The trend of the 21st century is an excessive concentration of economic activity in megacities and agglomerations. People rush to cities in search of well-paid jobs, and production and business try to be closer to the labor force. And it turns out a vicious circle, which leads to an overconcentration of both the population and the economy in a geographically limited space. it gives rise to a variety of risks: social, epidemiological, economic, environmental and others. Obviously, the regions cannot compete on an equal level either for specialists or for investors with the capital and regional centers. Therefore, a thoughtful state policy is necessary for the even development of the country. In the medium and long term, it is the regions that are one of the "engines" of growth. And the country's leadership traditionally pays great attention to the implementation of investment projects, the creation of decent jobs and the development of infrastructure in small towns. Alexander Egorov, Chairman of the Management Board of JSC “Development Bank of the Republic of Belarus”, spoke to a correspondent of the newspaper “Respublika” about the peculiarities of investing in the regions.
– Concepts and programs for the development of regions are developed in Belarus every five years. Objectively speaking, not all the results prescribed in the system documents can be achieved for a number of reasons. However, investing in the regions remains one of the main priorities, and this direction is constantly under the control of the country's leadership. Obviously, approaches and ways of investing change over time.
Today, one of the brightest examples of increasing investment activity in the regions is the implementation of the initiative “One District - One Project”. It is important to note that internal financial resources are used here, therefore, increased attention is paid to the effectiveness of the implementation of this initiative.
Each enterprise is considered as a separate commercial project, which must be effective. Accordingly, within the framework of the expertise conducted by the Development Bank, the most careful assessment of its parameters is made. In this case, we apply conservative approaches to the assessment of sales markets, the cost of materials and raw materials, as well as the assessment of potential sales.
Usually the Development Bank pays attention to those projects that are not implemented by other banks, as well as to projects with a long payback period, where the private effect is not as important as the national one. It means that the effectiveness of the project itself may not be high, but in general, its implementation will be of great importance for the state.
When financing investment projects, the Development Bank analyzes the effectiveness and financial feasibility of the project. It includes a comprehensive assessment of the business plan of the investment project and the actual results of the work of the initiating enterprise, analysis of the current state and development prospects of the industry in which the investment project is being implemented, marketing analysis, technical (technological) audit, etc. The benchmarking tool is actively used - comparative analysis of the indicators of the project under consideration with the actual indicators of other organizations and projects (including those previously funded by the Development Bank), as well as with world leaders. Separately, the correctness of determining the need for "turnover" after the completion of the investment stage for the project to reach production capacity is assessed.
Additionally, taking into account the risks and problematic issues identified during the analysis, the Development Bank conducts stress testing of the sustainability of the business plan.
As a result of the work, a final opinion is formed on the feasibility of lending to an investment project, proposals for structuring financing, proposed mechanisms for hedging identified risks for the successful implementation of the project at all its stages (investment and operational).
- To organize the fixing of projects of the target plan within the framework of the initiative “One District - One Project” (156 projects are planned to be implemented in total), increase localization and import substitution (53 projects), interaction with project initiators and partner banks, also participating in their financing, was organized.
The current status of project implementation is monitored online - the need for financing this year has been announced for 53 projects, of which the Development Bank plans to consider the possibility to finance 35 of the most capital-intensive projects with a declared amount of funding in the amount of 441.7 million rubles. Financing of the remaining 18 projects, also at the expense of the Development Bank, will be organized by other banks participating in this program (JSC “ASB Belarusbank”, JSC “Bank “Dabrabyt”, JSC “Belagroprombank”).
To monitor the progress of the implementation of investment projects within the framework of the initiative “One District - One Project” and to increase localization and import substitution, interaction with the Ministry of Economy was organized on the use of an automated system. On the basis of this, the Development Bank implemented an information system for the Government, which makes it possible to evaluate on a monthly basis the investment of funds in each project in the context of sources, as well as directions (construction and installation works, investment equipment, and other processes).
According to the results of the first half of the year, we see an advance in the schedule for the implementation of investment projects. However, the key quarters are the third and fourth quarters, when enterprises must acquire significant amounts of funds. If it succeeds, then there is no doubt that the goals of increasing investment in fixed assets and GDP growth will be achieved.
- There are also a number of small projects that do not correspond to the approaches laid down in the basis of the initiative “One District - One Project”, but they are important for the region, and we understand that these are small and medium business projects. Following the principle "the more difficulties in the development of the region, the more preferences", in 2023 we developed a special product "Support to regions" for areas that are not leaders in socio-economic development (34 regions of the country in total, including the southeastern districts of Mogilev region). Financing is carried out on unprecedented conditions - today no more than 6.5 percent per annum. And it's a long-term investment. It is clear that there is an increased demand for resources at such cost: more than 50 million Belarusian rubles have already been allocated to support 220 projects, and we expect them to contribute to the revival of business activity in these regions.
It is also worth noting the implementation of the Program of socio-economic development of the southeastern region. Until 2025, seven districts of Mogilev region were given benefits for the development of the social sphere and the economy, including state support to organizations in the form of budget transfers in the amount of 35 percent of the cost of capital expenditures, excluding VAT, with loans from the Development Bank. Since the approval of this program, 14 investment projects worth more than 50 million rubles have been financed using loans from the Development Bank in various business areas.
– - It is worth emphasizing that an important component in the implementation of investment projects in the regions is the availability of suitable labor resources. Therefore, at the stage of developing the business plan of the project it is important to fix the costs of training, retraining of personnel, creation of infrastructure, etc. If business plans do not include the provision of necessary personnel for the enterprise, the project is unlikely to be effective. And if ten years ago there was a problem of "hidden unemployment", some (mostly state-owned) enterprises had excessive staff, and some jobs were saved for social reasons, today most companies in the real sector are experiencing a shortage of personnel. Therefore, personnel should be paid close attention to in the investment process.
Undoubtedly, it is logical for an investor to invest not only in machinery and equipment, but also in the training of qualified personnel. Unfortunately, not all companies have funds for it. In this case, the state lends a shoulder. In particular, local authorities that are interested in the emergence of new industries and jobs. And according to these indicators, the country's leadership evaluates the work of leaders in districts and regions. State employment assistance programs are also being implemented, which provide for retraining and advanced training of workers, housing construction, social development, and the creation of infrastructure for comfortable living.
Of course, regarding the provision of new industries with qualified specialists, it is more correct to speak in the context of each individual project. But clearly, all investors need to work out measures to provide new enterprises with qualified personnel with the establishment of clear control points. In each case, it is advisable to use your own set of tools. For example, in the construction of dairy farms, the experience of consolidating facilities, the introduction of automated equipment, which reduces the number of employees, has shown effectiveness. However, it raises the requirements for their qualifications. The main tool for staff development is supervised installation (within the framework of contracts for the supply of technological equipment, which include staff training).
Also, do not forget about the mandatory digital transformation of enterprises, which allows you to adequately evaluate and manage technological processes, thereby increasing the economic efficiency of production through predictive management and data analysis.
