Questions/Answers

The “Empreender Paraíba” program, administered by the state’s Executive Secretariat of Entrepreneurship, has faced over the years some operational and economic challenges common to public services focused on production-oriented microcredit and income distribution. Notably, the lack of human resources required for improving the program’s service and coverage; the geographic distance between the different cities in Paraíba and Empreender’s headquarters (located in the state’s capital) and the absence of a standardized managerial control of the processes, which would cause them to be quicker and more transparent, as well as promoving equity in service access. Some measures have been taken in order to improve the program’s ability to overcome these challenges. First, a new online process management system was implemented, integrating all actions related to production-oriented microcredit concession and enabling the recipient to access their own information, provide the required documentation and keep up with their process. Improvements also happened in the program’s service and coverage quality and excellence, through changes in the Executive Secretariat of Entrepreneurship’s organogram. These were made in order to promote an increase in the program’s growth, implementing regional sub-managements that are responsible for the different geoeconomic micro-regions of the state of Paraíba, building bridges between the entrepreneurs and the program’s services. Another important action related to service access has been the establishment of partnerships with city-level administrations, implementing local service stations that feature a development agent available for direct interaction with the population. It should be mentioned that all the measures taken to establish local access to the program’s services help Empreender to become more isometric and accessible to the population.

The “Empreender Paraíba” program has the main objective of conceding production-oriented credit, incentivizing the creation of job and income opportunities amongst local entrepreneurs, as well as support and strengthen the solidarity economy, the individual micro-entrepreneur and the production cooperatives of the Paraíba state. Its attributions include increasing labor opportunities through the creation, expansion and modernization of formal and informal businesses; elevate the local population’s quality of life while creating safe income sources, providing sustenance to entrepreneurs’ families; promote the qualification of entrepreneurs, upgrading their abilities and providing access to technological innovation; offer the infrastructure needed for the production outflow and ease market access to the micro-entrepreneurs (exemplified in the “Melhor Negócio” project, an e-commerce platform developed in order to present and commercialize products made by those supported by the program); enable the participation of entrepreneurs in expositions and fairs, such as the editions of the “Feira de Negócios e Empreendedorismo da Paraíba – FENEMP”, organized by the program in different regions of the state; as well as other attributions established in the 9.335/11 decree.

The services offered by “Empreender Paraíba” are directly related to the selected category, considering they are providing universal and equalitarian microcredit access and promoting labor and income opportunities through the funding of entrepreneurships, notably prioritizing cities with a Human Development Index lower than 0,650, as established in the program’s creation, providing equal rights and access to economic resources, particularly to the poorest and most vulnerable. When it comes to providing services through inclusive partnerships, the “Empreender” initiative promotes actions directed to those in a situation of social and economic vulnerability, teaming up with the State Secretariat of the Women and Human Diversity through the “Empreender Mulher” credit line, which offers even easier funding opportunities to natural persons of the feminine gender in a situation of violence and/or social vulnerability. Also to be mentioned are actions alongside other social groups, such as the “Spa Empreender” project, accomplished with the Pombal city prefecture, and through capacitation and funding access, provided 70 women with a well-desired financial independence and consequent leaving of the federal social welfare program “Bolsa Família”.

The main factors that improve access to the “Empreender Paraíba”’s microcredit services are the special funding conditions offered to the entrepreneurs, with interest rates that vary from 0,50% to 0,64% monthly and initial grace periods for the financing payment; the fast and de-bureaucratic production-oriented credit access, through capacitation classes before concession; the permanent presence of specialized staff in the different cities of Paraíba, helping to build business plans with the entrepreneurs, other than the post-credit and charging actions (exemplified in the “Acordo Legal” project, which visits cities promoting renegotiation efforts with entrepreneurs in default situation.) In the same way, the aforementioned new internet access platform promotes a quicker and easier access to the program’s services, providing the entrepreneur with a transparent and fast way to obtain information on all credit and post-credit procedures, such as online emission of payment slips.

Considering the need to expand the “Empreender” project all over the Paraíba territory, the program’s staff has continuously searched for new institutional partnerships to make the population’s access to the services feasible. Of note amongst these actions are the services installed in the “Casas da Cidadania” of some cities, such as Patos and Itaporanga, a single ambient focused on service-related public and private institutions, facilitating their access to the population. In January 2017, the “Empreender Paraíba” program has also promoted a large round of reunions with the mayors of each of the 223 cities in the state, inviting them to collaborate so as to establish a point of service in each of them, with the basic structure needed to help access to the program’s services and providing a local technician capable of clearing doubts and support the local staff. This sort of partnership is already happening in 140 cities all over Paraíba.

There are some “Empreender Paraíba” actions focused on this sort of groups, notably the “Empreender Mulher” credit line, which gets special treatment throughout the other options, as seen in the Program Announcement in the following paragraph: “3.5.2. Considering the “Empreender Mulher” objective, all entries in this line will remain open in a continuous and uninterrupted form, providing the necessary urgency and priority in their analysis.” Other vulnerable groups have received special attention from the program, as seen in the case of the city of Pombal, through the aforementioned “Spa Empreender” project; and in the city of Conde, which pleaded for the acquisition of a tractor, a resource that was quick to improve the coconut plantations that happened to be the only source of income from the associated workers. Emergency services were also promoted after accidents like the fire on the Torre town market in the city of João Pessoa, supporting shopkeepers whose establishments and products were destroyed by the flames. There are uncountable actions directed by “Empreender” to specific groups of the Paraíba community, and the program searches to detect these demands to further qualify its services.

The presented initiative has an innovative character, not only because it is focused on income distribution through microcredit, but because it capacitates the entrepreneurs. The credit line diversity can also be mentioned as a differential, including ones destined for women, young people, artisans, production cooperatives, cultural and innovative projects, which makes “Empreender Paraíba” unique in its segment. It should be noted that “Empreender”, in contrast to other similar initiatives, has its own resources, coming from the administration fees of the contracts between the Paraíba state government and its products and services’ suppliers, of 1,6% on the contracted value for medium-sized companies and 1% for small-sized companies, received on the payment consolidation. Other than these factors, the initiative features easy credit access through special interest rates and deficiencies, as well as prioritized service to counties with an HDI of less than 0,650.

The Program for Entrepreneurship Support - EMPREENDER happens to be an adaptation of an analogous project on a more local level: “Empreender João Pessoa”, which evolved to a state-level program. In the same way “Empreender JP” was focused on incentivizing entrepreneurs from the state’s capital city, qualifying them and providing resources from the local government, “Empreender Paraíba” offers an advanced and widespread version of the project throughout the entire state, a sustainable initiative on all financial, social and economic scopes, creating job and income opportunities in its most fragile areas.

The financial resources from the “Empreender Paraíba” project come from the administration fees of contracts signed by the Paraíba state government and its products and services’ suppliers, of 1,6% on the contracted value for medium-sized companies and 1% for small-sized companies, received on the payment consolidation. Between 2011, the first year of the program, and 2017, more than R$170,000,000.00 in financial resources were collected, and 90% of it is destined to credit concession for entrepreneurs from Paraíba, while 10% goes to the program’s costs. Nowadays, the program has an average annual cost of R$2,500,000.00, with 34 technical public servants as well as an intern and outsourced staff. With the costing resources from the “Empreender” fund, it’s possible to keep a fine working logistic structure, from staff transport all over the Paraíba state, to the technology consulting needed for the operating system of concession processes, as well as funding the events and fairs promoted by the program.

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The “Empreender Paraíba” program is focused on incentivizing funding to entrepreneurs on the state of Paraíba, as well as providing technical support, enabling a sustainable development of the program in the financial, social and economic scopes, creating jobs and income throughout the most dependent and fragile areas. Facing this reality, similar programs have been implemented in places like the city of Conde, where the prefecture has implemented a similar program, mirroring “Empreender”’s implementation, functioning and execution. Other cities from Paraíba such as Bananeiras have also had experiences supported by “Empreender”’s know-how, providing services for small entrepreneurships, as well as supporting “Empreender Paraíba” locally. It should be mentioned that other cities also request technical and juridical support from “Empreender” to adapt versions of the program to their administrations, such as Rio Tinto and Cabaceiras, who are now in the implementing step of their programs.

The public services provided with excellence, quality and effectivity in the concession of the microcredit supplied by “Empreender” have a very positive effect on the economic and social development of the cities of the state of Paraíba. That, allied with low interest rates and credit facilitation, makes sure the invested resources are returned to the program, especially considering how the entrepreneurs have the opportunity to come back to the program for new investments through credit renovations. Searching to guarantee even more the program’s sustainability, the Post-Credit and Collect Management of the Executive Secretariat of Entrepreneurship constantly keeps up with the entrepreneurs’ investments and awards success cases, as well as promoting collection efforts through the “Acordo Legal” project and collect mechanisms, negativizing clients in default situation. Other than these credit defense mechanisms, economic security is ensured by the constant tax revenues destined to the “Empreender Paraíba” fund, keeping the program working in a safe and stable way, in both credit availability and operational costs of the system.

The way the credit analysis is implemented can be considered an assurance of continuous sustainability. The technical analysis needed for funding concessions is accomplished by taking in consideration the program’s nature and mission of promoting economic and social development, financing entrepreneurships for those who are excluded or find hardships through conventional credit systems. Those who wish to obtain funding are informed about the program’s rules, as well as being qualified with basic entrepreneurship notions. They provide the required documentation and the program’s technicians support the elaboration of their business plans, ensuring its compatibility with the target consumer. This process has been enhanced and perfected in a continuous way since the beginning of the program’s activities, with risk analysis procedures being implemented. It should be mentioned that this analysis does not follow the tools and procedures usually utilized by the traditional financial system, as those would create incompatible restrictions for the program’s mission. The main elements analyzed are: age, professional formation, service formalization, activity segment, entrepreneurship characteristics, amongst others. After going through each presented information, the technical staff analyzes and decides which should be the value available for the activity. Currently “Empreender Paraíba” has been using the Credit-Scoring model, which serves to identify each entrepreneur’s characteristics, uniforming the credit concession analysis based on the collected information.

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The County and State Development Institute - IDEME has realized a economic impact study to analyze the impacts of the “Empreender” program, amongst the different credit lines. The economic return for the Paraíba state economy was also evaluated, through the relation of the Added Value (AV) of the service sector and the social return of the program. A methodology was used for the elaboration of an Empreender Paraíba Performance Index (IPEMP) and a Calculation of the Economic Return (CRE), which allowed for the estimate of the direct, indirect and induced impacts over the state’s economy, as well as behaviour diagnosis and analysis relating to the program’s spread, the number of benefited entrepreneurs, the destined values and gender balance, helping to paint the picture of the impacts and available microcredit lines, as well as their evolutionary tendency throughout time. The entrepreneurs themselves were interviewed about the program and their opinion was also taken in consideration, and “Empreender” took from some of these suggestions to improve their methods along the line.

The Economic Impact Study of the Empreender Paraíba Program evaluation, carried out by the County and State Development Institute - IDEME, certifies that the program is intended to encourage investment in the most diverse productive business areas in the Paraíba state, providing the availability of resources in the 14 Geoadministrative Regions, geared primarily to raise the quality of life of the local population through the creation and diversity of income sources capable of stimulating the distribution of resources, in order to guarantee the livelihood of families, especially the low-income segments. The study also highlights the evolution in the program’s service providing, noting that the program "presented a growth of 208.71% in the 2011-2012 period, with the most significant being observed in the Geoadministrative Regions of João Pessoa (1,910.00%), Itabaiana (1,408.33%) and Mamanguape (530.00%). " It should be clarified that studies were carried out contemplating the 2011-2012 and 2013-2014 periods, and the following conclusion about this second period must be highlighted: "Another variable that also showed positive behavior was the supplied credit in the 2013-2014 period, which registered an increase of 84.10%, going from R$17.18 million in 2013 to R$31.63 million in 2014."

According to the Economic Impact Study of the Empreender Paraíba Program, carried out by the County and State Development Institute (IDME), for the year 2011 the results indicate that, for each real spent by the Empreender Paraíba Program, the return to society will be of R$2.44 (two reais and forty-four cents), and at an intertemporal discount rate of 5% (five percent), a minimum of attractiveness, the return to the program is equivalent to 144% (one hundred and forty four percent). For the year 2012, the results indicate that, for each real spent by the program, the return to society will be R$2.46 (two reais and forty six cents), and at an intertemporal discount rate of 5% (five percent), minimum attractiveness rate, the return to the program is equivalent to 147% (one hundred and forty seven percent), in the year of 2013 the results indicate that, for each real spent by the Empreender Paraíba program, the return to society will be of R$2.34 (two reais and thirty-four cents), and at an intertemporal discount rate of 5% (five percent), minimum attractiveness, the return to the program is equivalent to 134% (one hundred and thirty-four percent), when analyzed for the year of 2014, the results indicate that for each real spent by the Empreender Paraíba program, the return to society will be of R$2.47 (two reais and forty-seven cents), and at an intertemporal 5% (five percent) discount rate, minimum attractiveness, the return to the program is equivalent to 148% (one hundred and forty-eight percent). Therefore, the subsequent multiplier effect that each entrepreneurship assisted by the Empreender Paraíba investment can generate has to be considered.

Throughout its history, the “Empreender” program has sought partnerships in order to increasingly qualify the service provided to citizens, and several contributions can be mentioned regarding actions developed by the program. For one, the creation of some of the offered credit lines, such as the “Empreender Artesanato” line, which has been in existence since the first year of “Empreender”’s activities, which was created through a partnership with the Paraíba Handicrafts Program - PAP, a state-level organ responsible for monitoring and supporting artisans from Paraíba, which gives technical support to the “Empreender” staff in the concessions of this credit line. Other examples like this are the “Empreender Mulher” lines, with the State Secretariat of the Women and Human Diversity, the “Empreender Cultural” line, idealized with the State Secretariat of Culture, and the “Empreender Inovação Tecnológica” line, which goes through a project analysis by the Research Support Foundation of the State of Paraíba. While speaking about partnerships, several institutions routinely participate in the program's activities, such as SEBRAE-PB, the National Cooperativism Learning Service (Sescoop), the Sustainable Development of Cariri, Seridó and Curimataú Project (Procase), among other entities that “Empreender Paraíba” seeks support to further qualify the programs’ service providing.

There are countless lessons to be taken from these years of challenges in the “Empreender Paraíba” program, especially in regard to providing increasingly more qualified, egalitarian and humanized services to the target audience of the program. In a state with considerable operational challenges and with a lot to improve economically, the role of “Empreender Paraíba” becomes increasingly fundamental, distributing income, combating poverty and reducing inequality, fundamental principles of the SDGs. It is understood that we need to be each time closer to the entrepreneurs of Paraíba, throughout the professional qualification, the technical, operational and financial support as well as supporting local productive arrangements, which strengthen and give autonomy to the entrepreneurships. Service modernization is a priority, as seen in the implementation of the “Melhor Negócio” e-commerce platform, which is meant to provide another outflow for our customers' products and services, seeking new ways to support them, either through consultants financed by “Empreender” or directly with facilitated financial support, the program’s main activity.