Job Opportunities through Business Support (JOBS) - Bulgaria

Source: Ministry of Labour and Social Policy

• Background
• Development Problem Addressed by the Project
• Development Objective of the Project
• Project Strategy
• Core-activities of Business Centers
• Core-activities of Business Incubators
• Project Description
• Project Beneficiaries
• Policy Implications

Background

Unemployment has been a persistent problem in Bulgaria since the start of the transition 10 years ago. This is most visible in the rural and agricultural regions of Bulgaria. The long-term goal of an economically prospering Bulgaria where the private sector creates long-term sustainable jobs cannot be achieved unless the proper mechanisms are put into place.

The development of Small and Medium Enterprises (SME) over the last ten years has been very uneven and difficult. SMEs in Bulgaria account for 98.8% of all companies and employ about 45% of the labor force. The Bulgarian SME sector faces structural problems such as: difficult access to external financing in the start-up and development phase; lack of access to information and markets, high transaction costs related to compliance with unstable and changing legislation; excessive number of licensing regimes, lack of transparent administrative procedures.

Bulgarian agriculture is undergoing a difficult period of adjustment due to abruptly changing production and market structures. There is a low degree of market orientation, since about 77% of all farmers focus on subsistence agriculture. Rural areas cover 81.4% of the country's total area and 229 municipalities out of the total 262 municipalities. Additionally, 43.6% of the total Bulgarian population lives in rural areas. Agriculture is a priority for the Bulgarian economy in that it is a sector with high potential for development.

Tourism is also a priority sector that has great potential for development in Bulgaria. The weaknesses of the sector are related mainly to the limited diversity of tourist products and the additional services related to it; the low quality of tourist infrastructure and its unbalanced distribution throughout the country; low qualification of staff; and the high seasonality of tourism. Recently, there have been some favorable developments in the sector: increase of tourist flow to mountain resorts in summer and more touring visits in Bulgaria's countryside. Revenues from specialized tourism (rural, religious, medical and ecological) have been growing.

Development Problem Addressed by the Project

The development problem addressed by this project is the high and increasing level of structural unemployment in Bulgaria. Unemployment, and the effect it has on the Bulgarian population, is consistently ranked as the most important issue effecting Bulgaria today. This project addresses the problem by supporting development of the private sector (micro and small enterprises). The goal is to increase the level of employment throughout the country by developing business centers, registered as non-governmental organisations (NGOs), which will provide technical and financial assistance to the emerging private sector.

Development Objective of the Project

The development objective of the project is to demonstrate a replicable model for employment generation through stimulation and creation of micro and small enterprisess and adopt this model as national policy. The JOBS Project is being strategically managed by the Ministry of Labour and Social Policy and is implemented by the United Nations Development Program. The project shall enhance rural economic development by creating an environment where employment is promoted through support to micro and small enterprises. It is an extension of the successful Business Development and Support Project implemented through the UNDP. The JOBS project will also test innovative business initiatives and support the creation of producers/farmers associations and industry groups.

Project Strategy

The project strategy is to implement an integrated approach to job creation and economic development in rural areas, using tools that have proven to be successful and effective in the Bulgarian context. The project will create linkages between the public sector, the private sector and the NGO sector. From the experiences of the UNDP in this field for the past 5 years, it is fundamental to work on a local level in order to jump start communities. The tool that has been used to date is local business centers, structured as NGOs. The business centers' founders include representatives from the whole community (the local labor office, banks, the municipality, the private sector, other NGOs, etc.). Business centers are an essential component to a proper functioning business environment and they help to create jobs.

Core-activities of Business Centers

• Promotion of an entrepreneurial culture where potential business men and women become aware of the responsibilities, risks and possibilities of a self-owned business;
• Delivery of locally-based comprehensive support to potential or actual micro, small and medium sized entrepreneurs;
• Introduction of new management techniques and new technologies;
• Delivery of a wide range of information services;
• Consulting services provided by international and local consultants to develop projects, business opportunities and business to business links locally, regionally, and internationally;
• Mobilisation of opportunities and resources to facilitate access to credit and incentives for employment generation and training;
• Stimulation and support of a "dialogue" at the local and national level, between the public and private sector aimed at promoting private entrepreneurship and creating a relationship built on confidence between the public institutions and the private sector.

Core-activities of Business Incubators

• Providing premises to the tenants at below market rates, organized in modules that are easily transformed depending on the needs of the tenants;
• Access to technical services - telephone answering, word processing, secretarial support, coping, bookbinding, use of common facilities such as the conference room, computers, internet, etc.;
• Opportunity for both tenants and external clients to lease necessary equipment;
• Consulting and training - these services are provided on both an in-house basis and through networking arrangements with outside consultants;
• Internal and external networking advice - the Business Incubator provides a mutually stimulating environment for the entrepreneurs to develop fruitful contacts among themselves. Formal as well as informal networking between the tenants is promoted and managed by the management team;
• After-graduation services - the Incubator will continue to keep in touch with all the businesses after their "graduation" for the purpose of continuing with providing counselling services and using them as a means of external providers of expertise and business contacts.

The UNDP supported projects have had a particular emphasis on self-sustainability of the business centers after the project financing finishes. This is very important to the long-term success of the centers. The centers learn to think in an entrepreneurial manner and to look for income generation tools. In this manner, the business centers serve a long-term benefit to the communities by growing and developing other services, which are needed locally.

Project Description

The project demonstrates a replicable model for stimulation and creation of micro and small enterprises and will be implemented over a two-year period in two phases in 24 communities.

Phase I

Beginning in late Year 2000: Five existing business support centers in Devin, Gotse Delchev (with business incubator), Razlog, Velingrad and Vidin (with business incubator), will be strengthened and supported to focus on rural and agribusiness development. Additionally, an business center will be established in Polski Trambesh and business centers/business incubators established in Samokov (with virtual business incubator), Nova Zagora (with business incubator), and Aitos (with business incubator).

Phase II

Beginning in early Year 2001: Seven business centers will be established in Dulovo, Elhovo, Karnobat, Kubrat, Isperih (with virtual business incubator), Novi Pazar and Ruen. Five business centers/business incubators will be established in Karlovo, Shumen, Silistra, Sliven and Targovishte. Business Information Centers will be opened in Kotel, Sungurlare and Straldja.

The JOBS project has created a sustainable network of 24 Business Centers, including 11 Business Incubators and 3 Business Information Centers.

Each of 21 locations (with the exception of the 3 Business Information Centers) manage a financial mechanism (loan guarantee or leasing scheme) of up to $100,000. The mechanisms target micro and small enterprises that would not otherwise have access to credit. Each community will decide which financial mechanism is most appropriate for their environment. The financial mechanisms will be managed locally (through the local banking system in the case of loan guarantee schemes), with overall support from the JOBS Project's Central Coordination Unit in Sofia.

Each of the 24 BCs have an information technology center where Internet will be readily available to the business community to facilitate business development. The centers will help the development of local communications infrastructure by providing fast access for rural communities to up-to-date Bulgarian and international market information and opportunities. They will create links to other Internet services, which provide regular, detailed market information on most Bulgarian agricultural products and information on international markets. The information technology centers will develop practical computer skills amongst rural entrepreneurs; for example, businesses can develop their own web pages and will be assisted in establishing trade links not only in Bulgaria but abroad as well.

A weekly educational program on household agriculture was broadcast on Channel 1 of the Bulgarian National Television in 2000 and 2001. The TV series represents a continuation of the 40 broadcasts of the "Paradise Garden" TV show in 1999 - 2000. The TV program assisted the Bulgarian rural population in adding value to the current agricultural production, as well as, in the start-up or expansion of micro, family, small and medium agribusiness. A total of 40 new episodes of "Paradise Garden" complimented the activities of the business centers. The target audience was subsistence farmers interested in becoming micro farming enterprises.

Project Beneficiaries

The project's target beneficiaries are listed in order of importance

1. Unemployed people are the most important target audience. They will be assisted by the jobs made available through the businesses established with the BCs' and business incubators' assistance.
2. Micro and small enterprises that desire to grow and create additional employment will be given technical assistance and access to financing.
3. Farmers who are currently working on a subsistence basis and are interested in becoming micro farming entrepreneurs.
4. Minorities will be given more opportunities for jobs and self-sustainable income generation.
5. The local authorities and the key stakeholders in the 20 selected project sites will receive technical assistance in local economic development methods in order for them to take full advantage of the new tools which are being introduced to their communities.

Gender Focus

The project will assess the implication of its activities for women and men from a gender perspective. Accordingly, the project will implement a strategy to ensure that women and men benefit equally and are respected in all aspects of the rights, resources and opportunities provided under the project.

Minority Focus

The project will consider and work for the promotion and realization of the rights of minority groups as an integral part of the Bulgarian society. Various minority groups will be provided with the opportunity to receive additional financial support from the project by accessing the special projects fund. Minorities are an integral target group and most of the communities in the project are comprised predominately of minorities.

Policy Implications

This project promotes a replicable model in the Bulgarian business environment with the added elements of agribusiness and rural development, as well as, a strong technological focus and links to external markets. The successful implementation of the project will have several important policy implications:

1. Demonstrate that micro and SME development in rural areas is feasible.
2. Demonstrate how to implement micro credit mechanisms targeted for rural areas.
3. Demonstrate how to link remote communities and businesses with the larger world in a cost effective manner.
4. Demonstrate how business support can be organized in a self-financing manner in rural areas.
5. Demonstrate what types of active labor policy measures are successful in rural areas.

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