1. Poverty Community of Practice Meeting MSME Development in Central Asia Wojciech Hübner Regional Economic Advisor in Central Asia Issyk-Kul, 16-18 November, 2004

2. MSME Development in Central AsiaPoverty Community of Practice Meeting, Issyk-Kul, 16-18 November 20042 MSME development Fundamentally important Context of poverty alleviation “From job seekers to job creators” Powerful vehicle to help change attitudes Multiplier effect Market economy – as close as one can get * * * Use accumulated knowledge – selective new approach – synergies and cooperation

3. MSME Development in Central AsiaPoverty Community of Practice Meeting, Issyk-Kul, 16-18 November 20043 MSME sector – Among remaining challenges Deficiencies of business environment Unclear entrepreneurial perspective Limited decentralisation Shadow economy Too few innovative businesses Corruption Limited results in entrepreneurial development Behavioural and cultural change Donor community: fragmentation of the development effort

4. MSME Development in Central AsiaPoverty Community of Practice Meeting, Issyk-Kul, 16-18 November 20044  What kind of technical assistance initiatives should be of primary focus for the UNDP?  Which should be the target areas?  How to best implement the decided strategy?

5. MSME Development in Central AsiaPoverty Community of Practice Meeting, Issyk-Kul, 16-18 November 20045 Complexity: Focus on coordination with other donors; search for strategic alliances; Constraints: Preference given to the extension, strengthening and complementing the already successful line of UNDP’s assistance; Use our own assets: Exchange of best practices among CA countries;

6. MSME Development in Central AsiaPoverty Community of Practice Meeting, Issyk-Kul, 16-18 November 20046 SME technical assistance: Should respond to actual, recognised and important needs;  Be highly efficient. The sources of efficiency may stem from an advantageous positioning of the UNDP, and /or specific experience already gathered;  Bring clear value added;  Possibly create valuable synergies with other UNDP activities;  Should be consistent with the general UNDP’s strategy for Central Asia.

7. MSME Development in Central AsiaPoverty Community of Practice Meeting, Issyk-Kul, 16-18 November 20047 Proposed target areas A. Strengthen Poverty Alleviation / Social Mobilisation / Micro- crediting programs and projects by adding SME development component (new Business Development Centres, business incubators, intensive training based on case studies, apply external and CA best practices); B. Help broaden MSME financing; C. Combat shadow economy and reducing its negative impact; D. Focus on Entrepreneurial Development; E. Increase e-competence in doing business; F. Develop MSME connections to trade development and to foreign investment projects.

8. MSME Development in Central AsiaPoverty Community of Practice Meeting, Issyk-Kul, 16-18 November 20048 Implementation of the MSME development strategy – main guidelines 1. Use the MSME development as a link for subregional initiatives 2. Improve/develop efficient partnerships with governments 3. Aim at setting up of permanent structures; viable after the project is over; 4. Broadly use cooperation with Associations, NGOs – with ultimate focus on final end-users

9. MSME Development in Central AsiaPoverty Community of Practice Meeting, Issyk-Kul, 16-18 November 20049 5. Promote role of woman-entrepreneurs 6. Further decentralize assistance effort 7. Support only realistic E-strategy 8. Promote spirit of openness and export orientation in SME development 9. Accept only result-oriented initiatives, however adjustable over time 10. Promote broad participation of UNDP COs staff in regional initiatives

10. MSME Development in Central AsiaPoverty Community of Practice Meeting, Issyk-Kul, 16-18 November 200410 The follow-up: 1.Next input: national feedbacks to be incorporated in the next version of draft Strategy (types of activities, concrete initiatives, events, etc.). 2. New version of the draft – with national supplements and a matrix: countries /priority SME activities. 3. SME subregional specialists roundtable

11. MSME Development in Central AsiaPoverty Community of Practice Meeting, Issyk-Kul, 16-18 November 200411 4. Set up permanent CA SME Task Force – SME development intellectual centre (with a database and website). 5. Discuss proposed subregional and national strategies with leading government institutions and business associations 6.Formulate 2-year Action Plan 7.SME Subregional Conference – according to Subregional, iterative and participatory approach

12. MSME Development in Central AsiaPoverty Community of Practice Meeting, Issyk-Kul, 16-18 November 200412 Thank you