Entrepreneurism Support Fund
Entrepreneurism Executive Secretariat

A. Problem Analysis

 1. What was the problem before the implementation of the initiative?
The State of Paraíba, in the Northeast of Brazil, is a region historically marked by its underdevelopment and by a high and persistent level of poverty which exists alongside a just as high level of income concentration. The problem faced by Paraíba state stems from geopolitical, regional, and social inequalities. A chronical delay spacial economics setting, regional planning and public policies aimed at facing the unequal character of the productive and social organization in a diverse space from the national territory. The North and Northeast of Brazil - regarding its actions, vocations, competences and potentials - saw themselves continuously overpowered by underdevelopment, from which, as it's known, result increased and persistent levels of poverty and income concentration. With an estimated population of 3,766,528 habitants, Paraíba is the fifth most populated state in the Northeast (which consists of nine federative units), it occupies 56,584,6 km² in the territory of Brazil and encompasses 223 cities, according to data from the 2010 Demographic Census of Brazilian Institute of Geography and Statistics (IBGE). Such disparity in demographic density is proportional to the level of spacial wealth distribution, when analyzed by view of the Gini index, which measures income distribution levels on a scale of 0 to 1, where 1 is the greatest inequality, on 2010 Paraíba had a score of 0.62. Income concentration, as the presence of families in a situation of poverty, contributed to the state having a Human Development Index (HDI), which comprises variables of longevity, education and income, score of 0.658 according to the 2013 Human Development Atlas. When put under a microscope, the HDI level varies in Paraíba according to the characteristics of each city, which is coherent to its scene of inequality in income distribution and economic activity In 2010, the state presented severe socioeconomic problems and lousy social indicators, which inhibited its development and the promoting of citizenship and social justice. Among them are: - The lack of government public policies, actions and programs aimed at the continuous and persistent tackling of economic stagnation, poverty and income concentration that sought to generate jobs and income, work qualification, new markets and new local production arrangements; - The lack of institutional structure to encompass and foster science, technology and innovation towards promoting sustainable local development; - Income and economic activity concentration; - High levels of poverty; - Low Human Development Index score; - Low employability rates; - Low GDP growth; - The economically active population dependent of public jobs and its social programs. By their nature, transversal character and immediate and indirect impacts, these issues and themes were of extensive public interest and reached many segments of society

B. Strategic Approach

 2. What was the solution?
In the face of income and economic activity concentration and low Human Development Index score, the state needed to act based on public policy innovation to battle poverty, reduce inequality and foster economic growth and social inclusion. For that, Paraíba State Government created the State Program of Support to Entrepreneurism (Empreender-PB), enforced by Law 9.335, dated January 25th of 2011, managed first by the Entrepreneurism Sub-secretariat, then by Entrepreneurism Executive Secretariat. The Program provides oriented productive credit, promoting the generation of work and income among micro-entrepreneurs of Paraíba, as well as supporting and strengthening solidary economy, the individual micro-entrepreneur, the micro-businessperson, the medium sized businessperson, production cooperatives and the governments of Paraíba State's cities.

 3. How did the initiative solve the problem and improve people’s lives?
Empreender-PB Program, with its management structure, provided the state with an effective and continuous public policy of tackling social inequalities and promoting sustainable development. The State Program of Support to Entrepreneurism, Empreender-PB, is tasked to forward 50% of its financing resources to cities in Paraíba state that have an Human Development Index score lower than 0.650. Within this aspect, and according to Law 10.128, dated October 23rd of 2013, Empreender-PB Program prioritizes the concession of oriented productive credit aiming to encourage the generation of work and income among micro-entrepreneurs of Paraíba, as well as supporting and strengthening solidary economy, the individual micro-entrepreneur, the micro-businessperson, the medium sized businessperson, and production cooperatives of Paraíba, meaning to: I - increase job opportunities through creating, expanding, modernizing, transferring or reactivating businesses, formal or informal, through the concession of financial resources loans, facilitating the access to new production technologies and specialized technical assistance to the entrepreneurs and the logistics of distribution and conquering new markets; II - improve the quality of life of the population by creating secure and consistent income sources which provides the entrepreneur families with a way of living, especially the low income ones; III - promote managing training and qualification of entrepreneurs and small businesses, seeking to improve their aptitudes and secure access to technological innovation that grants them more productive efficiency and competitiveness in the market; IV - promote associative production systems by creating and managing purchase, production and selling centers under the management of entrepreneurs, formal or informal, of small businesses; V - offer infrastructure to ease the flow of production and allow the access of small entrepreneurs to the commerce system; VI - allow the participation of entrepreneurs, formal or informal, in fairs and exhibitions, wherever their presence may contribute to the development of their activities; VII - support and stimulate the creation of oriented and productive microcredit organizations and mechanisms; VIII - support and stimulate total enforcing state-wise of the National Statute of Micro-companies (MEs) and Small Sized Companies (EPPs) - Law 9.841/1.999 - and the General Law of MEs and EPPs, Complementary Law 123/2006; IX - support and stimulate the consolidation of solidary economy and a fair sustainable commerce. That way, Empreender-PB Program reaches a diversity of individual and collective social groups such as freelancers, artisans, youth, women, elderly, collective communities, professional motorbike drivers and urban taxis, native Indians, quilombo residents, technological innovation projects and cultural activities, among others. And so it contributes effectively to reduce income concentration, increase social inclusion, and improve the Human Development Index score of cities, therefore reducing poverty in the state.

C. Execution and Implementation

 4. In which ways is the initiative creative and innovative?
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.

 5. Who implemented the initiative and what is the size of the population affected by this initiative?
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.
 6. How was the strategy implemented and what resources were mobilized?
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.

 7. Who were the stakeholders involved in the design of the initiative and in its implementation?
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.

 8. What were the most successful outputs and why was the initiative effective?
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.

 9. What were the main obstacles encountered and how were they overcome?
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.

D. Impact and Sustainability

 10. What were the key benefits resulting from this initiative?
Empreender-PB's impact is apparent in the indicators that show the socioeconomic growth of Paraíba in the period coincident with the years the program was active. Among these indicators are the rise in the generation of jobs and income, the improvement of living conditions and the offer of social benefits, the rise in local production, improvement of housing and the beneficiaries and their families, besides realizing the dreams of Paraíba entrepreneurs. The program delivers a quality public service to the population, providing comfort to the entrepreneurs, breaking the geographical barrier of Paraíba regions, also easing the participation of the loan taker on the program, without debt searches in SPC/SERASA databases, with diverse credit lines that aim to reduce poverty, vulnerable people and social exclusion. According to a Study of the Economic Impact of Empreender-PB Program done by the Institute of Municipal and State Development of Paraíba (IDEME-PB), it was possible to observe that in 2011, the results indicated that, for each real spent by Empreender-PB Program, the return to the society was of R$ 2.46 reais; and under an intertemporal discount tax of 5% (minimum attractive rate), the return to the program was equivalent to 134%. When the 2014 was analyzed, the results show that for each real spent by the program, the return to the society was R$ 2,47 reais; and under an intertemporal discount tax of 5% (minimum attractive rate), the return to the program was equivalent to 148%. It is also known that, besides these factors, there are improvements of living conditions and the social benefits that the program may generate, such as the rise in local productivity and improving of housing conditions of those directly or indirectly benefitted. It's also notable the multiplying effect that each project may generate with the investment of Empreender-PB.

 11. Did the initiative improve integrity and/or accountability in public service? (If applicable)
The effort of the state administration regarding transparency, social accompanying and internal and external controls have been substantiated, since 2011, in the strengthening of structures and proceedings of access to public management information that widen the activities and management of Empreender-PB. It is apparent the improvement in the quality of institutional communication between the government and the society. Besides the creation and/or requalification of web portals in all state administrative areas, a number of new digital products were also created to widen the reach of government-society interactions. The intensive use of governmental media for management accountability include, still, a weekly radio program ("Speak, Governor"), broadcast regularly from many points of the territory by state radio broadcaster Tabajara, as well as a vast news coverage daily transmitted through A União newspaper, of great digital and printed circulation, and blogs, websites and many profiles on the Internet. The transversal character of the reach and functioning of Empreender-PB Program favors its regular presence in occasions of management and dissemination means of many areas of the government. As a highlight, one must mention the broadcast of the program's actions by the instances of State Democratic Budget, which are 16 great regional audiences held annually during three months, with active participation of the Governor, his Secretaries and millions of citizens from all 223 Paraíba cities. The Fund is overseen by a Managing Council made by 5 permanent and 5 substitute representatives. The State Entrepreneurism Fund does its own accountability, and the application of its resources is subject to accountancy in the forms and deadlines dictated by the legislation that disciplines the financial administration of the state. The program's microcredit concessions are all mirrored into the electronic Transparency Portal of Paraíba State Government, and the extracts of all contracts signed are published timely and regularly in the Official State Gazette (DOE). Furthermore, all Fund and Program management are subject to periodic inspection from control organs such as the State Controller General (CGE) and the State Court of Auditors (TCE).

 12. Were special measures put in place to ensure that the initiative benefits women and girls and improves the situation of the poorest and most vulnerable? (If applicable)
It is known that the effects of poverty, social and gender inequality affect mainly women. The social vulnerability, unemployment, and need of effective public policies to combat inequality and lack of opportunity and access to adequate means of survival affect the impoverished population immensely, and on a greater scale, the woman in the Brazilian reality. Needing to deepen this particularity, Empreender-PB Program created Empreender Woman, aimed specifically at female physical persons suffering from violence or social vulnerability, with the goal of encouraging the generation of work and income. Due to this objective, applications to this line remain open continuously, assuring urgency and priority in the concessions analysis according to technical and operational availability of Empreender-PB Program. Through actions and strategies, the program has been able to identify, attract, integrate and promote the Empreender Woman line of credit, directly benefitting 786 entrepreneurs and investing R$ 2,129,334.18 reais. In total, through the program's credit lines, R$ 64 million reais have already been invested, directly benefitting 9,768 female entrepreneurs.

Contact Information

Institution Name:   Entrepreneurism Executive Secretariat
Institution Type:   Other  
Title:   Entrepreneurism Executive Secretariat  
Telephone/ Fax:   +558399836-1817
Institution's / Project's Website:  
E-mail:   amandaaraujor@yahoo.com.br  
Postal Code:   58040-331
City:   Joao Person
State/Province:   Paraíba

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