Transnistria’s Economic Growth Transcends Politics
FrontLines - March 2009
By Emily Patterson
Transnistria Region, Moldova—This sliver of land on Moldova’s eastern border with Ukraine declared its independence in 1990 but is a virtual no man’s land with Soviet-era infrastructure and no foreign investment, no internationally-recognized government to formally accept foreign assistance, and no international banking system.
However, USAID is bringing expertise into Transnistria to help enterprising souls run businesses
to contribute to the local economy.
Anatoly Dzernovich, president
of a formerly state-owned apparel company in Transnistria, is one such individual.
Intercentre Lux, which employs 600 people, faces steadily rising labor costs and high employee turnover. Most of Dzernovich’s business comes from sewing garments for U.S. or European designers like Calvin Klein, Polaris, and Fuchs & Schmitt.
The company competes with apparel factories in China where labor is both cheap and skilled. As is true throughout the apparel industry, in order to retain existing
clients and attract new business,
the factory needed to increase productivity and efficiency.
After hearing about a U.S. productivity enhancement program for apparel businesses from other Moldovan entrepreneurs,
Dzernovich invited project representatives to come to his factory
and assess how they could improve operations in his firm.
“Most donor projects are not interested in helping us. All the assistance they offer has strings attached,” he said. “Only USAID’s Competitiveness Enhancement and Enterprise Development (CEED) project took our concerns seriously.”
Doug Griffith, CEED’s chief of party, said that “one of CEED’s conditions for assistance is that the company be willing to make the changes suggested and to share the cost of both the consultant
and the changes.”
Such an openness to change is not a hallmark of post-Soviet societies. Many businesses that approached CEED were rejected for assistance for that reason alone. Another common obstacle to assisting businesses in emerging
markets, particularly in frozen
conflict zones, is the intricate
political situation.
With about 533,000 citizens, Transnistria has been in
conflict with Moldova over its independence for nearly 20 years. Though Moldova proclaimed its independence from the former Soviet Republic in 1991, Russia continues to back Transnistria’s goals of autonomy.
“Politics getting in the way of business is a concern for the entrepreneur as much as for CEED,” said Griffith.
“Mr. Dzernovich’s first comment
to us was that he was not involved in politics. I explained that neither was CEED—that our objective is to support businesses,
to improve their results. And since we started working with Intercentre, there have
been no problems. We’ve had
no issues with either the Transnistrian authorities or the Moldovan government about our work in Transnistria. I think this is because everyone can agree that economic growth is a positive
thing that is above politics.”
It seems to be working. With direction from an expert consultant
in the apparel industry sent by CEED, Intercentre Lux has reduced production time, raised its seamstresses’ wages by 8 percent,
raised its overall productivity
over 10 percent, and increased its sales more than 20 percent.
★
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