PRIVATE ENTERPRISE PARTNERSHIP 39530 Partnership P E R S P E C T I V E THE F A L L 2 0 0 4 U K R A I N E Galnaftogaz Makes the Grade: The International Finance Corporation Transparency Pays off (IFC) is a member of the World Bank Group. IFC works to reduce poverty and IFC introduces good corporate governance practices and helps Ukraine's leading improve people's lives in emerging gas distributor gain investor confidence economies by enabling and promoting In the early 1990s, driving on Ukraine's highways was a risky proposal, not sustainable private sector investment at least due to the lack of service stations along the road. Filling stations were the frontiers of economic development. few and far between and offered gasoline of poor quality. Today, filling sta- IFC itself is the world's largest multilat- tions are abundant across the country and the competition for the gasoline eral investor in emerging markets. market share is fierce. The story of Galnaftogaz, a leading gasoline distributor in Western Ukraine, demonstrates how good corporate governance practices could help compa- nies stay ahead of competition in a fast growing market economy. Who We Are continued on page 7 IFC's Private Enterprise Partnership works to develop strong, self-sus- taining economies in the former Soviet Union that serve all levels of society. Together with our donor partners, we assist private compa- nies and governments to: ˇ Attract private direct investment to all areas of the economies, ˇ Stimulate the growth of small and medium-sized enterprises, and ˇ Improve the business enabling environment. Countries we serve: Armenia, Our Collaboration with IFC is a True Partnership Azerbaijan, Belarus, Georgia, Kazakhstan, Kyrgyz Republic, Conversation with two representatives of the Swiss State Secretariat for Russia, Tajikistan, Ukraine, and Economic Affairs (seco), Economic Development Cooperation, Investment Promotion Uzbekistan. Division, Claude Barras, Division Head and Davorka Rzehak, Program Officer We thank our donor partners for seco is one of the largest donors for IFC technical assistance programs making our programs possible. worldwide. We value seco's partnership in our work to fulfil our mis- sion. What value does IFC bring to seco? seco and IFC share the same goal, which is to reduce poverty in developing and transition countries by promoting sustainable private sector develop- In This Issue ment. IFC is our partner of choice to achieve this common objective. Your pg. 2 Interview with a donor: seco agency is the oldest multilateral investor and has accumulated considerable experience in implementing investment and technical assistance programs pg. 3 Program Launch worldwide. IFC's ability to adjust to market conditions, its local presence and pg. 4 Program Update: the capacity to combine technical assistance with investment leads to high Tajikistan, Uzbekistan impact sustainable programs. We highly appreciate IFC's added value and its ability to shorten the transition process to market economies. seco has a pg. 6 The Partnership's Financial global partnership with IFC, seco and IFC management meet once a year to Management decide on a joint strategy within a Memorandum of Understanding our or- pg. 8 Rural Finance in Tajikistan ganizations signed last year. continued on page 2 2 Interview with seco What is seco's strategy in Eastern Eu- In Tajikistan, we believe that in coopera- continued from page 1 rope and Central Asia? (For example, tion with IFC's Partnership, we have in Russia and Ukraine seco focuses on managed to create a sustainable model corporate governance, in Central Asia which could be replicated elsewhere: the the priorities are different, why?) joint stock company SAS. The company is owned entirely by farmers and is financed Our strategy is aimed at the development by IFC on a commercial basis, and by seco of private sector in our partner countries. on a grant basis. Since cotton farmers did We focus on the promotion of SMEs, de- not have funds to invest in the company, velopment of a favourable business seco agreed to provide grant funds, in environment, building entrepreneurial ca- conjunction with a technical assistance pacity, strengthening financial markets component, to help capitalize SAS and to and stimulating private investment from help farmers pay for their shares. SAS is Switzerland and from other OECD coun- currently operating successfully, offering tries. short-term finance as well as selected mar- Claude Barras, Division Head and Russia and Ukraine are the most impor- keting and retailing services to farmers. Davorka Rzehak, Program Officer tant Swiss economic partners and remain From this perspective, the project cer- highly relevant for Swiss foreign policy tainly represents an entirely new and Recently seco provided an additional objectives due to their strategic position innovative financing approach for seco. $8 million for the Partnership's tech- and importance for regional stability. Rus- A more "typical" investment for seco is nical assistance programs in CIS sia in particular continues to play an our participation in private equity funds countries. How do you evaluate the important role and has considerable influ- worldwide. These funds are invested di- work of the Partnership so far? ence on the overall transition process rectly in local companies, including in throughout the CIS. To achieve visible During the past three years Switzerland Central Asia. Over the past six years seco impact we concentrate on a selected num- and IFC's Partnership established a close has committed an equivalent of over $200 ber of issues in certain countries. In Russia operational and strategic partnership. million to 25 financial institutions and is and Ukraine, the size and importance of With more than 18 million in funding increasingly recognized as an important the corporate sector in the overall econ- provided by seco, the Partnership has player in this field with strong knowledge omy and its growth potential are successfully implemented or is currently and expertise. IFC is our coinvestor in a considerable. In these countries we con- implementing a total of 18 technical as- number of these investment funds. centrate on improving corporate sistance projects in Russia, Ukraine, governance practices of firms and banks. Azerbaijan, Tajikistan, Uzbekistan and What was your most memorable We are also about to start a project to de- Kyrgyz Republic. These projects cover field visit experience (to a Partnership velop the primary mortgage market in financial markets with a focus on leasing project)? Russia. and housing finance, corporate gover- To be honest, all of our field trips were nance, and SME development with an Similarly, in Azerbaijan our goal is the memorable and fascinating. We had the emphasis on improving the business en- development of the financial and corpo- chance to visit all of the Partnership's seco- abling environment and building local rate sectors. In order to support SMEs in funded projects and meet with the local consulting capacity. All projects have the non-oil industries we implement leas- teams. In Central Asia and Azerbaijan for very clearly defined goals that are recog- ing and corporate governance projects. example, we were impressed by the tenac- nized by local institutions and In Central Asia Switzerland acts as a facil- ity with which the leasing teams com- governments as priority areas. Last year itator and bilateral partner for reforming municated every day with the local parlia- a mid term evaluation of seven initia- transition country-members of the Swiss- mentarians in order to promote the new tives within the seco-funded PEP led constituency at the World Bank, the leasing legislation. As a result, these coun- programs revealed that the results IMF and the EBRD (Kyrgyz Republic, tries today have one of the most progressive achieved to date across all projects ex- Tajikistan, Turkmenistan and Uzbekistan). legal frameworks for financial leasing. ceed expectations. seco has been providing assistance to Cen- Similarly, we learned from the teams work- We are especially proud that seco fund- tral Asia since 1992, initially focusing on ing on the SME policy development and ing has been instrumental to launch the infrastructure and macroeconomic issues. surveys in Tajikistan and Uzbekistan how Partnership's activities in Central Asia. Today our programs emphasize SME they managed to collect very useful data Our joint program today is widely rec- growth and trade promotion. Our joint from thousands of SMEs in their respec- ognized as one of the highest performing programs with IFC focus on leasing de- tive countries, under very difficult in the region. One of the Partnership's velopment, creating a better enabling conditions. In Tajikistan, we met with the great strengths is that it takes a compre- environment for SMEs, and developing farmers--our partners through the SAS hensive approach to the development of rural finance. company. It was amazing to see how they the entire CIS while customizing its pro- become increasingly aware of their duties grams to the needs of each country, In cooperation with seco the Partner- and rights as SAS shareholders and regu- allowing for the donor funds to be allo- ship is implementing a unique project larly attend board meetings to discuss cated to projects that are most needed in Tajikistan--SugdAgroServ (SAS), complex management issues. In Russia and most effective. In addition the Part- unique from the perspective of donor and in Ukraine it was interesting to see nership brings innovation, sustainable involvement. seco is not only providing how companies participating in corporate project design and clearly defined exit grant funding for the technical assis- governance projects begin to understand strategies. tance project but also co-investing with the benefits of introducing best corporate IFC. Is it a typical model for seco? governance practices in their daily busi- Our collaboration with IFC is a true ness. Most of them have to struggle to partnership. seco actively participates in Access to finance is repeatedly identified introduce transparency in an adverse busi- project design and activities through our by SMEs in emerging markets as the main ness environment. own local presence in partner countries. problem they face not only to expand, but This active involvement allows us to bet- to ensure their survival. Therefore, like Generally speaking, the single most strik- ter understand the issues at stake and many other development agencies, seco ing impression during all our field visits respond rapidly to the countries' needs. has launched initiatives to help bridge the was to acknowledge the commitment and financing gap for SMEs. We have invested enthusiasm of the Partnership's staff. The seco is very satisfied with our joint work in a wide range of sometimes innovative Partnership has a demonstrated ability to with the Partnership, and we recently vehicles that offer assistance and financing recruit the right people on the ground and decided to extend our partnership for to SMEs in our partner countries. has gained credibility with local partners-- additional three years. a crucial factor for achieving lasting results. thePartnershipPerspective Fall ProgramLaunch 3 U K R A I N E The Partnership Takes Its Leasing Expertise to Ukraine In June 2004, IFC's Partnership launched a three-year initiative: Ukraine Leasing Develop- ment Project with funding from the Dutch Ministry of Economic Affairs. To develop the country's leasing sector the project will work with the Government of Ukraine on leasing legislation, conduct professional training pro- grams for leasing companies and their clients, provide consultations on leasing, and facilitate business partnerships between local and foreign companies. The project will also carry out a broad education campaign on leasing in the business community through various informa- tional products, seminars and round tables. M O N G O L I A The Partnership Expands its Mission to Mongolia, Starting with Leasing In July 2004, IFC's Partnership launched a two-year technical assistance initiative to de- velop the leasing industry in Mongolia. The Mongolia Leasing Development Project is fi- nanced from the Japan-IFC Trust Fund and from the IFC's Technical Assistance Trust Fund. The Project will focus on creating favorable conditions for the development of leasing in the country, providing local businesses with a viable alternative to bank finance. The project will work with the Ministry of Finance and Economy, the Ministry of Trade and Industry, and the Ministry of Justice, as well as with a working group composed of financial institu- tions to develop relevant legislation. The project will also build the capacity of the leas- ing market through training and consultations. The Project builds on the extensive experience the Partnership has acquired through its successful leasing development programs in Russia (supported by Canada, Finland, the United Kingdom, and most recently Sweden), Central Asia (supported by Switzerland and USA), Azer- baijan (supported by Switzerland), and Georgia (supported by Canada). The Partnership has been instrumental in improving leasing legislation and training thousands of leasing market participants across these countries. The Part- nership's leasing work in Russia and Central Asia has facilitated investment in this sector, including nearly $40 million from IFC in five leasing companies in Russia and more than $4 million in Uzbekistan. ProgramUpdate 4 T A J I K I S T A N The Partnership Takes its SME Survey to Tajikistan funded organizations to prioritize on local NGOs and business as- the issues facing SMEs in the coun- sociations for access to credit. try, IFC conducted a survey of the Entrepreneurs reported low legal sector in June 2003. The survey, awareness. Only 14% of the funded by the State Secretariat for polled entrepreneurs admitted Economic Affairs of Switzerland having good knowledge of the (seco), polled 2,000 representatives legislation that regulates their of small and medium businesses, pri- business activities. vate farmers and individual entrepreneurs across Tajikistan on a SMEs, on average, face 16 in- number of issues regarding the busi- spections by authorities per year ness environment for SMEs. The that last a total of 17 days. 98% Partnership's work on the survey is of the respondents admitted mak- based on its experience of conduct- ing unofficial payments to ing similar surveys in Ukraine and inspection authorities. Uzbekistan. Drawing on the key findings of the Some of the key findings of the sur- survey IFC's Partnership developed vey revealed the following constraints recommendations on steps to take in to SMEs growth: order to overcome administrative hurdles to SMEs development. The Starting a business in Tajikistan Partnership will now work with the is very costly. It takes an equiva- Government of Tajikistan on imple- lent of $176 to register a business menting these recommendations. and an additional $163 to obtain Specifically, IFC will advise the Gov- various permits and approvals or ernment on eliminating existing twice the amount of the coun- contradictions within the legislative Tajikistan is one of the poorest coun- try's per capita GDP of $186. base regulating the SME sector. The tries of the Central Asia region with SMEs have very limited access to Partnership, in cooperation with lo- an annual per capita GDP of $186 or external financing. Only 3% of cal business associations and NGOs, 52 cents a day. More than 80% of Tajik- the respondents obtained financ- will also focus on raising the legal istan's 6.3 million population live below ing from banks while 18% relied awareness of Tajik entrepreneurs. the poverty line. Throughout much of the early to mid 1990s the country was torn by a civil war. Only now Tajikistan is starting to recover from the effects of the conflict. Most of the country's economic recovery is seen in the small business sector. Small and medium-sized enterprises (SMEs) have become a major force of economic growth and job creation in Tajikistan, ac- counting for 35% of the country's GDP and employing 25% of the working popula- tion. However, Tajikistan's entrepreneurs face a number of daunting administrative hur- dles when starting and growing their businesses. In order to assist the Tajik government and donor- thePartnershipPerspective Fall 5 U Z B E K I S T A N The Power of Knowledge IFC's Partnership raises legal awareness of Uzbek entrepreneurs and empowers them Having read the brochure, Mr. Khay- to exercise their rights and fight corruption darov now has more confidence in facing future inspections. He says that Komiljon Khaydarov owns a small improvement of the inspections from now on every inspector will face café in Uzbekistan's Ferhana Valley. regime. The project works closely a serious test on proper inspection For many years his business suffered with the Ministry of Justice and its procedures before entering his café. from unauthorized inspections by var- Department for Protection of Entre- "Compared to my previous experi- ious government agencies. According preneur's Rights on developing policies ences, when I was at the inspectors' to Mr. Khaydarov, such inspections to curb unplanned inspections, fight mercy, today I am armed with would paralyze his business and would abuse of power by the regulatory au- knowledge about my rights and re- have a negative impact on business thorities and raise overall legal sponsibilities," said Mr. Khaydarov. As partners and clients. He was not even awareness across the country. a deterrent to any unsanctioned in- spections, Mr. Khaydarov attached the brochure to the wall of his office that demonstrates his knowledge of a proper inspection process. In fact, he was able to halt a non-sanc- tioned inspection by pointing out procedural irregularities. "It is hard to believe that a month ago I had no clue about my rights and re- sponsibilities of inspectorates, as a result I had to pay inspectorates with- out knowing what the payment really was for. I hope that my fellow entre- preneurs and other representatives of the business community will take this brochure seriously and share informa- tion with others. We are now more informed and know how to protect sure whether all of the inspections An effective instrument to increase our businesses," said Mr. Khaydarov. were officially sanctioned. To avoid SMEs' understanding of their rights problems with the inspection authori- and responsibilities has been the re- ties, Mr. Khaydarov, like thousands of cently published brochure "What one other Uzbek entrepreneurs chose to needs to know about inspections." It A Broader View make unofficial payments. was produced by the Partnership's Since the Partnership has started SME Policy Project in cooperation The issue of unauthorized inspections its work with the Government of with the Ministry of Justice of Uzbek- in combination with low awareness Uzbekistan on improving the in- istan. The brochure is an easy to read among entrepreneurs of their rights spections regime, the average step-by-step handbook explaining were revealed by the Partnership's number of annual inspections per what entrepreneurs should know about survey of Uzbek SMEs. IFC has been enterprise has decreased from 6.2 inspections. conducting annual surveys of the SME in 2001 to 1.9 in 2003. The share sector in Uzbekistan since 2001 with To date 28,400 copies of the brochure of entrepreneurs who claimed their support from the Swiss State Secre- have been distributed in Uzbek and understanding of inspection regu- tariat for Economic Affairs (seco). Russian through local business associ- lations is good increased from 30% These surveys help IFC and the Gov- ations and government agencies, to 51%. ernment of Uzbekistan identify key including reprints in local newspa- Currently the project is assisting issues to focus on in order to remove pers. To satisfy the growing demand the Government of Uzbekistan in constraints to SME growth and to in the business community for the vi- developing transparent criteria for monitor progress over time. tal information the brochure contains, selecting enterprises for inspec- IFC's SME Policy Project gave local Today, at the request of the Govern- tions and to simplify the inspection administrations official permission to ment, the Partnership's Uzbekistan procedures. reprint the brochure. SME Policy Project focuses on the ProgramInFocus 6 Transparency, Accountability, Efficiency in Managing Donor Funding In the Spring 2004 issue of the Part- ings, providing reference materials nance team. The centralization of nership Perspective we described the and manuals, and conducting regular the financial control allows the Part- Partnership's management structure compliance checks. nership to reduce administrative costs that is designed to deliver high im- and manage donor funding more ef- pact programs while maximizing the ficiently through common oversight, value of donor contributions. This Accountability clear division of responsibilities, and article focuses on one of the compo- The Partnership's business model is effective transfer of skills and experi- nents of the Partnership's manage- project-based. This means that we ences. ment--financial oversight of the work with our donor partners to de- The Partnership's finance team is an donor and IFC funding. velop, fund, and implement individual integral part of the Partnership's Since its inception in 2000, IFC's projects. This approach helps us be overall management. The team is in- Private Enterprise Partnership has more accountable by specifying how volved in the Partnership's projects managed over $50 million in donor each donor dollar is spent. Our fi- throughout their full life cycle. Dur- funding for over 75 projects. Our nancial reporting to the donors is ing the project development stage donors include government agencies aligned with our project-based ap- the finance team provides budget of 12 countries. In addition, the Part- proach to programming, and we forecasts based on the Partnership's nership is managing IFC's contrib- report separately to each donor on accumulated experience. This allows ution of $4.6 million per year to pay each project they fund. us to improve continuously the accu- for the Partnership's fixed costs asso- Many of our donors have signed long- racy of budgets for every new project. ciated with its management. To term framework agreements with the During the project implementation administer the overall program in an Partnership. These agreements are stage, an accountant is assigned to a efficient and cost-effective way and designed to simplify the administra- particular project. As an integral maintain a high level of transparency tive procedures involved in member of the project team, the ac- and accountability, the Partnership developing and adding new projects. countant provides support to project established a centralized financial However, these bilateral long-term managers and operational staff on a control system. The administrative agreements do not reduce the extent range of financial issues as well as as- costs of the Partnership's financial of the Partnership's financial account- sists in preparation of customized oversight of the donor funding are ability and reporting to donors. Even donor reports. covered by IFC. if a long-term agreement with a donor stipulates a range of initiatives across Finally, when our projects near com- different countries and program ar- pletion, the finance team works Transparency eas, we continue to report on each closely with project managers to pre- pare final reports and oversee the In managing donor funding the Part- project separately. audit of the projects. nership adheres to both World Bank In practice it means that during the Group and donor policies and proce- project development stage we de- dures. These policies provide mea- velop and negotiate a project budget Our Finance Team sures and mechanisms to ensure trans- with a donor. Once a donor approves parency and accountability in The Partnership's finance team con- the project and transfers the funding, spending donor resources. For exam- sists of local accountants based in the Partnership assigns an individual ple, each expense goes through two Moscow and in six other country of- trust fund to each donor. For exam- checks before funding is dispersed. fices. The team is managed from ple, if two donors are sponsoring one Donor-funded projects are audited in Moscow by an expatriate financial project, two cost centers are created, line with the donor agreements and controller. The network of account- one for each donor. It allows us to IFC requirements by both internal ants throughout the region allow the monitor expenses of the donor fund- and external auditors. team to respond effectively the needs ing precisely and gives us the of the Partnership's projects and Our finance team plays an important flexibility to meet individual donor donors. The Partnership provides role is facilitating our projects' com- requirements for financial reporting. on-going learning opportunities to pliance with these practices of the finance staff to strengthen their transparent and accountable financial professional skills. management. Specifically, the team Efficiency increases awareness of internal and The Partnership's financial controls donor procedures among project staff system is managed centrally by a fi- through conducting regular train- thePartnershipPerspective Fall ImpactOnTheGround 7 U K R A I N E Galnaftogaz Makes the Grade: Transparency Pays off continued from page 1 Galnaftogaz is a successful enterprise tition to attract financing it needed to tally new level of corporate gover- that built a widely recognized brand of grow. nance. The project reviewed the filling stations, "OKKO". The com- company's corporate documents and Having participated in a series of work- pany's young and progressive assessed its the financial practices and shops and consultations on corporate management, however, realized that recommended improvements to governance, delivered by IFC's Ukraine securing the company's strong posi- strengthen the company's internal gov- Corporate Development Project, Gal- tion in the market required forward ernance and management. More naftogaz quickly realized the value of thinking and a solid growth plan. The importantly IFC helped Galnaftogaz corporate governance in building in- management's vision for the develop- develop one of Ukraine's first internal vestor confidence and attracting ment of the company included reaching corporate governance codes and helped financing. According to Andriy Khudo, a 10% market share by 2008 through the company position itself as a na- the company's analytical department adding about 25 filling stations to the tional leader in corporate governance. chief, "We realized that investors are existing network of 160 every year. The company's leadership in imple- becoming increasingly concerned The key challenge to implementing menting sound corporate governance about corporate governance and are this ambitious expansion plan was find- practices has paid off in Galnaftogaz's willing to pay a premium for good cor- ing financing. While domestic search for financing. This year the porate governance. We decided to financing remains in short supply and company received $28 million in fi- improve our governance practices and foreign investors refrain from taking nancing from international banks. In turned to IFC for assistance". high risks in the Ukrainian market, addition IFC is currently appraising competition for available financing IFC's Ukraine Corporate Develop- the company for providing a $90-mil- among companies is high. Galnaftogaz ment Project worked with Galnaftogaz lion loan. had to differentiate itself from compe- to take the company to a fundamen- A Broader View IFC's Ukraine Corporate Develop- ment Project promotes the development of the private sector in Ukraine by helping companies and the government develop sound cor- porate governance practices and strengthen corporate regulations. The project is funded by the govern- ments of Canada and Switzerland. In the three years of its work, the project conducted 77 seminars for corporations in 29 Ukrainian cities attended by more than 3,078 people and provided 2,047 consultations on corporate governance, financial man- agement and investment strategies. Twenty more companies received individual in-depth consultations to address company-specific governance concerns. At the national level, IFC worked with the government to draft the Ukrainian Corporate Governance Principles. The Securities and Stock Market State Commission approved the Principles in December 2003. At the request of the Supreme Court of Ukraine the project has analyzed hundreds of court cases to summarize the existing practices of applying the Law "On Companies" to regulate activities of joint stock companies. The summary of court decisions prepared by the project was published by the Supreme Court and is available at the Ukrainian book stores. It is expected that this document will enhance consistency in court decisions and thus will have sig- nificant impact on enforcing corporate governance in Ukraine. To ensure that future managers understand the value of corporate governance and have the skills to practice it, the project helped 41 universities across Ukraine introduce corporate governance in their business course curricular. ImpactOnTheGround 8 T A J I K I S T A N Private Sector Approach to Fight Poverty and financial issues. In addition the Partnership provides farmers hands- on training in the fields on modern IFC in partnership with the Swiss State Secretariat for Economic Affairs help Tajik and environmentally sound agricul- farmers set up a private company to take control of their commercial activities tural practices and offers in-class trainings on financial and business Just three years ago Mr. Sufi Fatku- markets, IFC and seco established a issues. laev, a cotton farmer from the Sugd private company SugdAgroServ. The Mr. Sufi Fatkulaev is one of SugdA- Oblast of Tajikistan, could barely make company is completely owned by 365 groServ's shareholders. With $40,000 ends meet. His farm did not generate Tajik cotton farmers who purchased in loans received from the company, enough profit to pay for the planting shares with their own capital supple- he purchased agricultural machinery of the next crop. He could not afford mented by seco's grant funding of and was able to increase his farm's to pay his workers in cash and instead $2000. To finance the new company production. After one year of work- paid them in wheat, cotton seed oil seco provided additional grant fund- ing with SAS he returned his farm to and cotton stalks. The farm was falling ing of $248,000 as capital reserve, and a profitable status and has increased into decay and the future was very un- IFC has provided a commercial loan his profits in the subsequent two years certain and frightening. of $250,000 for working capital. through better management prac- The story of Mr. Sufi Fatkulaev is quite typical among Tajik cotton farm- ers across the country. After the collapse of the Soviet Union and a five-year civil war, most of Tajikistan's agricultural infrastructure deterio- rated, leading to a sharp decline in the production of cotton--historically the focal industry of the Tajik economy. With the disintegration of the cen- tralized Soviet economy, Tajik farmers no longer had access to cheap inputs, and the state no longer guaranteed the purchase of their cotton. Farmers SugdAgroServ makes loans to its tices learned from the technical became dependent on ginneries and shareholders, retails farming inputs, assistance program. He now pays his other middlemen for financing and and provides marketing services to workers a stable wage in cash and is often sold their crops at large dis- farmers' clients. To date, the company even able to award modest bonuses counts, which resulted in further has provided over 200 loans totalling to his better workers. His farm em- compounded debts. $1,000,000; supplied over 1,000 tonnes ploys 60 workers and supports of fertiliser, improved cotton seed and In order to alleviate the acute poverty approximately 70 families. equipment at competitive prices; and of Tajik farmers, IFC launched a rural Last year, the cumulative production marketed over $1.8 million of farm- finance project with support from the by SugAgroServ's clients exceeded the ers' crops. Today, two years into its State Secretariat for Economic Affairs province's average by 35%. Having operations, the company is profitable of Switzerland (seco). achieved such results the company is and pays dividends to its shareholders. To empower Tajik farmers to take already expanding to broaden its share- IFC's Partnership supports the com- control of their commercial activities, holder and client base. IFC and seco pany's operations with technical improve their access to finance, in- will continue to provide financial sup- assistance on management, business, crease their productivity and access to port to the new expanded company. The Partnership Perspective is Editors: Irina Likhachova 36 Bldg. 1 Bolshaya 2121 Pennsylvania Avenue, NW a publication of the IFC's Private Svetlana Pletneva Molchanovka St., 3 rd Floor Washington, DC 20433, USA Enterprise Partnership. Moscow 121069, Russia Tel.: + 1 (202) 458-0917 Contributors: Kenan Erkan Tel.: + 7 (095) 411-7555 Fax.: + 1 (202) 974-4312 Anna Honcharyk Fax.: + 7 (095) 411-7556 Irina Likhachova Dina Nicholas www.ifc.org/pep Svetlana Pletneva e-mail: ifcpep@ifc.org Currency is given in U.S. dollars throughout unless otherwise specified. thePartnershipPerspective Fall