Croatia faces daunting requirements in acceding to the European Union as well as economic challenges. Unemployment is high, foreign debt is rising, and foreign investment has declined as privatizations have slowed.
Small businesses have difficulty expanding because lenders impose stiff collateral requirements and fees, and because the training and advice needed to compete in international markets is scarce and costly.
The ESP project, led by a joint venture between Nathan Associates Inc. and Development Alternatives Inc., helped small businesses improve performance, increase production, reach new foreign and domestic markets, increase exports, obtain financing from commercial financial institutions, and attract foreign investment.
ESP helped firms take advantage of opportunities and establish partnerships with other firms in the same industry or supporting industries.
The goal: assist at least 4,000 enterprises, 25 percent in economically distressed areas. To boost private sector growth, the project worked mainly through partner organizations and service providers but also helped businesses directly and advised the government on policies that affect job creation.
Since September 2004, ESP
- Assisted 62 specialty-foods producers in attending the Anuga International Food Fair in Cologne, generating more than 300 sales leads and raising awareness of Croatian specialty foods in the EU and of EU consumers preferences in Croatia.
- Helped form regional information and communication technology (ICT) clusters, that then formed a national association representing about 60 innovative software development businesses.
- Established a national certification system for business service providers and a network of 15 local partners.
- Directly assisted more than 3,300 small enterprises and 15 banks on matters related to compliance, corporate governance, loan guarantees, and credit scorecards.
- Increased foreign direct investment by $62.5 million (nearly double the life of project target) and increased domestic direct investment by $64.2 million.
- Provided indirect assistance to 118 businesses by helping partner institutions to develop new or upgraded services (conducted 28 business courses for 176 SMEs).
- Trained more than 4,400 individuals through public-private partnerships, workshops, and practicums (local BDS providers are now able to offer technical assistance and training).
- Devised a program for formalizing unregistered hospitality businesses.
- Linked a brand strategy for tourism providers to a promotion and quality improvement program.
- Assisted 124 businesses through partner financial institutions Croatian Bank for Reconstruction and Development (20 credit-scored loans) and VABA (51 credit-scored loans).
- Helped more than 2,700 enterprises make use of new credit (18 are now using non-debt financing).