| 4. In which ways is the initiative creative and innovative?
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Through public policies, Empreender-PB Program presents innovative and creative actions which make it unique in Brazil, as demonstrated by the following strategies:
1. General Training for entrepreneurs;
2. Interest rates unlike those practiced in the financial market;
3. A grace period of at least 6 months, possibly 12 months, to start paying the loan;
4. Diverse lines of credit, aimed to attend specific societal groups such as women, youth, artisans, production cooperatives, cultural and technologically innovative projects, among others;
5. Possibility of extending the number of installments to fit the budgeting capacities of the entrepreneur;
6. 50% of the resources collected by the Entrepreneurism Support Fund must be destined to cities with an HDI score inferior to 0.650;
7. The Program's resources come from the collecting of Contract Administration Taxes established between the state government and its suppliers of goods and services, through a 1.6% rate over its face value, for medium sized companies or bigger, and 1% to small sized companies, to be applied on the act of consolidating the respective payments, guaranteeing the financial sustainability of the program.
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| 5. Who implemented the initiative and what is the size of the population affected by this initiative?
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The Entrepreneurism Executive Secretariat is linked to the State Secretariat of Tourism and Economic Development (SETDE). The former is the organ responsible for managing and operating Empreender-PB Program, created by Paraíba State Governor Ricardo Vieira Coutinho by way of Provisory Measure 163, dated January 3rd of 2011, approved by the State Legislative Assembly, which then became Law 9.335, dated January 25th of 2011, later altered by Law 10.128, dated October 23rd of 2013.
Between 2011 and 2016, Empreender-PB signed over 23,259 direct contracts with entrepreneurs of Paraíba state in the multiple lines of the program, and considering that the 2010 Census of Brazilian Institute of Geography and Statistics (IBGE) showed the number of people sharing a household was 3.34, it implies that the program indirectly benefits over 77,685 people, injecting over R$ 122 million (Brazilian reais) in Paraíba'a economy. All this potential is due to the execution of eleven different lines of access to oriented productive microcredit: Empreender Individual Person, Empreender Company, Empreender Woman, Empreender Handicraft, Empreender Professional Motorbike Driver, Empreender Youth, Empreender Culture, Empreender Cooperative, Empreender Technological Innovation, Empreender Freelancer, Empreender City Hall, each with their own features and singularities, all of them contributing to the advance of local development, reducing of social inequalities and the improvement of the quality of life of the population.
The execution of the program is managed by the following organizational structure: Executive Management of Economic Development Projects; Training Management; Regional Sub-managements; Technical-normative Consultancy Coordinator; Intern Control Management; Planning, Budgeting and Financial Management; Administrative Management; Accountancy and Post-credit and Billing Management.
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| 6. How was the strategy implemented and what resources were mobilized?
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The strategies followed by the Entrepreneurism Executive Secretariat are based on Law 10.128, dated October 23rd of 2013, which dictates that 90% of Empreender-PB Fund's resources are destined to oriented productive microcredit, and 10% of those resources are to be destined to the operational costs of the program. Between 2012 and 2016, the financial, technical, operational and human resources cost was R$ 12,799,260.51.
The transferring of the resources to the beneficiary is ruled by directives established by the Entrepreneurism Executive Secretariat, and are aimed, especially, to battle poverty, reduce inequality and promote growth through social inclusion. The Executive Management of Projects, based on the socioeconomic indicators of the 223 Paraíba cities, elaborates strategies aimed at the target public of the cities with an HDI score inferior to 0.650. Subsequently, it announces to the local partners the need of actions through microcredit. The Training Management improves the managerial performance of the entrepreneurs, aiming to sharpen their aptitudes and ensuring access to technological innovation. The Regional Sub-managements aid the elaboration of the business plan, a stage in which the candidate for the credit describes their entrepreneurial idea, which then goes to analysis. After assessing the registration and investment plan, the contracts of credit concession are emitted through the Technical-normative Consultancy. With the contract signed, the resources are forwarded by Planning, Budgeting and Financial Management to the bank account informed by the final receiver of the resources, and at the same time, are made available the payment notes of the referred loan. The Post-credit and Billing Management, within the strategic structure, supervises and orients the final receives after the concession of the loan.
The credit analysis is based on the "5 Cs of credit" concession model, which are:
- Character: the petitioner's part regarding the abiding by their financial and contractual obligations;
- Capacity: the petitioner's potential to pay back the solicited loan;
- Capital: the petitioner's financial solidity;
- Collateral: the amount of goods the petitioner offered to ensure the credit;
- Condition: the economic and sectorial conditions at play, as well as special elements that may come to affect both the petitioner and the creditor.
The resources of Entrepreneurism Executive Secretariat, responsible for managing and operating the program, are made up by collectings of the Contract Administration Taxes of the state government (resultant of the application of a 1.6% rate over the contract's face value, for medium sized companies or bigger, and 1% to small sized companies, to be applied on the act of consolidating the respective payments). Also integrating the State Support Fund to Entrepreneurism (Empreender-PB Fund) are resources from the State General Budget; tax collection under Law 7.947, dated March 22nd of 2006; the state administration bodies' own resources, where are the budget allocations of Program "5084", the Poverty Combat and Eradication Fund, at an amount approved by its Managing Council, being these necessarily completely applied in actions that are part of the construction of solidary economy and social intersection mechanisms; payments from the loans granted by financial agents and the profits from financial application of the non-compromised resources, interests and any other eventual profits beyond amortizations of the granted loans, ensuring the financial sustainability of the program.
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| 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
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Paraíba State Governor Ricardo Vieira Coutinho, by the attributions invested in him by art. 86, indent IV of the State Constitution and attending Law 9.335, dated January 25th of 2011, regulates Empreender-PB Program through Decree 32.144, dated March 17th of 2011.
According to the Decree which rules it, Empreender-PB Program is administered by the Entrepreneurism Executive Secretariat. Regarding its form and administration, its Managing Council has the competency to supervise Empreender Fund, being responsible for approving the general rules for operating the credit lines proposed by the Program, such as:
I - aiding the establishment of global and individual limit fixation criteria to the concession of loans and grants, under the availabilities of the Fund;
II - suggesting amortization and grace periods, as well as borrower's charges and fines for eventual contractual failure to pay;
III - analyzing the operational accounts of the Fund, through balances, and also evaluate results and suggest measures of improvement of the activities;
IV - priory manifesting about adjustments to be set with third parties, having the Fund's resources as object;
V - elaborate the internal regiment.
The council is made up of 5 permanent and substitute representatives from the following organs: I - State Secretariat of Tourism and Economic Development; II - State Secretariat of Planning and Management; III - State Secretariat of Finances; IV - State Secretariat of Revenue.
The execution of the program is managed by the following organizational structure: Executive Management of Economic Development Projects; Training Management; Regional Sub-managements; Technical-normative Consultancy Coordinator; Intern Control Management; Planning, Budgeting and Financial Management; Administrative Management; Accountancy and Post-credit and Billing Management.
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| 8. What were the most successful outputs and why was the initiative effective?
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Among the successful projects backed by Empreender-PB Program, with positive results in social and economic plans and referring to SDGs, are highlighted:
1. Project SPA Empreender, created by Pombal City Hall to attend low income women of impoverished and vulnerable families who were dependent on social programs of the Federal Government. Aiming to improve their quality of life and insert these women in the job market, qualification courses in the beauty and aesthetics areas were offered. It was sent to Empreender-PB with a credit solicitations for 70 entrepreneurs, checking the economic and social viability of the project. R$ 280,000.00 (Brazilian reais) were invested in these entrepreneurs. The project contributed to the social rehabilitation of these women, who left the vulnerability of where they were and gave back their social program cards (their only source of income so far), bringing personal and financial growth, development of the local economy and new perspectives of life and professional success.
2. Dona Antônia Settlement Association, which submitted a project to acquire a tractor able to modernize and improve the economic performance of coconut farming, the main economic activity and source of income of the city's workers. The project was assessed and approved, with R$ 150.000,00 (Brazilian reais) conceded through the Empreender Cooperative line, contributing to a significant rise in the coconut production. According to the treasurer, the profits tripled.
3. Empreender-PB Program awarded R$ 115.000,00 reais in credit to attend the emergency demand of 30 shopkeepers harmed in a fire on João Pessoa's Torre Public Market in 2014. The program enabled the recuperation of the hit establishments and allowed the return of the activities of the damaged group and of the Market.
4. The program promoted actions in Campina Grande city to attend emergency demands from shopkeepers of the Central Fair, the Footwear and Furniture Industry Centers and the Popular Shopping Center, all hit by unforeseen damages. The investments afforded a new beginning to these entrepreneurs. Almost half a million was also invested in the Cariri Milk Cooperative, which indirectly benefitted 500 familien in Paraíba.
5. The program promoted the exceptional XXIV Paraíba Handicrafts Showroom, held in Campina Grande city, where exclusive registrations were offered to artisans who needed working capital to participate on the Showroom. R$ 193.000,00 reais in credit were conceded, which allowed 30 artisans to acquire materials to make handcrafted protucts and colored cotton based.
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| 9. What were the main obstacles encountered and how were they overcome?
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Inserted in the indirect administration structure of the state government, the Entrepreneurism Executive Secretariat has its acting regulated by state legislation and directives. On the one hand, the program may benefit from the many virtuous aspects of administration; on the other hand, it needed to face the problems and obstacles stemming from the state's dimension and magnitude of the initiative, but also must solve those resultant of state management limitations, almost all of them relating to management and logistics. Among them, we can highlight: the geographic distance between the 223 cities on Paraíba, the target public of the program, and Empreender-PB's headquarters in the capital João Pessoa; the insufficient number of human resources for a better proceeding and reach of the program; difficulties to elaborate and implement an computerized system of oriented productive microcredit capable of guaranteeing a better financial control of the processes and the connection of the program to the financial system of state control.
To overcome these obstacles and improve the initiative, Entrepreneurism Executive Secretariat created a new organogram of the program's management, widened its board of human resources, promoted the hiring of new interns and outsourced the support team. Furthermore, to attend the program's target public regionally, the Secretariat signed Cooperation Terms with city halls, as in the cities of Bayeux, Bananeiras, Cuité, Patos and Pombal, narrowing the geographic distance between the cities. It also promoted the hiring of a specialized consultancy company for a web platform, aiming to establish control over the microcredit concession processes, as well as linking them to official state data and allowing anyone prone to credit, no matter where they reside, to have full access to the program.
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