Russia – Sakhalin Regional Microcredit Program

Delivering Much-Needed Credit to Micro- and Small-Scale Entrepreneurs

Since 1992, ACDI/VOCA has implemented numerous projects to improve Russian agriculture and agribusiness. ACDI/VOCA is also helping Russians gain a foothold in the financial world through its USAID-funded Sakhalin Regional Microcredit Program, which established the Sakhalin Small Enterprise Development Fund (SSEDF), a microfinance institution, and the Sakhalin Small Business Credit Society (SSBCS), a specialized consumer cooperative. Through SSEDF and SSBCS, ACDI/VOCA delivers much-needed credit in the form of peer-group loans (from $500 to $5,000 per loan) and individual loans (from $5,000 to $25,000) to micro- and small-scale entrepreneurs, who have been previously unable to access credit through commercial banks, government agencies or other private programs. The program has also been extremely successful in reaching out to an often overlooked section of the population: women, who constitute more than 60 percent of the SSEDF’s clients.

ACDI/VOCA’s program draws upon individual and peer-lending methodologies to mitigate the socioeconomic impacts of limited or inequitable oil and gas development. The Sakhalin project accomplishes this by offering entrepreneurs and employees of small businesses opportunities to participate in regional economic development by providing the necessary financial and non-financial services to expand. ACDI/VOCA has partnered with the Sakhalin-1 Consortium and received $500,000 in loan capital to expand the program to include the northern Sakhalin districts of Nogliki and Okha, where the consortium’s construction activities are located. The consortium includes ExxonNeftegasLtd, SODECO (Japan), Rosneft (RN-Astra) and its subsidiary Sakhalinmorneftegaz-Shelf (Russia), and ONGC-Videsh (India), and is one of the largest foreign investment projects in Russia, with an estimated $12 billion in capital investment.

To date, over 3,000 loans have been disbursed to Sakhalin clients totaling $4,015,906, and the loan repayment delinquency rate remains an exceptionally low 1.5 percent. It is projected that the program will be directly responsible for creating and/or sustaining an estimated 9,750 jobs in Sakhalin by 2007.

Along with its partner the Russian American Business Training Center (RABTC), ACDI/VOCA also provides essential training and consulting to program clients and start-up entrepreneurs. Over 4,000 entrepreneurs from Y-Sakhalinsk, Korsakov a Kholmsk as well as many other outlying areas benefited from the training made available through the Business Start-up Assistance Program (BSAP). Through the BSAP, Sakhalin project staff train local microfinance institutions in lending practices, bookkeeping and management to promote sound business practices. Additionally, a new advanced training program has been developed for SSBCS credit agents, credit agent trainees and credit specialists. Five SSBCS credit agent trainees have reached the professional level needed to market credit service independently, without the SSBCS support.

For more information, contact Alessandra Delgado at adelgado@acdivoca.org.

Updated: 3/06

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