Final study visit to Austria and Slovak Republic for BBTA, BIBM, Bangladesh Bank and selected officials of the Ministry of Industries and SME Foundation

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This last and final study visit was also successfully organised and completed, from 18th to 27th May 2015, with participation of 25 officials, including the Team leader of INSPIRED Component 3.

The main purpose of this study visit was to introduce and familiarise tStudy Visit BBTA BIBM 1he designated participants with some of the well-established SME planning organisations and SME support implementation organisations, as well as number of financial institutions which provide financing to SMEs. Thus, contrary to the previous study visits, this visit did also focus on blending of both finance and non—finance issues, such as research, technology, marketing, cluster development, and policy initiatives to support SMEs) and how national SME Planning is done and learn what works and what  does not. Specifically, the objective of the tour was to familiarise the designated participants with the activities of well-established SME planning, research and policy implementation agencies and organisations, which was particularly beneficial for the designated officials of MoI-SMEC and SMEF.

Study Visit BBTA BIBM 2The role of business communities/chambers has been remarkable in the development strategy including SME development in Austria. The Chambers (Austrian Federal Economic Chamber) are operating as a leading force in policy making at the level of industries/region as well as at national and EU level. They also provide supporting services and education and training to the members for the development of entrepreneurship in Austria. In addition, they also provide a number of start-up services to new entrepreneurs. WIFI (Institute for Economic Promotion) is the largest education partner for Austrian Chambers/businesses. The services offered by all WIFIs are geared towards the current and future qualification requirements of companies and their employees. Besides training, WIFI is also providing advisory and consultancy services especially to SME businesses.

One of the very constructive and fruitful visits/meetings took pStudy Visit BBTA BIBM 3lace at the Austrian Institute for SME Research where they provided a comprehensive presentation on how research could facilitate SME development. The institute specialises in social and economic research focusing on SMEs. The institute offers studies andanalyses on the structures and development of economic sectors and regions in the fields of entrepreneurship, innovation and technology, employment and labour market. It also coordinates with institutions responsible for economic policy making as well as universities and other higher education and research institutions.

Upon the visits and presentations held at Raiffeisenlandesbank, Vienna and Oberbank AG, Linz, the participants managed to gain first-hand knowledge about the SME financing practices. The distinctive feature of both banks, in relation SME finance, has been their clients’ focus, an important element that has also been emphasised throughout the relevant training and seminar delivered by the project. For example, one of the lessons learned was hStudy Visit BBTA BIBM 3ow a bank such as Oberbank has made it its strategy to be an effective and dynamic partner of local business and the effectiveness of having a bank operate on regional level. As for Raiffeisenlandesbank, its DIGITAL Consultants are always available for customers through telephone, email and video consultancy. Moreover, the bank also arranges training/education for its clients. Contrary to Austria where Economic Chambers play significant role in business development, the role for development of SMEs in Slovak Republic has been mainly mandated to the Slovak Business Agency (SBA), a specialised non-profit organisation founded by EU and Slo Study Visit BBTA BIBM 5vak Government in 1993. The objectives of the Slovak Business Agency, which are similar to SMEF in Bangladesh, are to increase the survival rate of enterprises, increase employment rate in private sector, increase the innovative performance of Slovak enterprises, stimulate entrepreneurship and increase competitiveness of Slovak business, particularly SMEs. During the visit at SBA, discussions were also held regarding possible establishment of cooperation between SBA and SMEF. A draft of MoU has been prepared which has been submitted to the Board of SMEF for review.

Access to finance is considered a pressing issue by a very large proportion of SMEs (around Study Visit BBTA BIBM 670%) in the Slovak Republic. That is why, Slovak Guarantee and Development Bank (Slovenská záručná a rozvojová banka, a. s.) [SZRB] has been established in 1991 which is a specialised financial institution owned by the Ministry of Finance of Slovak Republic with a mission to support and develop SMEs through partnership and cooperation with commercial banks and other institutions supporting SMEs. For several years the Bank has successfully provided bank guarantees aimed at housing development renewal. It has promoted the development of business activities in rural areas through special direct loans (with the support of tStudy Visit BBTA BIBM 7he EU, KfW and CEB) and financing long-term investments in fixed assets regarding the communal infrastructure of local areas. SZRB does not operate in the SME lending segment as a competitor; rather its activities support the needs of SMEs especially when the commercial banks are reluctant to finance SMEs due to short business history or insufficient collateral. Thus, in addition to providing guarantees, SRZB has positioned itself as a Complementing Bank, time to time as “last chance Bank” for SMEs. Moreover, Slovak government has successfully addressed the problem of lack of access to finance on the part of SMEs through introducing Guarantee Scheme or Direct loan by SZRB. This may constitute another learning point for Bangladesh as most of our SMEs have no access to finance because of lack of credit history or collateral. The establishment of such a financial institution, in Bangladesh, as all the participants observed, would be of great benefit to easing and enhancing access to finance for SMEs.