Institute for War and Peace Reporting | Giving Voice, Driving Change

Chechens Show Entrepreneurial Spirit

Locals try to break dependence on aid by taking out loans to start new businesses.
By Laila Baisultanova
Petemat Umakhanova, 35, is tired of being a victim.

She has had to bring up four children on her own in Grozny ever since her husband disappeared in 2004. What money she has had - just 2000 roubles (around 75 US dollars) a month - has come in benefits from the state and the Red Cross.

Now she is branching out, and has asked the Red Cross for credit to help set up her own business.

“I applied to purchase a freezer and foodstuffs,” she said. “I’m tired of living on the humanitarian aid alone. I want to have a business of my own, earn money and maintain my family properly.”

She is part of a trend in Chechnya, where both local residents and NGOs are keen to move away from being dependent on aid to building a local economy. The war in Chechnya, which has rumbled on since 1994, is now all but over. But it has devastated the infrastructure and economy of the region and most people are unemployed.

In 2005, the United Nations drew up a plan to help Chechnya develop for itself. The UN and other organisations like the Red Cross have started giving small loans to Chechens and those in neighbouring regions that have also seen bloodshed between local insurgents and Russian forces.

Abubakar Tashayev, manager of the Red Cross microfinance programme, said recipients of the assistance in Chechnya, Ingushetia and Dagestan could start their own businesses to improve the living standards of their families.

“This will allow a family to realise its potential and stop being dependant on humanitarian aid,” said Tashayev.

In 2005, the International Committee of the Red Cross launched 86 microeconomic projects. In 2006, that number was 379. In 2007, it is focusing on encouraging trade, and plans to have dozens of projects like Umakhanova’s going by the end of the year.

Each lucky family receives 1000 Swiss francs (around 23000 roubles) to put its business together.

“A person who wants to start a business of his own should take the initiative,” said Tashayev. “He applies for a mini-project, draws up a business plan. Then our organisation conducts a feasibility check and provides him with the necessary equipment.”

If the project proves promising in the six months after it takes off, the organisation will sign an agreement with the businessman, allowing him to use the equipment for free thereafter.

Banata Mustafimova is someone who has already benefited from the programme. She asked the Red Cross for sewing equipment, and now she runs a sewing workshop and employs several people.

More and more people want to share in the success of people like her. In January, the Red Cross received more than 800 applications for funding, and grants were made to 56 of them.

One NGO, the Caucasus Committee for Refugees, helps Chechens returning from exile outside the region buy business equipment.

“The organisation’s task is to allow as many families as possible to open small businesses,” said Ruslan Betayev, coordinator of the Caucasus Committee for Refugees in Chechnya. “This will help improve the welfare of a wider circle of people.”

Currently, the organisation is busy monitoring projects set up in 2005 involving over 100 direct beneficiaries and more than 500 indirect recipients.

In its turn, the Chechen government confirmed a programme to support small business in the republic titled “From survival to prosperity”. The programme allows ordinary citizens of Chechnya to apply for bank loans to promote their small businesses in the fields of private entrepreneurship and agriculture.

Some 4 billion roubles have been channeled into loan projects under federal and local programmes in Chechnya, but critics say much of the money has vanished into officials’ pockets. It has certainly had little impact on the local economy. The benefit of micro-credit, they say, is that the businesses created are so small that they fall beneath the radar of corrupt officials.

Another big lender has been the Chechen branch of the bank Rosselkhozbank. It says that since 2001 it has allocated up to 800 million roubles to support Chechnya’s small business sector.

“Over the past five years, the bank has provided loans to hundreds of enterprises,” said Zulai-Khan Tagirova, who is assistant director of the Chechen branch of the bank.

But most such bank loans are out of the reach of ordinary Chechens, who only need a small sum to get them on their feet.

Madina works in the Mikhail Lermontov State Dramatic Theatre. She intends to apply for a loan to open a beauty salon.

“I am going to take a course in hairdressing from the international organisation Care Canada,” she said. “If I succeed, they may give me a grant.”

Care Canada has worked in Chechnya for over seven years. It has opened a centre for Women offering a broad spectrum of courses, including in accounting, hairdressing and computer skills.

Project Manager Satsita Khaidukayeva said the project started in September of 2006 and would run until July. Over 150 people are now taking courses, trained by professional instructors.

Grants will be given to the ten best pupils, and to those particularly in need – such as Roza Zilbukharova, who got help buying beauty salon equipment.

“Roza is a widow, she has children and lives in a rented apartment,” said Khaidukayeva. “We awarded her the grant because of her social conditions and the diligence she showed during the studies.”

Laila Baisultanova is a journalist with Chechenskoe Obshchestvo newspaper in Chechnya.

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