Croatia—Enhancing Small and Medium Enterprise Performance (ESP)

In 2003, with an unemployment rate as high as 20 percent, job growth was a primary imperative for Croatia. The ESP project worked to create lasting private sector jobs in economic sectors where Croatia is internationally competitive—leading to higher levels of investment and sustainable economic growth. ESP’s strategy was to create 20,000 new jobs by improving the business performance of small and medium-sized enterprises (SMEs) in growth sectors by providing technical assistance through industry associations, economic development organizations, and business and financial services firms. ESP sought to improve the business environment for all SMEs through technical assistance to the Croatian government, national organizations, and educational institutions. The project worked through partner organizations to build capacity in delivering services, advocating policy and institutional change, and improving business performance.

Sample Activities

• Work with 13 financial institutions to expand access to finance through commercial banks and government agencies.
• Increase information and communications technology products and services within the industry and for end-user industries.
• Support sectors such as specialty foods, boatbuilding, metalworking, and other products to help them adopt European Union market requirements.

Select Results

• The team worked with commercial banks, including the largest banks, to introduce deposit mining and credit scoring that extended credit to SMEs for the first time. Banks dropped collateral requirements and now offer credit to SMEs in growing numbers.
• Introduced the concept of regional guarantee funds, promoting a business model that has regional development agencies setting up preferred lender programs with banks, and extending loans to previously unserved regions.
• Facilitated $54.1 million in foreign direct investment and generated an estimated $20 million in complementary local investment.
• With the Office of the Prime Minister, reviewed 1,500 laws, bylaws, and business regulations and procedures to determine their relevance, necessity, and impact on business.