According to the survey, each rouble provided to support SMEs pays 7 roubles back to the budget, and advisory support to businesses is rated by respondents as more effective than the financial one.
The Ministry of Economic Development of the Russian Federation annually invests about RUB22bn in the SME Support Program. KPMG analyzed the performance of SMEs receiving state support based on more than 10,000 questionnaires and 40,000 registers from 83 regions and compared it to that of SMEs not supported by the state.
According to the analysis, supported SMEs are more profitable, have less debt and several times more PPE than SMEs without support. On average, businesses without state support expand their PPE 15.8 percentage points more slowly than those participating in the Program. The support has its best effect on PPE of very small enterprises. The maximum effect is achieved in the third year after the support receipt.
Revenues of SMEs receiving state support are growing 5.7 percentage points faster in the same macroeconomic environment. The maximum effect on revenues is achieved by very small and medium enterprises in the year when the support is received. Then a declining trend is observed.
The analysis also revealed that the effect of each rouble subsequently spent on the support is for very small enterprises higher than that of spent before, and the optimal level of support for them is to exceed 30% of their annual revenues. As far as small enterprises are concerned, the effect of the state support on them reduces over time: at a certain point of time it ceases to drive the revenue growth. The optimal volume of support for them should be in the range of 10-20% of their annual revenues. There is however no evidence of the same trend with respect to medium enterprises.
According to KPMG, the total effect of the SME Support Program on the Russian budget is RUB153bn annually (RUB7 return on each RUB1 of investment). This amount is driven by additional tax revenue due to the increase in SMEs' revenues, as well as by the multiplicative growth of the Russian economy as a result of providing support to SMEs. The aggregate effect of the Program on SMEs' revenues is RUB859bn annually or 3% of the total turnover of SMEs for 2013. Its effect on the GDP is estimated to be RUB607bn (RUB27.6 return on each RUB1 of investment). For comparison, according to similar surveys conducted in the USA and the UK, the effect of their local programs on GDP was 19 and 34 currency units per each invested currency unit respectively.
Among all the types of support the advisory support through the entrepreneur support center and the export support center was recognized as the most effective in terms of the effect on SMEs' revenues per one rouble invested. It ensures additional growth of revenues by RUB641 and 119 respectively. At the same time, according to SMEs themselves, the most effective type of support is financial aid in the form of grants, subsidies, etc. This must be due to the low level of awareness among entrepreneurs about other types of support.
Overall SMEs provide positive feedback on the Program: the average score as to the overall impression of the Program is 4.4 on a scale of five. The categories "The simplicity of requirements to documents for receiving the support" and "The volume of the financial support" scored the lowest number of points (4.1 and 3.9 respectively). At the same time there are no complaints about the time of receipt of the support by SMEs: in 83% of cases a decision on the support request is made within 30 days, in 85% of cases the support is provided no later than 30 days after the decision is taken.
You can download the full report here (Russian only).
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