GOVERNMENT OF THE REPUBLIC OF BELARUS
UNITED NATIONS DEVELOPMENT PROGRAMME
COUNCIL FOR ENTERPRISE DEVELOPMENT
NATIONAL FUND FOR ECONOMIC RESEARCH
AND LEGAL INITIATIVES
Improving the administrative and economic environment for private sector development by facilitating public-private dialogue
The aim of the project is to promote effective public-private partnerships in identifying and removing barriers and challenges to small business development, to strengthen the expertise of the business community and to broaden its options for participation in the policy and rule-making process. The project will help develop the tools for comprehensive and consistent monitoring of trends in the small business sector. It will strengthen the role of the business community in creating a more favorable business environment by promoting its participation in the drafting of legislation and development and promotion of legal initiatives.
Country: Republic of Belarus
Country Programme Outcome: Improving the business and investment climate by promoting public-private partnerships
Implementing Partner: Council for Enterprise Development
National Fund for Economic Research and Legal Initiatives (NFERLI)
The present stage in the development of private enterprise is marked by a broad recognition of private sector’s role as an engine for employment generation and for sustainable socio-economic development. This recognition is reflected in a range of government documents that define private sector development as a key macroeconomic policy objective and set concrete indicators for its expansion. The 25% target for the share of small business in total sales of goods and services – set by the previous socio-economic development programme – has been met. The socio-economic development programme for the next five-year period calls for continued enlargement of the small business sector.
The National Sustainable Development Strategy up until 2020 emphasizes the great potential of the private sector in the transition to innovation-based development and calls for a more proactive role for SMEs, as well as a more effective business environment. “Stronger coordination and more effective interaction of private business and the civil society” have been stated as a leading principle of sustainable development.
As of 1 January 2005, 53.1% of total GDP was produced in the private sector1, representing a 6% increase over the previous four years. The private sector accounted for 64% of the total output in industry, 71% in construction and 78% in trade. These statistics are an indication of the steady progress made by Belarus in the transition to the market economy.
However, the development of small business has not been equally dynamic. At December 2004, small businesses produced less than 9% of the GDP, around 7% of the total manufacturing output, 14.2% and accounted for around 9% of retail turnover and 8% of consumer output2.
According to data from the Ministry of Statistics and Analysis, the number of SMEs is growing at a rate of no more than 3 - 4% per year. The majority of SMEs are still located in Minsk City and provincial capitals and operate mostly in trade and public catering. SMEs continue to play a fairly limited role in achieving export growth, rural recovery, development of consumer services and other important development objectives. SMEs’ cooperative ties with big business are also limited, constraining the contribution of SMEs to greater enterprise specialisation, technological innovation and other effective growth strategies.
Many reasons for this situation are attributable to the complex regulatory environment for private sector activity. The rules and regulations that govern different aspects of an SME’s operation - from registration to termination - act as a disincentive to enterprise flexibility and private initiative. As suggested by business owner surveys, the need to meet a large number of formal rules and regulations makes businesses less dynamic and constrains their ability to adjust to changing market demands. At the same time, business associations have limited capacity to influence the rule-making process due to lack of coordination and an excessive focus on narrowly defined issues faced by their individual members.
In these conditions, the processes for joint deliberations and decision making are a necessity. Mechanisms are also needed to translate such processes into opportunities to draft and promote regulatory documents affecting the legal environment for business.
The Council for Enterprise Development (the Council) could be the nexus for such processes and mechanisms. Created at the initiative of the President of Belarus, the Council is working to “coordinate the work of enterprise associations and recommend policies aimed at providing comprehensive government support for private sector enterprises”3.
The Republican Fund for Economic Research and Legal Initiatives (the Fund) acts as the Council’s executive arm. The Fund was established and funded by private enterprises and private sector associations (Appendix 1).
The Council of Ministers Resolution No. 819 of 7 July 2004 requires that all decisions affecting the operating conditions for SMEs be debated at the drafting stage at the Council for Enterprise Development.
An Advisory and Steering Conference of Business Communities (the Conference)4 has been established to coordinate the work of the Council for Enterprise Development and business associations on improving the business climate.
However, initial outcomes of those partnerships show the need for a continued effort to provide professional impact assessments of existing and proposed regulatory policies and to suggest well-argued and constructive policy options.
The Interministerial Commission for SME Support and Development - headed by the Prime Minister - is another venue for policy dialogue between the business community and the state. However, the Commission’s work could also benefit from a stronger focus on substantive analysis and a constructive debate of available options.
Overall, the openings for private sector influence on economic policies could be broadened by:
A stronger role for the business community in the policy and rule making processes would enhance the ongoing dialogue between business and the government and create a more favourable and transparent legal and regulatory environment for business in the long run.
To build a meaningful and productive dialogue between business and the state, effective and reliable tools are required to conduct consistent and ongoing studies and to monitor trends in the small business sector as they unravel. In the absence of such tools, assessments of the conditions, status, development and risks to small business are often sporadic and not current, making it difficult to adequately forecast small business sector trends, and timely, well-grounded regulatory responses become difficult or slow to come.
An ongoing comprehensive monitoring of small business is an essential tool for making sound policies on small business support, improving the effectiveness and efficiency of such policies and identifying and removing excessive administrative constraints to small business activity.
The development goal of the project is to improve conditions for new and existing small businesses by enhancing partnerships between business and the state in private enterprise promotion.
The main objectives are as follows:
The project will be implemented in direct partnership with business associations and private sector organisations, the National Parliament, Ministry of Economy, Ministry for Taxes and Duties, Ministry of Statistics and Analysis, Supreme Economic Court, National Law Drafting Centre and other government and public authorities.
The project will be implemented in close collaboration with other international organizations and in coordination with other technical assistance projects. Work on reducing administrative barriers to business will build upon the findings and recommendations sponsored by IFC.
The project is fully consisted with the objectives and target outputs outlined by the Country Programme Document for Belarus for 2006 – 2010. Notably, programme area 1 “Economic growth an improved living standards”, calls for projects aimed at “… (c) improving public-private partnerships and promoting corporate social responsibility, (d) improving the business and investment climate and (e) support for small business by removing excessive administrative constraints”.
These areas for project interventions are in line with the recommendations from the mission on assessment of UNDP activity on small business SME Support from 1997 to 2004.5 The recommendations suggested the following priorities for UNDP involvement in 2006 – 2010:
“Business Enabling Environment - building on past successes in this area, UNDP will work closely with the national Fund for Economic and Legal Initiatives and the Council for Private Enterprise Development to develop a comprehensive action plan for business environment reform. The action plan will be implemented, wherever possible and appropriate, in cooperation with other international organizations operating in Belarus.”
Outcomes from this project, oriented towards improving the business environment, will have a positive impact on private sector development in the regions, thereby contributing to the success of UNDP projects on employment and self-employment promotion in small cities, ecotourism development in recreation areas and socio-economic rehabilitation of Chernobyl-affected regions.
The direct recipients of project assistance include the Republican Fund for Economic Research and Legal Initiatives, the Council for Enterprise Development, Advisory and Steering Conference of Business Communities, the Interministerial Commission on SME Development under the Council of Ministers, and enterprise and private sector associations.
^ include government agencies, private sector enterprises and the general population.
The project is comprised of two components.
The aim of the first component is to strengthen the expertise of the business community and to increase its options for participating in the decision making process. This would involve the following activities:
1. Establishing and facilitating the work of analytical and expert panels consisting of members of the business community, government agencies, R&D institutions and international organizations, including the World Bank, IFC and EBRD.
The focus of each panel and timeline for the production of outputs in each issue area will be defined by the Action Plan on implementing the State Small Business Support Concept for 2006 - 2010.
2. Study of cooperation and subcontracting practices among small and large firms from different countries; evaluation, assessment and identification of opportunities to implement such practices in Belarus;
3. Deepening of partnerships with the Parliament, regional and local legislatures and governments on matters related to small business support. This would be achieved, inter alia, by contributing to working group meetings, workshops. Seminars and other events where the project’s proposals and initiatives could be presented and promoted.
Activities in the second component will include:
1. Developing a methodology for the ongoing comprehensive monitoring of small business development in Belarus. To this end, project activities will include:
The methodology should enable systematic tracking of parameters and trends in small business, while ensuring comparability of statistics and indicators with the EU to ensure internationally valid comparisons
2. Production, publication and dissemination of annual newsletters and generation of media coverage on the situation of small business, its contribution to socio-economic development, and support available to SMEs from the state and technical assistance programmes.
The project will develop and fine-tune the tools for the monitoring of constraints to the private sector. Upon completion of the project, this work is expected to be taken over by the National Fund for Economic Research and Legal Initiatives. In doing so, it will rely on a pool of national experts created and utilized by the project. These experts could also be of use to the Republican Fund, the Council for Enterprise Development, and the Coordination and Steering Conference in the pursuit of other priorities.
The existence of an ongoing constructive dialogue between business, the legislature and government would help introduce the legal changes needed to improve the business environment and guarantee steady progress towards more stable and transparent conditions for the private sector.
This project will mobilize the efforts, inputs and complementary capacities of UNDP and business community to address the issues facing the Belarusian private sector.
The project will be implemented in the national execution modality in accordance with the guidelines and recommendations contained in Resolution 47/199 of the UN General Assembly, directed towards greater decentralization of UNDP-funded activities. As a follow-up to the Resolution, letter from the UNDP Administrator of 17 December 1993 authorizes UN/UNDP Resident Representatives to provide direct organizational, administrative and other technical support to national organization implementing project activities. UNDP guidelines UNDP/ADM/93/46 also authorize UN/UNDP Resident Representatives to conduct procurement of equipment, contract local consultants and other technical expertise and undertake other expenditures in accordance with the project budget, as well as to maintain bookkeeping and financial records of nationally executed activities by analogy with the maintenance of the UN/UNDP Office Administrative Budget.
A consolidated budget will be created from the cost-sharing contribution of the project donors.
The Business Communities Advisory and Steering Conference will be expanded representing all of the project’s stakeholders, including UNDP and other international organizations. The aim is to provide a venue for joint discussion and decision making on matters of strategic importance and to ensure adequate project monitoring.
The Republican Fund for Economic Research and Legal Initiative contributes:
The UNDP Office in Belarus provides:
The project will have the following staff positions:
Part IV. Monitoring and Evaluation
The project will be subject to continuous monitoring, periodic assessment and reporting in accordance with UNDP rules and procedures.
The Project manager will prepare and submit to UNDP and donors semi-annual and annual reports in an agreed format and within to a fixed timeframe.
The Project Manager is responsible to UNDP and donors for appropriate expenditure of the project budget and reflects the structure of such expenditure in the budget revision, prepared in accordance with the rules contained in the “Financial management and reporting” section of the UNDP manual for nationally executed projects.
The final report will be presented to the Council for Enterprise Development.
This document is the legal basis for implementing a set of project activities, as stipulated by the Standard Basic Agreement between the government of Belarus and UNDP, signed by both parties on 24 September 1992.
The following amendments and additions to this project document can be made at the consent of all signatories to the said document:
Edict of the President of Belarus
“On the Council for Enterprise Development of Belarus”
No. 388 of 13 July 1999
With the purpose of providing comprehensive state support for the development of private sector enterprises, it is hereby decreed:
Edict of the President of Belarus No. 388
Of 13 July 1999
Council for Enterprise Development of the Republic of Belarus
Rules of procedure
- To propose improvements to current legislation and draft legislation reviewed at its meetings;
- Request relevant information from government agencies and enterprises;
- Invite, in accordance with an established procedure, civil servants and representatives of individual enterprises to participate in its proceedings.
Upon agreement with the Ministry of Economy of the Republic of Belarus the UNDP country office shall provide the following support services for the projects of technical aid:
* UPL: UNDP Universal Price List for Country Office Services to UN Agencies and Programmes
ISS: Implementation Support Services
GMS: General Management Support charges in percentage to cost-sharing
1 The private sector comprises privately owned firms and corporate entities with a less than 50% share of the government
2 Essential statistics on small business in Belarus 2004. Minsk, 2004. P.7
3 Rules of procedure for the Council for Enterprise Development of the Republic of Belarus adopted by the Edict of the President of Belarus No. 388 of 13 July 1999
4 An agreement on the principles of joint action by members of the Advisory and Steering Conference of Business Communities – Record of Approval, 3 December 2005
5 Impact Assessment report on UNDP small business development projects in 1997 – 2004, prepared by Mr. J. Brooks, Practice Leader of the Poverty Reduction and Economic Development, UNDP Regional Center for Europe and the CIS, Bratislava
|Government of the Republic of Belarus United Nations Development Programme||Government of the Republic of Belarus United Nations Development Programme|
С assessment of international assistance for implementation of the National Programme 6
|National bank of the republic of belarus government of the republic of belarus united nations development programme||United Nations Development Programme Republic of Belarus Project Document|
|United Nations Development Programme Republic of Belarus Project Document||The United Nations Development Programme (undp) in the Republic of Belarus Project Document|
|The United Nations Development Programme (undp) in the Republic of Belarus Project Document||The United Nations Development Programme (undp) The United Nations Conference on Trade and Development (unctad) project document|
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