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Technical Assistance/Donor Funded Program in Russian IT-Sector Jari P. ÄngesleväProject Manager IFC23.11.2004: 

Technical Assistance/Donor Funded Program in Russian IT-Sector Jari P. Ängeslevä Project Manager IFC 23.11.2004 33

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Financial products: Loans Equity Risk management Technical assistance (TA): support FDI promote SME development improve business enabling environment IFC Mission is to Promote Private Sector Investment

IFC in Central and Eastern Europe: 

IFC in Central and Eastern Europe RUSSIA Moscow KAZAKHSTAN POLAND BELARUS UKRAINE GEORGIA ARMENIA AZERBAIJAN UZBEKISTAN KYRGYZSTAN TAJIKISTAN

Why IFC Does TA?: 

Why IFC Does TA? IFC’s main business: to make profitable private sector investments in developing countries. TA is used to target constraints like: Regulatory and legislative framework not conducive Project sponsor has limited knowledge of the industry New and unfamiliar technology, skills or management may be required New sectors; new countries.

IFC’s Donor Funded Operations (DFOs): 

IFC’s Donor Funded Operations (DFOs) In addition to the Technical Assistance Trust Funds Program (TATF) IFC programs supported by Donors include: SME Facilities Social and Environmental Facilities Advisory Services including: Foreign Investment Advisory Services (FIAS) Private Sector Advisory Services (PSAS) Private Enterprise Partnership (PEP) Norway/Bank Group TF for Private Sector and Infrastructure

ICT Connector Project Russia: 

Background of the Project Russian ICT Industry is growing faster than in Western-Europe. The whole sector is app. $3.8 billion and off-shore programming represents app. 10% Overall infrastructure for future growth is sufficiently in place. However, some challenging areas do exist Interests to further develop the industry has brought IFC’s TA program and project donors together for cooperation ICT Connector Project Russia

ICT Connector Project Russia: 

Donors are: Ministry for Foreign Affairs and Ministry of Trade and Industry from Finland Project is jointly managed together with our copartner Finpro from Finland Project is a part of IFC Technical Assistance Program, that aims to develop SME sector in Russia ICT Connector Project Russia

ICT Connector Project Russia: 

ICT Connector Project Russia Project has two objectives: To promote cooperation between participating Finnish and Russian companies (Finpro) To develop the ICT market in Russia (IFC) http://www.russia-software.com/ICT/

Why Information Technology?: 

Why Information Technology? Russia is regional market with the largest potential Focus on systems integrators, followed by customization market Investments in IT driven by natural resources sector, particularly oil and gas Banking industry is a close second in its IT investments Offshore programming Software and solutions “New Telecoms” – under consideration

Is Russia Different?: 

Is Russia Different? No! Management problem everywhere Owner/manager/investor differences everywhere Companies fail everywhere Public markets unpredictable Yes! Corp governance worse Owners don’t believe in liquidity/upside, control Transparency awful Trust extremely low Not without reason! NO! YES!

Some Highlights…: 

Some Highlights…

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3 IFC “Prescriptions” Many problems manageable But only with good partners/trust “Russia risk” can be managed Investment structures matter Nobody has all the answers Company risk can be reduced/resolved Requires active investors, progressive owners How many progressive owners are there? Public markets unpredictable

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33 Kiitos! Tack! Takk! Спасибо! Tänan! Paldies Achiu! Dziekuje! Thank You!