Ministry of Economic Development to Divide the Work to Support Micro, Small, and Medium-Sized Businesses

17 july 2015

The Analytical Center hosted an expert workshop Development of Small and Medium Enterprises in Russian Regions. Current Problems and Solution Approaches - during which experts discussed the socio-economic situation of small and medium-sized businesses in the regions of Russia and also examined the support programs that are currently in place.

Natalia Larionova, the Director of the Department of Small and Medium Business and Competition of the Ministry of Economic Development of the Russian Federation, talked about the outcome of a sub-program to develop small and medium business in the regions. “30% of the funds of our program are connected with paying subsidies to support the purchase of business equipment,” she said. “The second place is firmly occupied by financial institutes – guarantee funds and microfinance organizations. Microfinancing is a tool that is actively being used; this autumn micro-loans will increase from RUR 1 million (USD 17 592, EUR 16 150 with today's exchange rates) to RUR 3 million (USD 52 777, EUR 48 450). According to Ms. Larionova, in third place is support for municipal programs and goal-oriented work with the regions to establish the main tools of support for small and medium business in the municipalities. “Our experience shows that the crisis has not developed to its full extent. Supporting single-industry towns, for example, is a priority. However, only three of our constituent entities required support in this area. This means that monotowns are not currently the focus in the regions,” said Ms. Larionova. In her opinion, technological underdevelopment has already reached critical levels and funds need to be invested in infrastructure. Therefore, a large portion of the program is focused on establishing an innovative structure.

“Next year, unfortunately, part of the program’s funding will face cuts, that is why we are taking action to combat this now,” said Ms. Larionova. She stated that the funding for the program is being reduced from RUR 33 billion (USD 580 553 566, EUR 532 960 368) to RUR 18 billion (USD 316 665 581, EUR 290 705 655). “Not a lot of funds are being allocated, so we cannot say that the program is developing, we need to finish projects that have already been started,” says Ms. Larionova. There are plans to abandon definitive subsidies for entrepreneurs and concentrate on completing work to establish support infrastructure, she explained. The policy will be clearly divided into work with micro, small and medium business. There will also be a focus on supporting medium-sized companies.

“Work on the strategy has only just begun; the first stage will be completed on August 3. However, deadlines are very tight – we have to present this version of the strategy to the Government by September 1,” said Ms. Larionova.

During the discussion, experts examined the experience of implementing regional programs to support small and medium business and discussed proposals to increase the effectiveness of federal support measures. Experts believe that the development of small and medium business needs to be coordinated with regional development targets, and support measures for the development of cooperation between small, medium-sized and large enterprises need to be more focused.