Keeping entrepreneurs off the endangered list

By Mike McDonough

Are entrepreneurs in the EBRD region a dying breed? Since the global financial and economic crisis, governments have been removing barriers to starting new businesses, but the rate of business creation has nevertheless declined. So does that mean entrepreneurial spirit itself is in increasingly short supply?


That’s the question Laurie Spengler, President and CEO of Shorebank International, put to speakers at the Fostering Entrepreneurship: Financing for the Future panel discussion at the EBRD’s Annual Meeting and Business Forum in Astana on 20 May.

Ms Spengler, who moderated the debate, also challenged panellists to identify what financial instruments and regulatory measures are needed to stimulate business growth in the EBRD’s countries of operations.

Far from being an endangered species, entrepreneurs in Kazakhstan are seeking how to emulate business figures such as Steve Jobs and Warren Buffett, according to Kairat Mazhibayev, Chairman of Resmi Group. He cited the Kazakh government’s ambitious industrialisation programme as an opportunity to boost business participation in the country.

“Kazakhstan has a bright future,” Mr Mazhibayev said, although he added it was “no secret that young talents are more attracted by opportunities in the government sector. Sometimes we are upset by the competition for talent.”

Thomas Engelhardt, chairman of the management board of AccessHolding Microfinance, also dismissed the idea that entrepreneurs in the EBRD region were becoming rare.

“In Azerbaijan, 150,000 businesses have received a loan from us and two-thirds of them are still clients and still doing business. They are successful at adapting,” Mr Engelhardt said.

“It’s not so much the exact conditions of a product – such as interest rate or maturity – that count, but the fact that a financial institution takes them seriously, that their analysis of whether to give a loan is based on the entrepreneur rather than on a textbook. Establishing yourself as a reliable partner can lead to huge market success in terms of growth and portfolio quality.”

Fellow microfinance specialist Aleksandar Kremenovic, president of the management board of Bosnia-Herzegovina’s Mikrofin, agreed that a deeper understanding of clients on the part of financiers – and banks in particular – was necessary for entrepreneurial development.

“We hear all kinds of excuses from commercial bankers about why they can’t lend to small and medium enterprises, but from my point of view they represent a huge opportunity,” Mr Kremenovic said. He added that equity investment was increasingly becoming a “real necessity” for some SMEs.

At the other end of the scale financial giant Citigroup was represented by Alberto Verme, CEO for Europe, Middle East and Africa. He highlighted the important role governments can play – in supporting research and development and providing infrastructure and education – and the need for long-term loans. “Entrepreneurs don’t want money for just 12 or 18 months,” he said. “Access to long-term capital is of the essence.”

A government perspective on the issue of fostering entrepreneurship came from Ganhuyag Hutagt, Mongolia’s Vice Minister of Finance and the former CEO of Mongolian microfinance institution XacBank. He said providing equal access to information and to markets was vital to allowing business creation to take off and suggested that developing equity markets was also key.

“Government needs to become itself an entrepreneurial government. It needs to look at successful models and take the best out of them; put policies in place to identify the most successful entrepreneurs; and let the system provide a product that will create national champions with thousands of employees,” Mr Ganhuyag Hutagt said. “That’s an important long-term vision.

With such an attitude, the Vice Minister added, countries like Mongolia and Kazakhstan could succeed the dragons, tigers and bears and create a new breed of “wolf” economies.