Strategies of the Development of Entrepreneurship and SME
Strategies of the Development of Entrepreneurship and SME
Strategies of the Development of Entrepreneurship and SME
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In August 2006, <strong>the</strong> Republic Agency for <strong>Development</strong>, toge<strong>the</strong>r with ENTRANCE team,establishes <strong>the</strong> Center for support to foundation <strong>of</strong> business incubators (BusinessIncubator Support Center-BISC), defining in more details, <strong>the</strong> forms <strong>of</strong> support for both,already established incubators <strong>and</strong> incubators in development phase.The goals <strong>of</strong> BISC services:• BI functioning stabilization according to ENTRANSE methodology• Active role <strong>of</strong> BISC in achieving <strong>the</strong> stability <strong>of</strong> existing <strong>and</strong> activities <strong>of</strong> new BI• Offering all necessary forms <strong>of</strong> support to implementation teams• Creating <strong>of</strong> stronger connections <strong>and</strong> common activities <strong>of</strong> existing BI• Involving all relevant institutions in support activities, both to existing <strong>and</strong> new BI• Creating <strong>of</strong> new commercial services for existing BI• BI, included in relevant support programs, carried out by RA<strong>SME</strong> (internationalization,B2B, fair Business Base etc.).3.4.5. FINANCING <strong>SME</strong>s IN SERBIAIn general, <strong>the</strong> infrastructure <strong>of</strong> financing <strong>the</strong> <strong>SME</strong>’s sector in Serbia is still ra<strong>the</strong>rundeveloped. Predominating is two <strong>the</strong> most important source groups:I – Governmental institutional channels including:• Direct governmental support <strong>of</strong> financing <strong>the</strong> <strong>SME</strong>’s sector financing through acceptablecredits provided by <strong>the</strong> <strong>Development</strong> Fund <strong>of</strong> <strong>the</strong> Republic <strong>of</strong> Serbia. These kind <strong>of</strong>credits are granted, <strong>and</strong> <strong>the</strong> interest rate is ra<strong>the</strong>r low (in some cases only 1% onannual level), accompanied by <strong>the</strong> significant grace period. The problem is that <strong>the</strong>sesources are limited.• Indirect governmental support, through o<strong>the</strong>r institutions, such as <strong>the</strong> Agency for <strong>the</strong><strong>Development</strong> <strong>of</strong> Small <strong>and</strong> Medium Enterprises <strong>and</strong> Guarantee Fund. The Agencyprovides linking services with international financing sources, while <strong>the</strong> Guarantee Fundprocure <strong>the</strong> credit guarantee services that <strong>SME</strong>’s take from commercial banks, reducingto great extend <strong>the</strong> risks level, <strong>and</strong> consequently, <strong>the</strong> interest rates.II - Banking channels - comprise a number <strong>of</strong> credit types granted to <strong>SME</strong>’s sector.Because <strong>of</strong> <strong>the</strong> adopted restrictive monetary policy directed towards inflation restraining (inSerbia, in <strong>the</strong> year 2007, <strong>the</strong> expected inflation shall be between 8-9%) <strong>the</strong> credits are veryexpensive <strong>and</strong> <strong>the</strong> interest rate is fluctuating between 10-12%, sometimes even higher, at <strong>the</strong>annual level). The high interest rate is <strong>the</strong> consequence <strong>of</strong> <strong>the</strong> high credit risk level, <strong>and</strong> thathas a great influence on <strong>the</strong> small <strong>and</strong> medium enterprises sector.The <strong>SME</strong>’s sector is considerably limited on <strong>the</strong> capital market. The Belgrade StockMarket every year exhibits <strong>the</strong> turnover growth, in <strong>the</strong> transaction volume, as well as <strong>the</strong>value, but that is a place that mostly deals with privatization process shares. There was no onereal initial public <strong>of</strong>fering (IPO). Many entrepreneurs show <strong>the</strong> interest, but still, it has to pass along period till <strong>the</strong> conditions will be created that <strong>the</strong> capital shall be relatively easilyaccumulated by share issuing. The situation with <strong>the</strong> issuing <strong>of</strong> corporate bonds is even moreadverse, because <strong>the</strong> market for <strong>the</strong>se kinds <strong>of</strong> securities hardly exists.The venture capital firms <strong>and</strong> its legislative forms are not present. Certain investmentfunds, started by <strong>the</strong> end <strong>of</strong> 2006, when <strong>the</strong> Law on Investment Funds has been adopted,initiate to analyze <strong>the</strong> situation <strong>and</strong> to inaugurate such kind <strong>of</strong> operations. The similar situationis with <strong>the</strong> private equity funds <strong>and</strong> business angels. The good notice is that in Serbia isdeveloping <strong>the</strong> significant group <strong>of</strong> institutional investors. Besides <strong>the</strong> investment funds, <strong>the</strong>re63