) has potential to serve both as a SEDF interventions are in progress in seventeen companies covering service provider and original equipment manufacturer (OEM) for other sectors foundries, steel rolling mills and machine shops. These specific interventions such as agriculture, RMG and transport which, in turn, contribute are expected to result in cost and resource savings in these companies­ considerably to the GDP. SEDF has taken a multi-pronged approach to decide primarily by introducing process and operational control. SEDF has also taken its strategy for intervention in this sector. up special assistance to Dholaikhal cluster by modernizing their processes and SEDF's first step was to map the LES sector in order to gain in-depth industry thereby achieving cost reduction. knowledge. This research covered 131 companies and was conducted by local SEDF has identified ten experienced service providers in the area of experts supported by SEDF. Engineering consultancy who are currently in the process of implementing the Thereafter, SEDF organized a week long workshop, in May 2003, on improving above interventions. They are backed by necessary resource support from foundry techniques. The workshop was conducted by a team of three within the region. The focus is on capacity building of the local service specialists from the Indian Institute of Foundrymen (IIF). Eight foundries, providers in this area of "Engineering Consultancy" ­which would lead to from Dhaka, Rangpur, Bogra and Faridpur participated in the workshop along sustainable benefits to the LES as a whole. with three service providers. The training workshop demonstrated practical ways to reduce the consumption of coke in the melting process. Coke is SEDF also organized a focus group discussion between representatives of the usually imported from nearby countries, mainly China and India. Thus the manufacturing sector in Canada, the local engineering companies, trade training aimed at reducing imports as well as the cost of input. The hands-on bodies and the Bangladesh government. The objective was to help Canadian training methods were designed to reduce rejections by improving the process companies to identify suppliers of spare parts for automobiles from methods and introducing operational changes. Bangladesh. Summary of LES activities 1. Mapped 131 LES-SMEs all over Bangladesh 2. Demonstration of savings to 17 SMEs covering all LES sub-sectors 3. Four on-the-job training programs covering 60 workers and technicians 4. Introduction of shop-floor manual MIS in 15 SMEs 5. Interventions led to three direct assistance demonstration projects in progress and five in the pipeline 6. Creation of a consortium of consulting engineers, specializing in LES 7. Prepared operations manual for foundries 8. Finalized pass book for LES SMEs for their identity, for the authorities' consideration Metal Testing equipment in Elite Steel, part of SEDF's SEDF client KSD Pumps has products fitted to a locally process improvement program. fabricated dredger. It is one of the beneficiaries of SEDF's assistance to the light engineering sector. ACCESS TO BUSINESS SERVICES & SUB-SECTOR DEVELOPMENT 21 New Technology: Centrifugal Castings Project KEY RESULTS Achieved in Light Engineering Sector ­ 2003 SEDF is helping a local foundry set up a modern centrifugal castings unit. The 1. Foundries (8 foundries) project would produce cylinder liners using the centrifugal casting method. · Inputs (coke, scrap) per ton of gray iron produced are reduced by 8% implementing appropriate coke to metal ratio This is the first time the centrifugal casting method has been introduced in · Yield per ton of input from the cupola (the melting unit) is increased by 9.8% with Bangladesh. This improved production process produces much better quality proper monitoring · Rejection rates brought down by 3.4% by controlling the process parameters products. It also reduces rejections and saves time, energy and material. 2. Steel Re-rolling mills (5 re-rolling mills) · Scale losses brought down by 3.6% The sponsor decided to implement this project when they attended SEDF's · Melting losses brought down by 13.4% · Gas consumption per ton of steel re-rolled brought down by 7.7% foundry workshop and realized the importance of modernizing their foundry 3. Machine shops (14 machine shops) and also of using this new technology to produce cylinder liners, used both in · Reduced machining time by 30% by use of proper tools and cutting parameters the auto industry (agricultural and transport sectors). · Rate of metal removal was increased 45% · Selected old machines were re-conditioned and furbished The casting industry is currently using old processes and technology­the Knowledge Centers average age of a casting unit in Bangladesh is 15 years. This project is expected to demonstrate to the entire industry the value of modern processes. Lack of information is a major limitation for SMEs. Knowledge Centers, established by SEDF in conjunction with local partners, would help SMEs and service providers by providing access to business resources, training and support. The Centers will use PC and Internet based business tools and Cost Benefit Analysis of SEDF's Assistance resources along with hands-on support to SMEs. The Centers will attempt to to the Light Engineering Sector "wholesale" the one-on-one support provided by SEDF to individual companies 4 and reach a large number of SMEs by utilizing IT. The Knowledge Centers will eventually be franchised to local service providers in and outside the country. million) (in 3 The Centers will give SMEs access to information on key business topics such as accounting, export marketing information etc. SMEs can also take advantage Dollar 2 of various training programs and utilize business tools and applications such as US SME toolkit developed by the SME Department of the World Bank Group, 1 animation-based training CD-ROMs as well as provide references for consultants or business support programs. The Centers will also be equipped 0 with books related to SMEs and will also house World Bank publications. SEDF Intervention Cost Annual Benefit* The Centers will be an important channel for SEDF to communicate with SME Planned US$250,000 US$2,500,000 clients and make services and products known and available. Actual US$210,000 US$3,040,000 SEDF is partnering with the Dhaka and Chittagong Chambers of Commerce & Industries in setting up these Centers. A website (www.sedfkc.info) has also *Based on certified actuals from the enterprises been launched to coincide with the opening of SEDF-DCCI Knowledge Center in April 2004. 22 ACCESS TO BUSINESS SERVICES & SUB-SECTOR DEVELOPMENT Agribusiness Sub-Sector AGRI-INVEST 2003 BANGLADESH In Bangladesh, agriculture plays a key role in overall economic performance, not The Agri-Invest 2003 forum was organized by Board of Investment (BOI), the only in terms of its contribution to 24 percent of GDP, but also as a provider of Ministry of Agriculture (MOA) and SEDF. The event included an international employment to about 65% of the population, particularly the poor. Meeting the seminar and trade fair. The objective was to develop awareness of international nation's food requirements of about 140 million people remain the key-objective agribusiness prospects in Bangladesh and promote interaction between private of the government and in recent years there has been substantial increase in grain sector, policy makers and academics and national and international investors. SEDF production (about 27 million tons in 2002). Based on constant prices the average provided technical and financial support in organizing the international seminar as growth rate during 1999-2001 in agriculture was 6.2% whereas industry grew at well as assistance in selecting speakers for the seminars and exhibitors. Over 2,000 5.7%. In recent years, due to lower returns in cereal production, a shift has participants took part in 11 sessions including the private sector, policy makers, occurred from cereal to non-cereal (fruits, vegetables, pulses etc.) and non-crop researchers and the media. More than 5,000 visitors visited the 67 stalls, of which 52 (livestock, fisheries, poultry, dairy etc.) production and processing. Major growth were from Bangladesh and the rest from overseas. SEDF will follow-up with MOA has been reported in the fishery (over 8%), livestock (about 4%), poultry (layer and BOI in implementing the recommendations of the Agri-Invest seminar. 31% and broiler 52%) and feed industries (about 30%). Other areas such as leather, food processing, herbal medicine, and fresh and frozen vegetables are also emerging. Unlike the garment industry, where the bulk of the export earnings have to be used to pay for imported raw materials and machinery, in agribusiness the value added stays in the country. COUNTRY MAP: AGRIBUSINESS SECTOR, BANGLADESH A Country Map of the agribusiness sector in Bangladesh was published by SEDF's agribusiness team in May 2003. The Map provides an overview of the agribusiness sector and outlines the prevailing issues, analyzes the gaps and identifies the possible measures that could be adopted to address the issues. The Map has been distributed to stakeholders, development partners, government and NGOs. Mr. Mirza Fakhrul Islam Alamgir, Hon'ble State Minister of Agriculture, speaking at the closing ceremony of Agri-Invest 2003 while Mr. Anil Sinha GM SEDF, Mr. Abdul Mannan Bhuiyan, Hon'ble Minister of Local Government of Rural Development, and Mr. Mahmudur Rahman, BOI Executive Chairman seated on the dais. Eurasia, a client of SEDF in Bangladesh, has been receiving TA on European Food Standard Information System (EFSIS) and Hazardous Analysis Critical Control Point (HACCP). From preparing frozen paratha and aroid to packaging of these products for export, all are carried out under hygienic conditions. ACCESS TO BUSINESS SERVICES & SUB-SECTOR DEVELOPMENT 23 IT SECTOR DEVELOPMENT PROGRAM SEDF aims to facilitate the growth GlobeKids Digital Ltd. is a producer of animation and of Bangladesh's IT sector which multimedia products. It is a joint venture of GlobeKids mainly consists of SMEs. It Inc. (a US based company) and the Grameen Fund, a venture fund promoted by also seeks to improve the Grameen Bank. SEDF assistance includes development of animation skills through competitiveness of other training and technical assistance. More than 1800 hours of training to develop organizations and sectors through animation skills has enabled the company to successfully bid for additional work the better use of IT. Five types of both in the local and foreign markets. interventions are being CSL Software Resources Ltd. is a technology company that produces undertaken: (i) direct company software and provides software implementation services and IT solutions. assistance, (ii) business SEDF's TA includes training for upgrading technology, developing marketing development services (BDS), capacity, enhancing RMG ERP (ready-made garments enterprise resource planning) (iii) IT sourcing capacity improvement, (iv) linkages (outsourcing), and software implementation capacity, and improving the functional and technology (v) E-Governance. In the direct company assistance component, SEDF addresses the base of the RMG ERP software. The assistance provided for improving RMG ERP technical and marketing issues common to most companies. These measures are software implementation capability has significantly contributed to the company's expected to be replicated in other companies to bring about industry-wide recent success in signing MOUs for implementing this software in 7 RMG units with improvement. SEDF has been providing TA to a number of companies on a cost the potential of bringing additional business worth US$100,000 (approx). sharing basis. These include: strategic and business plan development, The project involves providing support for improving strengthening management, raising finance, improving business development management capacity, international marketing capacity, enhancing software engineering process capability, updating technology practices and software engineering process capability of Millennium Information base, expanding access to domain knowledge, gathering market intelligence, Solution Ltd. SEDF's recent TA in international marketing capability improvement facilitating penetration in export markets, and diversifying to new areas (e.g., has resulted in new business opportunities worth US$0.9 million (approx). The on embedded computing, chip design services). These companies were selected going TA for CMM certification and training is the first such process capability through a process which included a formal diagnostic exercise. Ongoing direct improvement initiative in Bangladesh and is envisioned to have a significant impact company assistance projects are as follows: not only on MISL but also on the local IT industry as a whole. TechnoVista Ltd. produces software and is an IT solution Spectrum produces software and provides software implementation consulting services and IT solutions. SEDF's provider. The project involves developing the performance and assistance in developing marketing materials and promoting the company has competitiveness of TechnoVista Ltd. SEDF has assisted the company in a new market enabled SECL to further penetrate both local and foreign markets. SEDF's TA for the development campaign in Europe, improving its technology skill set, and product improvement of asset management software capability has produced new business positioning. The TA has had a significant impact on the company's success by opportunity worth US$100,000. This capability improvement has also strengthened developing new business in the European Community worth more than US$1 SECL's eligibility to be the implementation partner of a reputed international vendor million and in establishing linkage with a Danish company. of asset management software 24 ACCESS TO BUSINESS SERVICES & SUB-SECTOR DEVELOPMENT Women Entrepreneurs WOMEN CHAMBERS PROMOTING WOMEN IN BUSINESS SEDF jointly with the Women Chamber of Commerce and Industry (WCCI) conducted weekly business counselling sessions which provided first hand Women entrepreneurs in Bangladesh have come a long way in breaking the knowledge about the real issues and obstacles that women entrepreneurs face barriers of social conventions and stereotyping that have kept women outside and what kind of needs exist among the women entrepreneurs. of business. But they also face severe constraints in terms of lack of access to capital, managerial and quality control skills, basic knowledge about the SEDF facilitated `market readiness' training in New York City for two industry and market and of course, access to markets. SEDF focuses on companies last January as a result of which both companies have been able to strengthening the capacity of business membership organizations so that they increase their sales. There are plans to set up a fully functional membership can be more supportive to women entrepreneurs. database in the Chamber for better administration and monitoring. The women entrepreneurs of these two companies, moreover, have become Presently, SEDF is working with three major women entrepreneurs associations resource persons for the Chamber. Another workshop with 45 entrepreneurs in Bangladesh. Assistance to them includes helping them to develop a strategic as participants gave an orientation on the handicraft market in USA for their plan to make the associations more structured, transparent, financially products. Eight companies also received one to one consultation from a sustainable and better equipped to meet the needs of its members. handicrafts expert who gave them product specific advise. SEDF assisted two companies to participate in an International Trade Fair in Washington DC. CHITTAGONG WOMEN ENTREPRENEURS SEDF recently assisted the association in organizing a month-long trade fair for SMEs in Chittagong in December. The trade fair resulted in sale of about BDT 20 million (US$334,000) of which about BDT 13 million (US$217,000) was from companies owned by women entrepreneurs. SEDF also sent three women entrepreneurs for international training to Thailand which will help them to expand their product lines. Mr. Zia U. Ahmed, Senior Consultant & Program Manager of Financial Markets Women entrepreneurs from the Chittagong Women Entrepreneurs (CWE) Participants seen at a Workshop on Market Readiness Exporting Handicrafts SEDF, speaking at the closing ceremony on Training Workshop on Market association seen at a workshop organized by SEDF in Chittagong. Ms. Deneb to USA organized by SEDF and CWE. Readiness for Exporting Handicrafts to USA organized by Bangladesh Women Z. Latif of SEDF seen taking part in the workshop. Chamber of Commerce & Industry (BWCCI) and SEDF. ACCESS TO BUSINESS SERVICES & SUB-SECTOR DEVELOPMENT 25 ACCESS TO FINANCE SEDF is exploring ways to remove some of the obstacles currently faced by SEDF will assist in increasing sources of income for these business women's women entrepreneurs. This includes access to finance, access to domestic and groups and make them financially sustainable and improve access to finance international markets, market intelligence and access to technology. for women entrepreneurs who are the members of these business associations. Surjomukhi Handicrafts ­ A Bright Future Awaits When Naznin Ansary started taking lessons on doll making from a Dutch In 2002, she became a member of the Women Chamber of Commerce & woman, it was purely because of her interest in making things with her hands. Industry and through this association participated in trade shows in Bhutan Naznin always had a passion for making handicrafts, creating batik designs, and Nepal. She even managed to set up a small workshop and employ a few candles and of course, dolls. It was her teacher and mentor Stans Stolte who women workers. But Naznin's market was very limited and she was still not recognized her special talent and helped her to start selling her dolls sculpted very confident about selling abroad. Through the Women's Chamber, Naznin in western-style, to buyers in the Netherlands. Naznin, who named her small was able to take advantage of SEDF's business counselling program. SEDF business `Surjomukhi (meaning sunflower) Handicrafts', also sold her also arranged for her and another woman entrepreneur to go to New York to products to Christmas fairs and then to Aarong, the popular retail shop take a training course on market readiness offered by the US-based NGO Aid sponsored by the country's largest non-governmental organization, BRAC to Artisans. Naznin says she learned invaluable lessons at this training (Bangladesh Rural Advancement Committee). workshop such as how to improve quality of the product, how to capture the market and how to price her products for the export market. At present Naznin sells a wide variety of hand made items including dolls, doll's clothes, children's costumes, jute bags and household linen. Naznin has already received a US$20,000 order for stuffed toys from Aarong for a Belgian company and plans to expand her business. She is also currently negotiating with a Japanese specialty toy store chain for an order. "The training gave me immense confidence and also allowed me to make valuable contacts", says Naznin, who has a workshop in her house in Niketon, another one in Gulshan, and employs 45 women workers. Export quality products of SEDF's client Ms. Naznin Ms. Shyama F. Huq of SEDF with Ms. Naznin Ansary, Ansary who exports to international markets and also proprietor of Surjomukhi, at the display of her products supplies her works to local shops like Aarong. at her store in the city. 26 Business Enabling Environment SMEs, unlike large corporates, usually cannot influence policy change themselves. Easing their many constraints to starting, managing, and growing a business is a vital step in transforming the private sector. Expanding Markets, Increasing Competitiveness REGULATORY, POLICY AND ADVOCACY WORK Formulating an SME-friendly business environment for SMEs to flourish SEDF participated in the World Bank/Bangladesh Enterprise Institute requires the co-operation of the government, private sector and donors. But in Investment Climate Assessment that covered over 1,000 companies, (25% of Bangladesh, the last 20 years of small enterprise-related policies indicate that which were SME's) and also arranged workshops to help discuss the findings. SMEs are still faced with a very restrictive and difficult regulatory environment. Going forward, we will also be doing follow-up panel surveys on 250 of these They face a larger burden of inspection from government authorities than do SMEs, improving coverage to include industries from the service sector like IT larger firms. Corruption too, increases their costs of doing business. The high and tourism that were not extensively covered in the original round, and work cost of complying with regulatory policies is a strong deterrent to growth of on implementing suggested reforms. These are semi-annual surveys that will be SMEs, often encouraging firms to remain small and informal to avoid carried out for three consecutive years to track down the changes in regulations. performance of these firms in the investment climate that they operate in. SEDF's business environment strategy in Bangladesh takes into account the SEDF also has recently financed participants from Bangladesh and Nepal to existence of an emerging class of relatively successful entrepreneurs who are attend a World Bank organized workshop on Investment Climate in Colombo, trying to grow. The strategy has three components: Sri Lanka. The purpose of this workshop was to share the findings of Investment Climate Assessment (ICA) Reports of the South Asian Countries with the · Developing policy framework for SMEs representatives from the respective governments and private sector and get their · Strengthening of business membership organizations feedback on how the World Bank group could engage in facilitating the removal of the constraints identified. The materials presented in this workshop are · Facilitating inter-regional and intra-regional trade available at http://www.investmentclimate.org/southasiaic03/. BUSINESS ENABLING ENVIRONMENT 27 The BEI-SEDF Advisory Services (BSAS) project has assisted SME clients to set and Sri Lanka. Bangladesh Agro Processors Association (BAPA) claims that up businesses through information dissemination on regulatory requirements. they are faced with double/multiple taxation on their products which make It is assisting firms to obtain trade licenses from Dhaka City Corporation (DCC), these uncompetitive in the local and international market. The study will verify a Certificate of Incorporation from Registrar Joint Stock Companies (RJSC), this with the National Board of Revenue (NBR). On the basis of a comparative Certificate for Import and Export from Chief Controller of Imports and Exports analysis with VAT structures in Pakistan, Sri Lanka, Thailand and China, it will (CCI&E), and dealing with National Board of Revenue on VAT issues. make recommendations on a more user friendly VAT structure that can promote Billboards have been provided in these offices and process charts the agro-business sector while retaining a fair share of revenue for the have been published in a newspaper. SEDF has prepared government. manuals for other statutory requirement as well and The Registration project is an important step to ease company formation and made recommendations to reduce paper work and improve corporate governance by automation of the office the Registrar Joint improve regulatory procedures. These are being Stock Companies (RJSC). Undertaken at the request of the Ministry of discussed with the representatives of these Commerce (MOC), it is a joint effort with the Australian High Commission. As regulatory bodies. a first step, a System Requirement Analysis has been prepared by international A report is also being prepared on VAT and local experts by analyzing the current situation, identifying the gaps and specifying what needs to be done. The Ministry is keen to start this project as Policy for Agro-Processing part of its E-Governance program. Enterprises which is examining the tax structure of these enterprises The MOC has now requested SEDF to take the lead and prepare the Technical on a comparative framework Assistance Project Pro Forma (TAPP) for this project. Once the TAPP is with other countries like approved by the External Resource Division (ERD) of the Ministry of Finance, Thailand, Pakistan, China the project is expected to kick off. 28 BUSINESS ENABLING ENVIRONMENT Under this project: (i) the manually kept files at the RJSC will be electronically INTER-REGIONAL TRADE archived in an electronic data base; (ii) the website will be updated and Online name clearance will be made possible, (iii) the whole system of registration will Inter-regional trade is crucial for increasing the access of SMEs to resources and be automated from submission of application to approval by the Registrar markets. The Chambers of Commerce in Bangladesh, India, Nepal and Bhutan have already initiated measures to stimulate inter regional trade with the including other post registration formalities, (iv) digital signatures may also be support of the respective governments. In addition, a number of donors and introduced in future but this will need regulatory changes. institutions such as ADB and the World Bank are trying to facilitate inter To improve the administrative functions of the RJSC, steps are being regional trade with SEDF complementing this work, focusing especially on undertaken as a part of public awareness campaign to reduce the information SMEs. The goal is to ease the burden for export oriented SMEs. gap among entrepreneurs on regulatory requirements. An animation film on At the request of the Chittagong Chamber of Commerce and Industry and the how to register a business is being produced for television. A Registration Kit Tripura Chamber of Commerce and Industry, SEDF facilitated a study on the has been prepared by SEDF for the RJSC consisting of the brochure, contents of non-tariff barriers to trade between North East India and Bangladesh. The the billboard, all forms needed for registration, and filled out model forms of results of this study have been instrumental in furthering trade negotiations Memorandum and Articles of Association. between India and Bangladesh. SEDF is jointly conducting an Investment Incentives Review with the World These interventions are aimed at removing business constraints and stimulating Bank Group's Foreign Investment Advisory Service (FIAS) for the Board of markets for SMEs. They will also help to better represent SME interests and Investment. This will look at the overall investment scenario in Bangladesh, expand their overall market. particularly the fiscal incentives for local and foreign investors. KEY RESULTS SEDF is also a part of a committee that is coordinating a Donor Consortium · Process charts of RJSC, DCC, CCI&E published in the Financial Express. Billboard in Project led by DFID/USAID that has surveyed over 10,000 private RJSC & CCI&E providing information on the registration process. Recommendations to micro/SMEs. The survey provides updated and reliable data on this sector's reduce paper work of regulatory processes. characteristics. · System Requirement Analysis on Automation of RJSC at the request of the Ministry of BUSINESS MEMBERSHIP ORGANIZATIONS Commerce. Under this component, SEDF focuses on strengthening existing business · Partnerships in the World Bank/Bangladesh Enterprise Institute investment climate assessment that included an extensive study of SME sector characteristics. associations mainly through training and technical assistance. The aim is to understand as well as address the needs of the members to make them · SEDF and NBR signed an LOU to undertake a study on VAT Structure of Agro- internationally competitive. Through these programs, entrepreneurs learn how Processing Enterprises. to use IT applications, how to develop their marketing and planning skills, how · Study highlighting non-tariff barriers in trade between India and Bangladesh and how to use management information systems, how to improve quality control they could be reduced. systems, finance and accounting systems etc. SEDF also tries to improve the sustainability of Business Associations by helping them to offer commercially · TA to 4 Business Membership Organizations to develop capacity for advocacy and viable services to members. services to members. BUSINESS ENABLING ENVIRONMENT 29 Investment Climate Assessment (ICA) A productive investment climate can be broadly thought of as an environment in which governance and institutions support entrepreneurship and well-functioning markets in order to help generate growth and development. SEDF participated in the Investment Climate Assessment jointly carried out by the World Bank and Bangladesh Enterprise Institute (BEI). Its focus was on the institutional and policy environment that determines whether investments pay off in terms of greater competitiveness for firms and in sustained growth for the economy. Six industries were included in the survey: garments and textiles; food and food processing; leather and leather products; electronics; chemicals and pharmaceuticals. The survey collected data from a total of 1,000 firms in Dhaka and surrounding areas and Chittagong and compared findings with neighboring countries. The hope is that its results will help identify the reforms most critical to private sector development and facilitate consensus on a more far-reaching agenda of reform. KEY RESULTS ICA related activities of SEDF Some of the main findings from the ICA: - Contribution to the SME segment in the World Bank/Bangladesh · Infrastructure poses some of the most severe obstacles facing firms. Bangladesh fares Enterprise Institute investment climate assessment worse than its neighbors on general measures of infrastructure, and the vast majority of - Six monthly panel survey of SMEs underway with BEI and WB firms report that problems in infrastructure seriously hamper their growth. - Initiatives to reduced registration time of companies including · Electricity problems plague firms in Bangladesh, which has less generation capacity per automation of the Registrar of Joint Stock Companies underway capita than its neighbors. Firms report experiencing power outages or surges nearly - Contributed to reduction of VAT on packaging of agricultural products every day they operate. As a result, more than 70 percent rely on electric generators-- at great expense. On average, these generators cost more than US$20,000 to purchase and 50 percent more per kilowatt-hour to operate than the price of power from the public grid. · Corruption is pervasive. Bangladesh ranks worse on measures of corruption than its neighbors, with more than half the firms reporting it as a major or very severe obstacle. · Firms view regulation as a serious problem. Starting a firm in Bangladesh is fairly difficult. And once firms are running, they receive frequent visits from government agencies--about 17 a year on average. · Access to finance is a problem. For those firms that have access, it is mostly short-term and nearly 60 percent of firms with a line of credit report having exhausted that credit. Moreover, the very large share of non-performing loans portends potential difficulties. · SME's are disproportionately affected by all these problems. The smaller the firm, the more of its resources it devotes to "unofficial" payments and to deal with government visits and inspections, and the less likely it is to have access to formal finance. These problems can pose great barriers to market entry and growth for small firms. 30 BUSINESS ENABLING ENVIRONMENT Bangladesh Investment Climate Assessment: Opinions Expressed by the Private Sector SUPPORT NEEDED FOR: FACILITATION MEASURES REQUESTED: · Incentives to help private sector channel resources to high-yielding · A promoters guide to explain, in simple terms, the steps required for investments company registration · Reforms in business entry regulations · Registration services provided to eight cities in Bangladesh · Promoting more "interactive dialogue" · The records of 43,000 existing companies should be transferred to an · More focus on SMEs in the ICA (not large manufacturing sector only) electronic data base · Human resources development through recruitment of professional staff · Promote more collaboration and harmonization of tax structures in South and their intensive training Asia so that the region can compete with the West or other regions · Close interaction between the head office and the regional offices · Assistance in knowledge transfer within South Asia · System of annual conference of all heads of regional offices · Creating one standard definition for SMEs for all South Asian countries · Creating an external World Bank Institute website for the workshop · Focus and promotion of women-based SMEs materials--PowerPoint presentations, key readings, and for updated · Develop professional human resources personnel, including recruitment materials on the investment climate as they are developed and training specialists who would, in turn, develop good managers in · Development of infrastructure local companies · Assistance to promote Free Trade Agreements between countries bilaterally and regionally (for example Bangladesh-India) · Promoting private sector investment in Nepal and therefore helping in reforming regulations, income tax reforms with particular attention to Nepal's accession to the World Trade Organization BUSINESS ENABLING ENVIRONMENT 31 Corporate Governance for Financial Institutions TOWARDS A SUSTAINABLE FINANCIAL SECTOR The workshop also recommended that membership of boards should not Although corporate governance is based on internationally accepted ground exceed 15, preferably about 11. Members should be independent directors and rules it must take into account the local conditions of a country. Banks in appointments should not be based on political affiliation or to persons working particular have a specific role to play with respect to corporate governance both for the government. Another important conclusion the workshop came up with internally and in their client's companies. Trust and transparency, however, are was that internal control is a prerequisite for good corporate governance that universally accepted as being the most important elements in this area. must be embedded in a bank's infrastructure. One of the key elements of internal control is information and communication. For good corporate SEDF and the Dutch development finance company FMO jointly organized a governance, a sound Management Information System (MIS) is essential. workshop on corporate governance in January 2003 in Dhaka. The importance of Internal and external audit functions, moreover, should be improved to higher the workshop was marked by the presence of Bangladesh's Minister for Finance levels of expertise. and Planning, the Governor of Bangladesh Bank and several distinguished speakers including the managing director of International Credit Rating Agency Regulatory bodies in addition, have to be accountable and transparent towards (ICRA)Advisory Services, an independent credit rating agency in India affiliated the banking industry. They must also make their reports available to the banks with Moody's Investors Services of the US. The workshop was attended by 21 within a short time so that the banks can use the findings to take corrective participants from leading banks, both senior executives and directors. actions. Regulatory bodies must ensure that their inspectors are highly qualified and properly trained. These bodies need a business-like approach to With the help of resource persons from Bangladesh and abroad, the participants understand the financial business environment. The Bangladesh Bank, for made important recommendations to promote good governance. These relate to example, should grant banks on-line access to the Credit Information Bureau to the functions and composition of the board of directors, proper functioning of facilitate prompt credit decisions on the part of the banks. internal controls, and relationship with regulatory bodies and with the public including depositors. There should be, for instance, a clear division between Finally, a positive relationship with the public is another essential element of tasks and responsibilities of the Chief Executive Officer (CEO) and the Board of good governance. In the depositors' interest, banks should publish quarterly Directors (BoD). bulletins on key operational and financial highlights. The banks and their clients should also implement internationally accepted accounting standards A bank's day-to-day management must be mandated by the board to function in such as IAS. accordance with policies and guidelines so as to be accountable to the BoD at all times. Policy guidelines of the board to the management, therefore, have to be clearly defined with no ambiguity regarding their interpretation. If the management deviates from these guidelines it must inform the board and get its approval. Banks must be pro-active in promoting a self regulatory framework that works and realize that when the banking industry fails in this respect, the authorities will be forced to impose stricter regulations. The initiative thus must come from the banks themselves to put good governance into practice. From right: GM SEDF, Hon'ble Minister of Finance, Representative from FMO sharing his notes with Governor of the Bangladesh Central Bank, and officials participants from local banks during the corporate from FMO of the Netherlands at the workshop on governance workshop with the assistance of Ms. Anushe corporate governance for financial institutions. A. Khan of SEDF. 32 Special Projects, Linkages & Sustainability Linkages between large corporations and SMEs, environmental and social sustainability, and good governance programs for SMEs are also important points of SEDF's agenda. Linkages One of SEDF's key goals is to link SME suppliers to large corporations so that large producers are ensured consistent supply of such products and SMEs have access to markets and best practices through them. In the present environment, most large corporations are reluctant to procure from SMEs as they lack the capacity to meet their needs and are not very efficient in terms of delivery and quality control. SEDF activities include working to improve supplies from SMEs, assist them in developing quality control systems and to introduce innovative ways to finance these small and medium enterprises. Sustainability SEDF recognizes that economic growth must be pursued in a sustainable manner. In order to integrate sustainability in all its development activities, SEDF has three levels of interventions: i) company level assistance-direct and through local service providers, ii) assistance to banks and business associations and iii) corporate governance program. i) COMPANY LEVEL ASSISTANCE Each SEDF project is assessed to ensure compliance with local environmental laws. In addition SMEs are advised on best international practices and how to implement them. SEDF helps SMEs to acquire international certification, where possible. ii) ASSISTANCE TO BANKS AND BUSINESS ASSOCIATIONS SEDF works with banks to create awareness of sustainability issues and helps introduce environmental and social compliance checks as part of their credit appraisal process. This includes training of bank staff and introduction of needed systems and procedures. Business associations are also informed of rules and best practices and encouraged to create awareness among their members. iii) CORPORATE GOVERNANCE PROGRAM This includes sensitizing stakeholders (such as authorities and associations) and SMEs on governance issues. SPECIAL PROJECTS, LINKAGES & SUSTAINABILITY 33 Worker at a Superior Footwear factory preparing safety shoes for export. Superior Footwear: A Bangladeshi Entrepreneur Pioneers A New Sector INTERNATIONAL MARKETS SEDF has assisted Superior Footwear Co. Ltd. (SFL), a pioneer in manufacturing safety footwear in Bangladesh, in achieving international quality standards and penetrating new markets. Safety footwear is part of the `personal protective equipment' (PPE) segment which is mandatory for a wide class of industrial and professional workers. SFL was the first company in Bangladesh, and to date the only one, to have established a plant to manufacture safety footwear. However, given the sophisticated requirements of manufacturing safety footwear, SFL faced problems in mastering the `Goodyear welted' technology and in penetrating the important North American and European markets. SEDF designed and delivered a technical assistance program to SFL which resulted in · SFL obtaining European certification for selling its products in the European Union (the first Bangladeshi company to do so in the PPE segment) · Orders from a large Canadian company · Establishing its presence in the European market SEDF shall soon offer the second phase of TA to SFL for worker training, better productivity and shop floor layout. 34 SPECIAL PROJECTS, LINKAGES & SUSTAINABILITY Shapla Filter : Safe Drinking Water for the Rural Poor Bangladesh has long grappled with the problem of providing low cost arsenic free drinking water to the poor in the countryside. Estimates suggest that there are potentially between 30-40 million people at risk of arsenic poisoning from drinking water sources. Fifty-nine out of sixty-four districts have arsenic contaminated water and officially over 7,000 people have been affected by arsenic poisoning. SEDF has supported the development of the Shapla Filter, an indigenous low cost arsenic filter developed by an ex-professor of chemistry from the Rajshahi University in Bangladesh. The filter is highly effective and based on locally available raw material. IDE International, an NGO based in the USA and operating in Bangladesh for 21 years, has teamed up with the professor to develop the filter as an affordable commercial product and make it available to the rural population in Bangladesh. SEDF is also supporting the field testing of the Shapla Filter which will enable it to receive BCSIR approval required for commercial marketing. The project was a finalist in the World Bank's prestigious annual innovation grant contest, the Development Marketplace 2003. A housewife in the rural part of Bangladesh serving drinking water to her husband from the Shapla Water Filter. 35 Acronyms ADB Asian Development Bank ICRA Investment Information & Credit Rating Agency of India Ltd. BB Bangladesh Bank IDE International Development Enterprise BDFC Bhutan Development Finance Corporation IDLC Industrial Development Leasing Company of Bangladesh Ltd. BDS Business Development Services IFC International Finance Corporation BDT Bangladesh Taka IIF Indian Institute of Foundrymen BEE Business Enabling Environment IT Information Technology BGMEA Bangladesh Garment Manufacturer & Exporter Association LES Light Engineering Sector BNB Bhutan National Bank LoU Letter of Understanding BoB Bank of Bhutan MIS Management Information System BoD Board of Directors MoU Memorandum of Understanding BOI Board of Investment NCBs National Commercial Banks BTTB Bangladesh Telephone and Telecommunications Board NECCI North East Chamber of Commerce & Industry CCCI Chittagong Chamber of Commerce & Industry NEDFI North East Development Financial Institution CEO Chief Executive Officer NGOs Non-government Organizations CIDA, Canada Canadian International Development Agency NORAD Norwegian Agency for Development CME Canadian Manufacturers and Exporters NPPFB National Pension and Provident Fund Board CWE Chittagong Women Entrepreneurs OEM Original Equipment Manufacturer DCCI Dhaka Chamber of Commerce & Industry PFI Partner Financial Institution DFID Department for International Development, UK RICB Royal Insurance Corporation of Bhutan EC European Commission RMA Royal Monetary Authority EOF Environment Opportunities Facility RMG Ready-Made Garments FBCCI Federation of Bangladesh Chambers of Commerce & Industry SEDF SouthAsia Enterprise Development Facility FIAS Foreign Investment Advisory Service SIDBI Small Industry Development Bank of India FMO Finance for Development/Dutch Development Finance Company SMEs Small and Medium Enterprises GDP Gross Domestic Product TA Technical Assistance GoB Government of Bangladesh TFOC Trade Facilitation Office of Canada IAS International Accounting Standards ToR Terms of Reference ICA Investment Climate Assessment WCCI Women Chamber of Commerce & Industry 36 Financial Report SEDF's accounts are audited by Deloitte and Touche International. SEDF Donors' Funding Position as of December 30, 2003 Committed Paid to Date Unpaid Donor Original Amount in US$ FY 04 (till Dec '03) in US$ Commitment in US$ IFC 5,000,000 3,000,000 2,000,000 United Kingdom (DFID) 5,680,000 2,179,660 3,500,340 Netherlands (MoF) 2,030,000 1,792,191 237,809 European Commission 11,580,000 5,852,000 5,728,000 Asian Development Bank 750,000 0 750,000 Canada (CIDA) 5,840,000 943,997 4,896,003 Norway (NORAD) 7,030,000 3,587,311 3,442,689 Total 37,910,000 17,355,159 20,554,841 FINANCIAL REPORT 37 SEDF Budget/Expenditure for CY 2003 (Amount in Million US$) A. Program Cost (US$ millions) Budget (For CY 2003): Expenditure (For CY 2003): % of Expenditure Finance 2.48 0.89 24% Business/sub-sectors/special projects 1.49 1.63 43% Business Enabling Environment 0.87 0.70 19% Sub-Total 4.84 3.22 86% General Admin & Contingency 1.33 0.52 14% Sub-Total 1.33 0.52 14% Total (A) 6.17 3.74 100% B. IFC Admin Fees 0.47 0.47 Sub-Total 0.47 0.47 Grand Total (A+B) 6.64 4.21 Notes: 1) Expenditure relates to cash outflow. Additional committed expenditure is approximately US$1.05 (m) FY:03 Bangladesh 3,241,070.00 88.10 Nepal 662.00 0.19 N. India 127,914.00 7.33 Bhutan 68,969.00 4.38 Total 3,739,996.00 100.00 2) Apart from above expenditure, since inception SEDF has utilized IFC Managed Trust Funds of approximately US$440,000 Denmark US$110,000.00 Denmark US$140,000.00 Norway US$190,000.00 Estimated 38 Summary of Results Since operations started October 20, 2002, SEDF has brought a business-like approach to its development work. Outputs are agreed on an annual basis and monitored every quarter through scorecards. The summary scorecard below indicates that, despite ambitious targets, SEDF is well ahead in terms of achievements. SEDF SUMMARY SCORECARD (THROUGH DECEMBER 31, 2003) 15 MONTHS OF OPERATIONS Access to Finance Activities/Programs 5 year target 2 year target Completed/Achieved Remarks (15 months) Diagnostic of Financial Institutions 16 8 12 Targets exceeded with excellent results Numbers of PFIs Signing MOUs 12 6 9 Targets exceeded with good results Numbers of referrals from Partners 72 22 22 On target Number of persons attending SEDF training 750 150 424 Targets exceeded with excellent results New Products 4 2 1 Targets expected to be exceeded with good results SUMMARY OF RESULTS Trade Gothic 12pt 39 Access to Business Services & Sub-Sector Development Management Development & Training Activities / Programs 5 year target 2 year target Completed/Achieved Remarks (15 months) Management training materials produced 11 7 26 Targets exceeded with excellent results Training package developed 28 10 2 On target Training sold (number of persons) 1460 260 139 On target Issues papers of workshop & focus group discussion 25 12 7 On target Service providers franchised 20 7 5 On target Sub-sectors summary Sub-sector mapping & related studies 12 4 20 Targets exceeded with excellent results Company diagnostic 145 40 61 Targets exceeded with excellent results Direct assistance projects 90 25 15 On target 40 SUMMARY OF RESULTS Business Enabling Environment Activities / Programs 5 year target 2 year target Completed/Achieved Remarks (15months) Policy & Advocacy Survey / Research papers 10 5 9 Targets exceeded with excellent results Policy / Regulatory changes facilitated 7 3 7 Targets exceeded with good results Business Associations MOU signed with business associations 22 7 11 Targets exceeded with good results Publications with business associations 14 4 2 On target Increase in sales of business associations members, as per MoUs 10% 3% 4% Targets exceeded with good results Trade Increase in trade (US$`000)* 4000 250 17000 Targets exceeded with excellent results Gender Increase in sales by women-owned SMEs 1700 600 437 On target OTHERS Environment & Social Environment assessments performed 165 45 4 **Below target but expect to make-up in next 12 months Companies assisted to improved E&S standards / governance 97 22 0 Below target but expect to make-up in next 12 months Knowledge Centre Number of franchises 6 2 2 On target * Intra-regional (North East) and inter-regional trade (Canada) ** This is the only area where SEDF has had a slow start, essentially because of recruitment issues. However, program now underway and expects to meet targets by Year 2.