Банк в СМИ
20.05.2008

The St. Petersburg Times, "Small Businesses Lack Confidence in Future"

By Yekaterina Dranitsyna
Staff Writer

Small and medium-sized enterprises (SMEs) underinvest into development because entrepreneurs are not confident about their future, the results of a recent survey show. According to research carried out by ROMIR-Monitoring and sponsored by TRUST National Bank, most entrepreneurs are content with the present condition of their businesses but do not expect secure growth in the future.

“The results of the survey were most surprising. Paradoxically, entrepreneurs are optimistic about the present situation, but the future seems highly obscure to them. The smaller the company, the greater the pessimism of its owners,” Andrei Sogrin, director for internal relations at TRUST National Bank, said at a press conference Tuesday.

As a result of the lack of confidence, SMEs are not investing sufficiently into development, which slows down economic growth, Sogrin observed.

Since March last year ROMIR-Monitoring has conducted six surveys at two-month intervals. Researchers used methodology developed by Michigan University, adapting it to correspond to the Russian business environment.

Irina Krylova, deputy director of ROMIR-Monitoring, said that researchers questioned 1,000 business owners and, in rare cases, top managers. 60 percent of them represented micro-businesses, 30 percent were from small enterprises and 10 percent from medium-sized companies. About half of the respondents represented wholesale and retail companies.

According to the most recent survey, conducted in January this year, the index of the present situation stood at 150 points and the index of future expectations at 133 points.

The index varies from 0 to 200, with 200 indicating full positivity, and 0 representing zero positivity.

“Microbusinesses demonstrated the lowest index of future expectations. We tried to compare the index dynamics with macroeconomic factors — GDP, inflation and unemployment rates — but so far we have not found any correlation,” Krylova said.

This year ROMIR-Monitoring will conduct the surveys once every three months and the number of respondents will increase to 1,200 people. Krylova said that the researchers had written a hypothesis, which is yet to be proven.

Last year, for the first time the growth rate of loans to SMEs in Russia was higher than the growth rate of corporate and retail loans, said Nadia Cherkasova, managing director for the development of small business at TRUST National Bank.

However, Cherkasova warned, the lack of confidence demonstrated by entrepreneurs is a dangerous trend.

According to official statistics, eight million individual entrepreneurs and one million SMEs are registered in Russia. They employ 24 percent of the workforce and contribute 22 percent of the GDP.

“The role of SMEs in the GDP and active workforce in Russia is half of that in developed countries,” Cherkasova said. In Japan, SMEs employ 78 percent of the workforce and contribute 55 percent of the GDP, she said.

Cherkasova and Sogrin suggested that support of small businesses could be provided as a national project.

“The national projects that are being realized are mostly social and require state subsidies. This project could bring positive results quickly and easily with minimum effort,” Cherkasova said.

Over the last two years TRUST National Bank has granted loans of a total of more than $630 million to 19,000 entrepreneurs in 115 Russian cities.

TRUST focuses on microloans for a period of up to seven years. About 92 percent of its credit portfolio consists of microloans of up to 1.5 million rubles ($63,000). The maximum size of a loan is 75 million rubles ($3 million), and loans of up to one million rubles ($42,000) are issued without collateral.

Sogrin said that private banks in Russia are not very willing to finance start-ups. “The state budget has been quite plentiful in recent years and could afford to support SMEs. In most developed countries, state budgets guarantee 50 percent of high risk loans issued by private banks,” he said.

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