战略与国际研究中心-Enterprise-Funds-for-American-Soft-Power_34页_993kb

Summary of the E&E Enterprise Funds

Core Content

The E&E Enterprise Funds were a series of ten investment funds established by the U.S. Agency for International Development (USAID) following the fall of the Berlin Wall in 1989 and the dissolution of the Soviet Union in 1991. These funds were designed to support the transition of 19 countries in Central and Eastern Europe and the Former Soviet Union from centrally planned economies to market-based systems. They were modeled after Western-style venture capital funds and aimed to promote private sector development through a dual mandate of economic development and financial profitability.

The funds were created with the belief that private sector investment could be a powerful tool in fostering economic growth and stability in these transitioning economies. Each fund had an independent Board of Directors composed of American and local private sector professionals, who provided strategic guidance and oversight on a pro bono basis. USAID monitored the funds to ensure compliance with grant terms and adherence to sound financial and corporate governance practices.

Main Points

Financial and Development Impact

• Total USAID funding: $1.2 billion
• Total capital raised: $9.8 billion
• Total net proceeds from investments: $1.7 billion
• Total investment in host countries: $2.97 billion
• Technical assistance provided: $77.7 million
• Jobs created or sustained: Over 300,000
• Funds returned to U.S. Treasury: $225.5 million, with an expectation to return over $400 million
• Legacy Foundations established: 9, with an additional one expected in 2013
• Assets allocated to legacy foundations: Over $1.3 billion

Key Activities

• Made equity investments and loans to private enterprises
• Introduced new financial products such as home mortgage lending, credit cards, and investment banking
• Helped develop capital markets and financial intermediaries
• Supported institutional and regulatory reforms to promote a stable business environment
• Provided technical assistance to SMEs and entrepreneurs in areas like financial management and strategic planning
• Played a role in transforming the private sector and promoting civil society development

Performance and Challenges

• The funds were pioneers in private sector investment in the E&E region, demonstrating that such investment was feasible and profitable
• Early performance was mixed, with some funds struggling to meet expectations due to the challenging investment environment
• Over time, the funds gained experience and success, leading to significant financial returns and developmental outcomes
• The dual mandate of economic development and financial profitability was central to the model's design and success
• The model was not replicated by USAID in other regions until the "Arab Spring" in 2011, which renewed interest in using the Enterprise Fund approach in other transitioning economies

Key Information

Oversight and Governance

• Initially, USAID provided limited oversight, but later implemented a more active program to ensure compliance and sound governance
• The dual mandate was crucial in attracting both private and public investment
• The boards of directors played a key role in guiding the funds and ensuring their success

Legacy and Sustainability

• The funds have transitioned to legacy foundations, which will continue to support private sector and civil society development in their host countries
• These foundations are self-sustaining and do not require additional U.S. government funding
• The Enterprise Fund model has demonstrated long-term value, even after the funds have completed their active investment phase

Regional Impact

• The funds operated in Poland, Hungary, Russia, Ukraine, Moldova, Belarus, Central Asia, Romania, Bulgaria, Slovakia, Albania, and the Baltics
• They were instrumental in establishing the private sector in countries with weak or non-existent financial systems
• The transformation of the economy in these regions was significantly influenced by the funds' activities

Conclusion

The E&E Enterprise Funds represent a successful and innovative model of public-private partnership in economic development. Despite the challenges of operating in a region with limited financial infrastructure and political instability, the funds have achieved substantial financial returns and positive developmental outcomes. Their legacy is preserved through the establishment of long-term philanthropic institutions that continue to support private sector growth and civil society development. This document serves as a learning tool for future investment fund initiatives, highlighting both the successes and the lessons learned from the 20-year experience of the E&E Enterprise Funds.

Recommendations

• The Enterprise Fund model should be implemented in parallel with broader development efforts to ensure a supportive business environment
• Emphasis should be placed on demonstrating financial profitability to attract further investment and support
• The dual mandate approach should be considered when designing similar funds in other regions
• Oversight and governance structures must evolve to ensure both compliance and effectiveness
• Technical assistance and capacity building are essential components of the model’s success

References

• The report is an internal review and not a formal evaluation
• It is intended to serve as a starting point for USAID and other donors considering similar investment fund activities
• The lessons learned are based on the oversight perspective of USAID and the U.S. Government, not the fund boards or management teams

Annex A

• Provides detailed financial data on the ten E&E Enterprise Funds
• Summarizes specific achievements and financial returns of each fund
• Includes country-specific performance metrics and total investment figures
• Offers a comprehensive overview of the financial and development impact of the funds across the region