Delivering Much-Needed Credit to Micro- and Small-Scale Entrepreneurs
Beginning in 1999, ACDI/VOCA helped Russian small business owners gain a foothold in the financial world. Through its USAID-funded Sakhalin Regional Microcredit Program (SRMP), ACDI/VOCA established the Sakhalin Small Enterprise Development Fund (SSEDF), a microfinance institution, and the Sakhalin Small Business Credit Society (SSBCS), a specialized consumer cooperative. SSEDF and SSBCS delivered much-needed credit in the form of business development loans for start-up and young businesses and collateralized loans of up to $120,000 to micro- and small-scale entrepreneurs who were unable to access credit through commercial banks, government agencies, or other private programs. The program was particularly successful in reaching out to women, who were usually neglected by local credit institutions but who constituted more than 70 percent of SSEDF’s clients.
With the financial support of a national and international consortium of oil and gas companies operating in Sakhalin, ACDI/VOCA established a network of branch offices in northern and southern Sakhalin. ACDI/VOCA’s program drew upon individual and peer-lending methodologies to mitigate the socioeconomic impacts of uneven development in oil-rich areas. The Sakhalin project offered entrepreneurs and employees of small businesses the opportunity to participate in regional economic development by providing necessary financial and nonfinancial services to expand their enterprises. ACDI/VOCA also provided essential training and consulting to program clients and start-up entrepreneurs. In addition to entrepreneur training, four commercial banks received direct training for their credit personnel and staff in credit analysis and loan development. Trainings were held in accounting, management, and credit to ensure that microcredit institutions provided efficient and transparent loans and competitive credit products.
The most significant impact made by the program was to serve as a model of small- and medium-sized enterprise (SME) credit to local commercial banks. The program demonstrated to the local commercial banking community that SME loans are very good business because they provide an avenue for investment into the local community and allow banks to build name recognition within a growing client base. Commercial banks began SME lending, which created a healthy financial competitive environment among lenders that was all to the advantage of small business owners.
About 9,500 loans were disbursed to 2,140 Sakhalin clients totaling $35,223,702. The program was directly responsible for creating and/or sustaining over 9,750 jobs in Sakhalin by 2008.
