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I I I I I I I I I I I I I I I I I v D - A (3. (2. - -:+?--:s I ID$D~1- I I FY1999 FOURTH QUARTER I PROGRAMREPORT I July 1, 1999 to September 30,1999 I Strengthen Private Enterprises in War-Affected Areas ofCroatia I Agreement Number NIS-A-OO-97-00026-00 I Prepared for I United States Agency for International Development I Prepared by I University ofDelaware 4 Kent Way I Newark, DE 19716 I October 31, 1999 I I I I I I I I PROGRAM OVERVIEW 3 HIGHLIGHTS 3 I FY99 FOURTH QUARTER RESULTS 3 Table 1 - Targets and Indicators 5 FIRM LEVEL ASSISTANCE 5 ASSOCIATIONASSISTANCE 6 I PRIVATIZATION ACTIVITIES 6 POLICY REFORM 7 OUTREACH PROGRAMS 7 I UPCOMING ACTIVITIES 8 FLAG VUKOVAR - OSIJEK / FORMER SECTOR EAST 9 I SIGNIFICANT EVENTS 9 I II BUSINESS HIGHLIGHTS 9 II AGRICULTURAL HIGHLIGHTS 10 III COMING EVENTS 12 I FLAG DARUVAR / FORMER SECTOR WEST 13 I SIGNIFICANT EVENTS 13 II BUSINESS HIGHLIGHTS 13 I III AGRICULTURE HIGHLIGHTS 17 IV UPCOMING EVENTS 19 I FLAG PETRINJAIFORMER SECTOR NORTH 20 I SIGNIFICANT EVENTS 20 II BUSINESS HIGHLIGHTS 20 III AGRICULTURE HIGHLIGHTS 23 I IV UPCOMING EVENTS 25 FLAG KNIN / FORMER SECTOR SOUTH 27 I I SIGNIFICANT EVENTS 27 II BUSINESS HIGHLIGHTS 27 III AGRICULTURAL HIGHLIGHTS 28 I FLAG MONTENEGRO 4TH QUARTER REPORT 31 ATTACHMENT A TABLE OF CLIENTS IN RAP AND/OR PRM MUNICIPALITIES 33 I ATTACHMENT B SMALL AND MEDIUM BUSINESS ENTERPRISES POLICY RESOLUTION 34 ATTACHMENT C AGRICULTURE POLICY RESOLUTIONS 37 I FARM COOPERATIVES AND THE FAMILY FARM 39 CREDIT, DEBT, AND THE FAMILY FARM 39 ACCESS TO AGRICULTURAL TECHNOLOGY AND RESEARCH 40 I RURAL DEVELOPMENT AND THE F AMILY FARM 41 FARMERS AND THEIR ORGANIZATION 41 I ATTACHMENT D AGRICULTURE MESSENGER, JULY '99 AND SEPTEMBER '99 ISSUE 43 ATTACHMENT E SURVEY OF THE MONTENEGRO TOURISM INDUSTRY 54 I I I I I PROGRAM OVERVIEW I HIghlIghts • 0 52% Decrease m employment wIth assIsted firms I • 4 96% Increase m sales wIth assIsted firms • 5 New agrIcultural aSSOCIatIons organIZed and regIstered • 192 New members m assIsted assocIatIons I • 45 New busmess lInkages • 1907 ConsultatIOns wIth prIvate busmesspersons and farmers • 7 semmars wIth 233 PartICIpants I • 14 VIsItmg techmcal adVIsors I FY99 FOURTH QUARTER RESULTS The growth and expanSIOn of FLAG clIents m the war affected areas of CroatIa contmues to I faCIlItate the remtegratIOn ofwar affected populatIOns In a challengmg economIC envlfonment, FLAG SME clIents m the war-affected areas contmued to outperfonn the overall economy WIth sales mcreasmg by an average of 4 96 percent compared to the correspondmg penod the I prevIous year The CroatIan economy contmued to struggle and IS currently m ItS fourth consecutIve quarter ofreceSSIOn GDP decreased by 0 6 percent compared to the correspondmg penod the preVIOUS year and mdustnal productIOn m partIcular does not show SIgnS ofrecovery I At the end of August 1999, mdustnal productIOn had declmed by 2 8 percent compared to the correspondmg penod m 1998 I I DespIte these negatIve economIC trends, FLAG SME clIents m the war-affected areas of are almost mamtammg current employment levels and only averaged a 0 52 declIne m employment I compared to the correspondmg penod the preVIOUS year At the end ofAugust 1999, regIstered unemployment m CroatIa was 19 1, which IS 142 percent higher than at the end ofAugust 1998 In addItIon to nsmg unemployment, there are stIll an estImated 150,000 employed workers who I are not paId regularly Many FLAG clIents are mvolved m agncultural productIOn and processmg Agncultural I productIon and processmg was 8 4 percent lower at the end ofAugust 1999 compared to August 1998 2 Another cause of the downturn m the CroatIan economy IS the poor perfonnance of the tradItIonal export mdustnes and weak domestIc demand Personal consumptIOn has declmed by I 11 percent m 1999 compared to 1999 3 FLAG SME clIents contmue to be affected by weak domestIc demand and nsmg mter-company arrears FLAG contmues to promote exports and has faCIlItated 45 lmkages for our SME clIents to boost export sales to non-tradItIonal markets I FLAG clIents contmue to target CroatIa's largest export market, the ED Promotmg exports WIll reduce the effect of weak domestIc demand and aVOId mcreasmg receIvables caused by large mter-company arrears FLAG wIll also ImtIate a new value added electromc commerce servIce I for SME clIents dunng the next quarter to contmue our emphasIS to promote regIonal trade and exports I I 1 Croattan Nattonal Bank, Bullettn No 42, October 1999 2 Ibid 3 Ibid I 3 I FLAG has orgarnzed and registered 5 new agricultural aSSOCiations and cooperatives dunng tills quarter, bnngmg the total number of active associations and cooperative clIents to 22 (21 agncultural assocIatIons and cooperatIves and 1 8ME aSSOCIatIOn) FLAG wIll now refocus I techmcal assIstance on strengthemng eXIstmg assocIatIon chents to expand membershIp and ensure sustamabIhty Our emphaSIS on regIstenng and orgarnzmg new assocIatIons and cooperatIves has been successful and our emphaSIS WIll now sillft toward strengthemng and I expandmg eXIstmg chents To date, membership has mcreased to 11,742 durmg this quarter, an mcrease of 192 new members over the preVIOUS quarter In the rural areas of the I war-affected areas, agnculture represents the most sIgruficant employment OPPOrtunIty for returnees Table 1 Illustrates progress towards annual goals I I I I I I I I I I I I I I I 4 I Table 1 - Targets and Indicators INDICATOR #1 I ENTERPRISE GROWTH AND EXPANSION TARGETS 4th quarter FY 99 15% sales growth m assIsted 11 496% I finns 10% employment growth m 12 -052% assIsted fInns I 1.3 30 assIsted fInns 53 53 * sales growth and employment growth for Jan 151 1999 to Sept 30th 1999 compared to I the same penod ofthe preVIOUS year INDICATOR #2 REINTEGRATION OF THE REGIONAL ECONOMIES I TARGETS 3rdquarter FY 99 4th quarter FY 99 150 transactIOns Imkmg 229 274 21 enterpnses m fonner1y occupIed I regIons to CroatIa and abroad th * Lmkages counted from October 1sl 1998 to September 30 1999 INDICATOR #3 I COOPERATIVE AND ASSOCIATIONS DEVELOPED TARGETS 3rdquarter FY 99 4tb quarter FY 99 I 8 new cooperatIves or 23 31 33 aSSOCiatIons developed (cumulatIve) 10% mcrease m revenue of I 32 assIsted cooperatIves and n1a 1912% aSSOCIatIons * mcrease m revenue of assIsted cooperatIves between Jan 151 1999 to Sept 30,lh 1999 I compared to the same penod ofthe preVIOUS year INDICATOR #4 POLICY AGENDA ISSUES ADDRESS LEGAL AND REGULATORY I CONSTRAINTS TO SME DEVELOPMENT IDENTIFIED AND SOLUTIONS PROPOSED BY ASSISTED COOPERATIVES AND ASSOCIATIONS TARGETS 3rdquarter FY 99 4tb quarter FY 99 I 3000 41 1 benefItIng cooperatIve or 11,550 11,742 aSSOCIatIon members I I FIRM LEVEL ASSISTANCE FLAG CroatIa completed 14 volunteer and consultant aSSIgnments and 7 semmars dunng tlus quarter WIth 233 partIcIpants 4 new clIents were added to our portfolIo. wluch now meludes 37 I actIve busmess clIents that receIve technIcal asSIstance from resIdent expatnate adVIsors, local busmess and agncultural adVIsors, local consultants, and US volunteer adVIsors More than 1,907 consultmg meetmg were conducted With clIents by US volunteers, resIdent expatnate I staff, and local busmess and agncultural adVIsors 5MB clIents are slowly expandmg despIte the poor enVIronment and the lImIted support prOVIded by local fmanclal mstItutlOns and mImstnes I ~I 5 I ASSOCIATION ASSISTANCE I Agncultural productIOn and processmg provIdes an Important source of mcome for many returnees m the rural parts ofthe war-affected areas FLAG currently has 22 active agncultural assocIatIOn and cooperative chents, after addmg 5 new chents dunng tills quarter MembershIp I has mcreased to 11,742 In the past, FLAG has Implemented a grass roots campaIgn to organIze and regIster aSsociations and cooperatIves m the war affected areas, and to focus on marketmg I aSSIstance, productIOn scheduhng, and budgetmg Tills effort has been a success Begmnmg m the next quarter, FLAG WIll focus fewer resources on reglstenng aSSOCIatIOns and cooperatives, and WIll concentrate more resources on marketmg aSSIstance, productIOn schedulmg, budgetmg, I and accountmg Pendmg approval of ModIficatIOn 06 (ModIficatIOn 05 was a no cost extenSIOn to bnng the I Montenegro component m-Ime WIth the eXlstmg Croatia Cooperative Agreement end-date) to the eXlstmg Cooperative Agreement, FLAG IS prepanng to Implement a new grant fund to capltahze agncultural cooperatives and aSSOCiatIOns The goal of the grant funds wIll be to I prOVIde support for refugees and dIsplaced persons usmg mnovatIVe fundmg strategIes for economIC development projects m the war-affected areas of Croatia Projects wIll be bUllt around market OpportunItIes for pnmary production and processmg ofagncultural commodIties I Grant funds WIll be used to promote economIC development, and when appropnate, m collaboration WIth other USAID Implementers and International OrgamzatIOns The grant funds WIll prOVIde timely, benefiCIal economIC support for returnees and persons affected by recent I conflIcts m the Balkans and the commumtles where they have returned m recent years and where more are hkely to return The ObjectIve IS to leverage technIcal aSSIstance WIth grant I funds to promote local economIC development projects from our eXlstmg chent base World Learnmg organIzed the thIrd CooperatIve Leaders TRANSIT program m the US from August 14th until September 5th The group of 14 Croatian aSSOCIatIOn and cooperative leaders I from the war affected areas partICIpated m the USAID sponsored 3-week tralmng program m MISSOun The Implementmg organIzatIOn m the US was the Jefferson CIty MISSOun based InternatIOnal
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