Southeast Europe Enterprise Development (SEED) is a multi-donor initiative managed by the joint World Bank Group-IFC SME Department to strengthen Small and Medium Enterprises (SMEs) in the Western Balkans. Known as the Balkan Enterprise Facility during its inception, this five-year initiative has a planned budget of nearly US$ 40 million, and is funded by Austria, Canada, Greece, the Netherlands, Norway, Slovenia, Sweden, Switzerland, the United Kingdom, and IFC. SEED was initially launched in September 2000 in Albania, Bosnia and Herzegovina, Macedonia and Kosovo The board of donors extended SEED's reach to fully include the Federal Republic of Yugoslavia in May 2001.
SEED specifically supports the development of private SMEs through capacity building and facilitating access to capital. SEED offers a variety of services to enhance the abilities of individuals and other organizations that serve the needs of SMEs such as business associations, chambers of commerce/economy, local consultants and educational institutions. SEED also will work closely with the World Bank Group and other international institutions to improve the difficult operating environment for small businesses in the target economies. Headquartered in Sarajevo, SEED has regional offices in Banja Luka, Belgrade, Skopje and Tirana.
 SEED's Mandate |
SEED supports the development of Small and Medium Enterprises as well as individuals and institutions that serve the needs of SMEs and will enhance the broader enabling environment in which all of these stakeholders operate. SEED implements its mandate through tailored, enterprise- and organization-specific technical assistance, capacity building programs, training courses and research / policy interventions.
To implement our mandate fully, SEED embraces three strategic targets of assistance:
· Enterprise-level Investment Services
· Capacity Building of Enterprises and Institutions Serving SMEs' Needs
· Improvement of the Business Enabling Environment
 Investment services |
The goal of SEED is to target companies for sustained, market-based competitiveness. If SMEs can define their business in these terms, then and only then are they ready for financing. SEED attempts to identify clients that are near this goal. In such cases, SEED will actively try to match the company with appropriate investors and financiers immediately. SEED will assist development where there is a need to strengthen SME performance, prior to seeking financing. These pre-investment services are described in the text below:
Pre-investment services encompasses pipeline development and the preparation of a company's Development Plan:
Pipeline Development: SEED works to develop a pipeline of companies (clients) and to identify and catalyze financial resources both at a domestic and international level. We seek input from providers of finance regarding high- potential sectors and regions, as well as specific terms influencing companies' access to financing;
Development Plan: SEED assists its clients to develop a clear and specific plan as well as methodology of the overall company's development. The plan focuses not only on the internal and external financing needs of the company, but also on current and future marketing opportunities and challenges, strategic issues to be faced by the company, operational analysis of current operations and corporate governance issues and training.
Post-financing services: After successfully identifying and helping to negotiate an initial investment, SEED intends to maintain and strengthen its links with the company and develop a long-term relationship with its clients. This long-term relationship allows us to offer post-financing support, keeping in mind the needs and targets established in the Development Plan. Three specific post-investment services might be:
· Post-investment cash flow management (with a focus on debt servicing commitment);
· Development Plan Implementation;
· Market Analysis and enhancement of marketing strategy for better understanding of future demand.
Investment services products aimed at SMEs in various stages of development and competitiveness
| Internal Enhancement Plan (IEP) |
SEED assists the Company in analyzing its current situation and determining / prioritizing the appropriate actions to improve internal management systems. SEED's recommendations focus on systems and mechanisms that can be implemented in the near term such as working capital management, MIS, cost analysis, and quality/environmental certification. SEED helps the Company identify the resources it needs to implement the IEP including members of its own staff, local consultants, SEED staff, and inter-national experts if required.
Following the implementation of key recommendations in the IEP, SEED assists the Company in designing an IP for the Project. The IP provides pro forma financials of the proposed project, gauges the receptivity of potential investors and their likely requirements for equity purchase, loan pricing, maturity, security, support arrangements, and other financing features.
| Marketing the Investment Plan |
SEED will market a company's IP to a targeted group of financial sources on a commercially reasonable efforts basis. Investment negotiations with the financial partner are responsibility of the Client. SEED will provide services to its clients to help prepare them for such negotiations.
| Environmental and social overview of SMEs |
As a part of the existing services, SEED will review all aspects relating to the environment, occupational health and safety, fire protection, social issues, etc. This review will be an integral part of the IEP and IP. SEED's environmental consultants will help the Company seek solutions on issues dealing with environmental protection. They will closely cooperate with the client to identify the project impact, mitigate or reduce risks and potential negative side effects, and in addition highlight the importance of environmental and social outcomes.
| Useful web tools as part of investment services |
SEED as part of investment services has launched
SEEbiz.net (Southeast Europe Business Network), a regional web portal for entrepreneurs.
The goal was to create a central repository for all business information relating to the registration process, credit lines, taxes, institutions, associations, organizations and individuals who provide services to small and medium-sized enterprises. In addition this portal contains information on certain sectors of the economy such as certification, export of products, forwarding and transport, packaging, marketing and similar. Most recently feedback from the pilot web page that covered food and wood industry in BiH and fruit and vegetable processing in Yugoslavia, has indicated that there is a big interest among entrepreneurs for these type of services. A new version of the portal is under preparation and it will allow for daily updating with agency news, an exchange rate list, advertisement banners, calendar of events with an increase in the number of industrial sectors. The new version of the portal is scheduled to be published on the Internet in May.
During the first stage in addition to BiH and Yugoslavia the portal will be expanded to Macedonia, and to Albania by the end of this year. By the end of September the portal will get new contents such as registration of users, e-mail accounts, e-bulletin, and others.
SEED has undertaken this project in cooperation with local and foreign partners; including SAYBER for BiH, europroNET for Yugoslavia, and GTZ for Macedonia. Since inception the objective has been to develop SEEbiz.net as a commercial project, that would provide services after the cessation of SEED's mandate.
| Investment services success stories |
During FY '02 SEED is conducting initial estimates for 89 SMEs and 64 IEPs that are designed to help companies improve their current operations. In addition to this, SEED intends to develop 48 investment plans. Up to the third quarter of '02 SEED's efforts have resulted in USD$ 8 million investments for seven SMEs. Highlights of SEED's work with investment services clients follow:
Ilidza "Diamond" sparkling mineral water
Introduced appropriate planning of seasonal working capital requirements, contributing to savings up to €100. 000 annually;
Developed marketing strategy for conquering 24% of the market of mineral water in the Federation BiH;
Advised the company on the most optimal production mix;
Made arrangements for financing by DEG in the amount of €1,200,000.
Bamcard - card processing center for 17 banks
Provided capital to the amount of €100 000;
Helped arrange loans to the amount of €250 000;
Reduced investment costs by €450 000 through equipment optimization;
Developed a strategic and marketing plan;
Developed a price list and organizational structures to optimize profitability;
Introduced the company to international accounting standards in card processing by utilizing professional consulting.
Tetra Pak line
A greenfields project set to produce 4.5 million liters of fruit juice annually:
Advised the company on development of the investment concept (project site, type of products, type of equipment);
Successfully raised €150,000;
IEP resulted in additional financing from Tetra Pak;
Provided technical expertise for operation of the production line;
Trained executives in financial and strategic management.
|
PVC window frames
Raised a €150,000 loan for the purpose of expanding production capacity;
Increased gross profitability by removing production bottle necks;
Installed management information systems (MIS) software and provided relevant operational training;
Saved €125,000 by providing advice on management of working capital;
Arranged a one week strategic management training.
Capacity Building
Experience has shown that some small and medium-sized enterprises (SME) have been innovative and have applied western business management techniques and visions to their operations. Some enterprises have managers and employees who spent an extended amount of time abroad and have been able to apply those experiences on their local business. However, the vast majority of private companies have been shielded from modern market economies and are at a disadvantage trying to develop their businesses.
As part of capacity building SEED implements the core training programs for SMEs, designed to enhance the entire business competitiveness by facilitating improvements in key areas such as - financial management, marketing and distribution, environmentally friendly production, corporate governance.
SEED also informs and educates enterprises about the crucial segments of the operation of a business emphasizing:
- strategic planning
- importance and use of financial statements
- staff development programs
- production management
- general and administrative management
- marketing and sales management.
In addition to direct assistance to SMEs, SEED is building the breadth and quality of the relevant services offered in the market.
SEED identifies and partners with local consultants, chambers of commerce, business associations and municipal bodies, whose role is to serve the SME sector. In the last fiscal year and up until the 3rd quarter of fiscal year 2002 SEED has organized professional seminars and workshops that included around 330 employees from various companies. In the same period SEED conducted a series of "train the trainer" workshops with the participation of 50 consultants.
| Types of Training Programs offered by SEED |
Train the Trainers
Capacity building of SMEs and Business Development Specialists (BDS)
On site training and training for groups
Specific sector e.g. Agribusiness and construction
Some of the Training Topics
"What will an International Lender Want to Know about My Company?"
It provides detailed instructions on the information required by donors and international banks from credit applicants:
· Overview of market analyses
· Overview of the strategic planning process
· How to prepare the balance sheet and income statement
· How to analyze working capital and cash flow
· How to improve working capital and cash flow by managing the operating cycles
· How to project the financial performance of my company
| Executive Management Development |
It is exclusively created for Chief Executive Officers (CEO's)
· Your role as a CEO
· What you as a CEO need to know about financial statements
· How can you use the financial statements to manage your company more efficiently
· The crucial role of the CEO in managing resources - financial, human, material and fixed assets
· Managing strategically to improve profitability
· Performance measurement and management reporting systems
· Cash crises management
"Do you plan to fail if you fail to plan"
· Why should CEOs think strategically?
· What is a strategic plan? When is it useful?
· What is strategic thinking?
· What is change management?
· What is the strategic planning process?
"What you need to know about financial statements"
This training program is exclusively created for CEOs.
· What do balance sheets and income statements tell me about my company?
· What is working capital and how can it be improved?
· How can my company generate more cash?
· How do I know that all my business lines are profitable?
· How much cash does my company need every month and will it run out?
"How to prepare winning bids on large construction projects funded from international or local funds?"
This training format will teach you the process of submitting bids, including:
· Understanding the instructions to bidders, technical specifications and special conditions
· How to read drawings thoroughly and accurately
· Pricing and understanding the bill of quantities
· How to price competitively and profitably
· International standards for construction
· FIDIC contracts for construction
· Access to information about the upcoming construction projects
"Agribusiness: production according to the EU standards"
· Maintaining the quality control and insurance systems (ISO, HACCP)
· Food safety for a broader product process
· Appropriate hygiene in a facility and sanitary procedures
· Good Manufacturing Practice
· Product handling and its storage
· Identity protection
· Importance of certain packing and labeling
· Standards unique for some EU markets
· Different tastes and preferences within the EU markets, having an impact on the quality standards
| SEED's success in Capacity Building |
Micro Enterprise Bank d.d. Sarajevo (MEB Bank)
SEED organized training for the loan officers and credit analysts
MEB bank is a specialized financial institution set up as a private-public partnership in 1997 by the international financial institutions and private capital providers. The MEB's objective is provision of a full range of banking services to micro and small entrepreneurs and businesses.
The training was aimed at developing MEB loan officers' and credit analysts' fundamental skills in attracting potential borrowers, analyzing loan applications and making recommendations on whether to provide loan extensions. The challenge was to design an effective training course for loan officers with some prior experience in analyzing and issuing loans.
The training curriculum successfully combined advanced conceptual material, in particular "The 5 C's of Credit" and "Industry Characteristics", with realistic sample analyses and case studies. The training material was designed for immediate relevance to the loan officers. The principle instructor, Ms. Jane
Mc Neil, included case studies based on actual MEB cases.
The "Concepts of Funds and Funds Flow" and assessment methods for entrepreneurs' management abilities proved practically effective in enhancing participants' knowledge. Exercises on generating financial statements further developed the loan officers' practical skills. In all, the training course can be deemed a valuable contribution to institution building for the credit operations of MEB Bank Sarajevo.
| Japet - Affordable Accounting Software |
It is rare that small business enterprises in the region have an automated accounting system. The owners/managers are not aware of providers of accounting software nor do they possess the skills to use it. Cost is another deterrent to its use. Providing complete and accurate financial information, however, is a standard requirement of providers of external funding such as foreign lenders and venture capitalists.
SEED's research of the market in Sarajevo identified JAPET, a provider of accounting and inventory management software that could be adapted for use by SMEs. With the potential for multiple installations, the local provider was willing to sell the software at one half the standard price, a cost they could afford. Additionally, due to the infrequency of SMEs using an automated accounting system, there is limited skill and knowledge of such systems.
SEED financed the installation costs and training for employees of the clients that purchased automated accounting systems. In addition to training by the software vendor, SEED staff provided financial management training so that the companies' owners and managers can use financial information to manage their companies more efficiently. |
