technoserve report on the rmgc potential private sector …
TRANSCRIPT
Objectives and Content
PRESENTATION OBJECTIVEPresent the potential sustainable development impact of the RMGC project on theRomanian private sector
CONTENTS
1. Technoserve Overview Mission and Approach Countries and Partners
2. Examples of Work in Mining Communities Local Development Regional and National Development
3. RMGC Potential Summary Local Development Regional and National Development
4. Wrap-up Methodology Impact
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Technoserve Mission:TechnoServe helps entrepreneurial men and women to build businesses that create income, opportunity and economic growth for their families, their communities, and their countries.
Technoserve Approach1. Empower Entrepreneurs2. Build Businesses & Industries3. Transform Lives
Technoserve Engagement with RMGCTo develop a plan to maximize the project’s sustainable development impact on the Romanian economy
TechnoServe Mission and Approach
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• A U.S.-based, nonprofit economic development organization.
• Philosophy: Private enterprise can drive economic growth and positive social change; a hand up is better than a handout.
• History: Founded in 1968 by businessman Ed Bullard, who pioneered the private-enterprise approach to solving poverty.
• Staff: Talented business advisors, many of them former management consultants or industry experts.
• Partners: Leverage the expertise of strategic corporate, non-profit and government partners.
• Funding Sources: U.S. and foreign government agencies, multi-lateral organizations, corporations, foundations and individuals.
TechnoServe Company and Partners
PartnersCompany
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Active ProgramsHonduras
IndiaKenya
MozambiqueNicaragua
PeruRwanda
South AfricaSwazilandTanzaniaUganda
VenezuelaZambia
BeninBoliviaBrazil
Burkina FasoChile
ColombiaCôte d'Ivoire
EcuadorEl Salvador
EthiopiaGhana
GuatemalaHaiti
Where We Work
Past Work (extensive)Democratic Republic
of CongoGuinea-BissauMadagascar
MaliSudan
BelizeCosta RicaDominicaPanamaPoland
Norwalk, CT OfficeWashington, DC Office
London, UK Office
Emerging ProgramsGuineaMalawiMexicoNigeria
Zimbabwe
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• Rated one of the top 5 NGOs for corporate partnerships by the Financial Times• Named one of the world’s “Outstanding Social Entrepreneurs” by the Schwab Foundation
for Social Entrepreneurship• Rated one of “America’s 100 Best Charities” by Worth Magazine• Received the Presidential End Hunger Award from USAID
“TechnoServe’s partnership with our government is bringing concrete results in the fight against poverty:
jobs, opportunities, and globally competitive industries.”— Aiuba Cuereneia,
Minister of Planning and Development, Mozambique
"I was greatly impressed by the variety of sectors that
TechnoServe is involved with and the tremendous impact that TechnoServe’s work is having
with regards to economic development and job creation."
— Titus Brenninkmeijer, Founder of Solgenix and
Energy Access Foundation and TechnoServe member
since 1998
“Google is an entrepreneurial company, so we appreciate TechnoServe’s business focused approach to
development…Together we are helping men and women turn their good business ideas into thriving enterprises.
— Rachel Payne, Google.org manager
TechnoServe Recognition
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Contents
1. Technoserve Overview Mission and Approach Countries and Partners
2. Examples of Work in Mining Communities Local Development Regional and National Development
3. RMGC Potential Summary Local Development Regional and National Development
4. Wrap-up Methodology Impact
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Case 1: Developing Local Entrepreneurs
Context
Opportunity to develop small and medium enterprises within the Cajamarca region in partnership with the Yanacocha gold and silver mine. The mine is a high-value buyer of diverse products
and services that can be supplied locally, serving as a springboard for regional, national and export markets.
Our solution
Identify 54 high-potential small and medium enterprise businesses in diverse sectors of the region.
Deliver comprehensive entrepreneurship skills training program.Deliver practical and technical training.
Facilitate access to finance.Improve the enabling environment by establishing SME financing
relationships and funding models.
Results
Dissemination of the model for replication with other natural resource companies throughout Latin America and Africa.
54 small and medium enterprise entrepreneurs trained, resulting in US $1.8 million in incremental sales, 373 new jobs, and
purchases from more than 1,500 local suppliers of agricultural primary products.
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Case 2: Developing Regional and National Entrepreneurs
ContextOpportunity to develop local, regional, and national enterprises in South Africa in partnership the Lonmin Platinum mine. Focus on
supporting women and minority owned businesses.
Our solution
Develop a network of over 500 minority ownedbusinesses in South Africa.
Restructure procurement policies and procedures to reach local businesses.
Deliver comprehensive entrepreneurshipand technical skills training program.
Facilitated access to finance
Results
Increased procurement from women and minority owned South African firms to over USD 500 million annually, 55% of USD 1
billion annual spendDeveloped 70 start up new suppliers and new joint ventures
over a two year period awarding them over USD 100 million in contracts
Diversified local suppliers with goal of over 50% of sales from non mine sources.
Contents
1. Technoserve Overview Mission and Approach Countries and Partners
2. Examples of Work in Mining Communities Local Development National Development
3. RMGC Potential Summary Local Development Regional and National Development
4. Wrap-up Methodology Impact
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TechnoServe and RMGC have identified the potential for significant local, regional, and national benefits from the project (USD).
Projections RMGC Plan AdditionalPotential
Total Potential
Local purchase of goods and services 120 million 110 million 230 million
Local economic development - - 464 million
Total 694 million
Projections RMGC Plan AdditionalPotential
Total Potential
Romanian purchase of goods and services (including local)
2.5 billion 880 million 3.4 billion
Local Economic Development
Regional and National Procurement of Goods and Services
Summary RMGC Project Projections
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Local Context
Population Jan-063 Nov-081 % Change
Rosia Montana 3,557 3,227 -9.3%
Abrud 5,980 5,809 -2.9%
Campeni 8,178 7,805 -4.6%
Total 17,715 16,841 -4.9%
Population Characteristics Local : Rosia Montana, Abrud, CampeniTotal Population: 16, 8411
Aging population, 41% of working age2
RM 14.86% official unemployment1, 24.6 % salariedemployment2, therefore high potential for unreportedunemployment and underemployment 5% population loss over two year period
1 Report of the Socio-Economic State of the Roşia Montana Village, Socio-Economic Research and Development Center “Muntii Apuseni” Association, December 2009.2 National Institute of Statistics3 The County Statistics Department of Alba Iulia.
The local population is relatively small with high unemployment and significant out-migration.
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The local economy has 439 registered businesses generating 120.2M USD of sales in 2008, although the top ten businesses account for 53.5 % of all sales. 1
Sector RM, Abrud, Campeni 2008 Turnover
Food and Beverage 39,557Construction 19,314Timber/Furniture Manufacturer 13,809
Copper Mine 12,135Transport 12,012Other retail 6,920Textile Industry and Retail 4,610Other Service 4,207Other Wholesale 2,741Livestock 1,905Auto Body Repair/Part Sales 906Other 893Business Consultancy Services 776
Hotel 375Total USD 120,160
Local Economy
1 Romanian Companies Database www.romanian-companies.eu/default.asp
Sector Number of Companies Employees Income USD % of
Total
Food & Beverage 3 180 23,700,617 19.4 %
Mining 1 148 11,819,896 9.7%Timber/
Furniture 2 240 10,553,216 8.6%
Construction 2 201 10,424,027 8.6%
Transport 1 15 5,146,491 4.2%Textile and
Retail 1 206 3,728,713 3.1%
Total 990 65,372,961 53.5%
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Technoserve and RMGC have identified 230M USD of procurement opportunities that could create 445 entrepreneurial jobs locally over the life of the mine.
Local Supplier Development
Reagents and Consumables Transport
Construction EarthworksDrilling and exploration SecurityContract Mining Services Cleaning
Maintenance (mine fleet) Contract MaintenanceSample Preparation and Analysis Contract Electrical and Instrumentation
Light Vehicle Servicing Contract Blasting Services Forestry Monitor& Manage Tire Maintenance and MonitoringCatering Contract Surveying Services Accommodation Courier Rapid Service
Closure Demolition (3 yrs only) House Demolition (3 yrs only)
Local Purchase of Goods and Services
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Local Supplier Capacity
Sector RMGC Mine
Demand Per Year (000k)
Local Opportunity
(000k)
% of 2008 Total
Catering 350 17,765 2.0%
Construction 3,139 13,761 22.8%
Transport 300 12,012 2.5%
Auto Body Repair
405 1,905 21.3%
Hotel 315 375 84.0%
Cleaning 275 63 436.5%
Total 4,784 45,881 10.4%
2%
23%
2%
21%
0%
5%
10%
15%
20%
25%
-
5,000
10,000
15,000
20,000
Catering Construction Transport Auto BodyRepair
RMGC Spend as a % of Local Economy
Total Local Economy RMGC % of Total Economy
The capacity to meet this demand exists locally or can be developed.
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TechnoServe has designed a program to develop local entrepreneurs (beyond selling goods and services to the mine) to result in USD 464 M in incremental sales over the life of the mine.
Entrepreneurial Needs
High Priority Business Planning Marketing Strategies Financial Projections
Medium Priority Access to Finance Strategic positioning
Program Projections
•Cumulative Incremental Increase in Sales over 20 years: 464.0M
• Annual Incremental Sales at the end of 20 years: 25.8M
• Year 0 to Year 5: 50% increase in sales of 150 companies, with limited growth from Year 5 to Year 20
Local Non-Supplier Business Development
Program Focus
• Largest 150 businesses in area
• Training, skilling, access to finance, development of new markets, diversification beyond mining
• Intensive mentoring with select businesses
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National Context
-10
-5
0
5
10
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
European Union Romania
Real GDP Growth Rate: Growth Rate of GDP Volume -% change over Prior Year
Romanian Population Characteristics Total Population: 21,513,6621
Population declined 6.5% since 1990 Unemployment at 7.5% (Dec 2009) up from 5.8% in 20082
Negative 7.3% GDP growth in 20093
Government deficit increase by 142% in 2008 and 27% in 20093
1 World Bank, World Development Indicators 2008.2 Harmonized unemployment rate, European Commission – Eurostat3 European Commission – Eurostat
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Development of Romanian Suppliers
Romanian Goods and ServicesReagents and Consumables Transport
Drilling and exploration Security
Contract Mining Services Cleaning
Construction Services Social and Environmental Services
Earth Works Rehabilitation Services
Maintenance (mine fleet) Contract Maintenance
Sample Prep and Analysis Contract Electrical and Instrumentation
Light Vehicle Servicing Contract Blasting Services
Forestry Monitor& Manage Tire Maintenance and Monitoring
Catering Contract Surveying ServicesAccommodation Courier Rapid ServiceClosure Demolition (3 yrs only) House Demolition (3 yrs only)
Potential Romanian Goods and ServicesMining Reagents
Grinding MediaMechanical Equipment
Lubricants
RMGC plans USD 2.5 billion of purchases from Romanian suppliers, with potential for an additional USD 880 million, for a total of USD 3.4 billion over the life of the mine.
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Contents
1. Technoserve Overview Mission and Approach Countries and Partners
2. Examples of Work in Mining Communities Local Development Regional and National Development
3. RMGC Potential Summary Local Development Regional and National Development
4. Wrap-up Methodology Impact
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Access to InformationRMGC with potential suppliers
Database Workshops on opportunities Opportunity distribution
channels
Contract Structuring Contract disaggregation Outsourcing Contractor subcontractor
requirements Offsets
Training & Development Business vs. Technical Classes and Coaching Mentoring
Access to Finance Debt Financial institutions Contract advance Special purpose Equity Grants
Joint Venture Creation Majority local/Romanian Gradual transfer of ownership
SUPPLIER DEVELOPMENT
Tools for Developing Romanian Suppliers and Businesses
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Program Methodology
Local Supplier DevelopmentOngoing Program to Identify and Develop Suppliers from the local community: Selection Training Joint Ventures Access to Finance
Regional and National Supplier Development
• Orientation of procurement department to Romanian procurement
• Communication and selection of Romanian suppliers
• Development of key sectors for the advancement of Romanian economy.
Local Economic Development3 Year program to develop local business community: Broad outreach training Advanced training for selected entrepreneurs Development of key sectors (agriculture, timber, etc.)
Local Economic Development Regional & National Development
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Impacts
Local PurchasesSupporting the local economy through USD 230 million of purchases over the life of the mine
Local Economic DevelopmentSupporting the local economy through developing USD 464 million of additional sales for local businesses over the life of the mine
Regional & National PurchasesSupporting the Romanian economy through USD 3.3 billion of purchases over the life of the mine (including local purchases).
Regional & National Economic DevelopmentSupporting the development of Romanian industries especially including hospitality, construction, earthworks, and mining related services
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Rosia Montana Private Sectors Impacts