7.
Financing / Subsidizing Nuclei and Associations
The chambers cooperation project in Brazil subsidized neither
individual enterprises nor Nuclei or chambers;
if the entrepreneurs are convinced of something then they will find ways of
financing it. This, however, is different in Sri Lanka, where there is
prevalence – boosted by government and donors – to expect grants (“recipient
mentality”). But even there the entrepreneurs have arrived started saying “We do
not bother about the subsidies. We need the Nucleus!”
The question is how and what to subsidize on the basis of which
reasons – all the while reinforcing, not counteracting the orientation of the
Nucleus Approach.
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Subsidizing individual entrepreneurs is in diametrical
contrast to the Nucleus Approach and should be done under no circumstances.
On the one hand, having access to individual subsidies automatically reduces
the entrepreneurs’ interest and motivation to engage themselves in a Nucleus
and chamber; on the other hand it undermines their self-help efforts. They
will not do what they think is good for the enterprise but what they think
will be subsidized.
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Subsidizing Nucleus activities can be argued for as a means
of motivating the initially distrustful entrepreneur to try out
participation in a Nucleus by reducing the barriers to entry as low as
possible. With agreed upon promotion guidelines defining the rights and
obligations of Nucleus members, chambers and the project, activities can be
promoted in the field of training, consultancies, visits to enterprises and
other institutions relevant to the entrepreneur, marketing, fairs and
expositions and possibly also investment into hardware up to certain limits.
Even small activities can be subsidized in a fast way with a decision taking
board that includes representatives of the involved chambers. Easy to handle
standardized forms for applications, contracts statements and reports keep
the administrative costs relatively low.
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Subsidies shall gradually decrease (exit strategy) in
expectation of the entrepreneurs’ growing awareness of the importance of the
Nucleus for them, so that they are prepared to finance the activities by
themselves or search for other financial sources.
-
Performance oriented subsidization of chamber overhead
costs: The establishment of Nuclei involves additional costs (personnel,
physical infrastructure etc.), which initially the chambers are not able to
cover.
It has been successful to subsidize according to the motto “subsidies
against performance”. In Sri Lanka, the criteria “number of active Nuclei”
and “number of Nucleus members paying membership fee” worked well.[3]
This system has a further advantage for the project in that current costs do
not have to be accounted and paid for, nor controlled by the project staff –
a process that easily invites manipulation. Only the number of Nuclei and
their members needs to be monitored.
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