48838 MAY 2009 ABOUT THE AUTHORS Two Are Better Than One: Leveraging ARIF NASIBOV Resources across Advisory Business Lines is the legal advisor for the Uzbekistan Business Enabling Environment Project. He In 2008, Uzbekistan significantly improved its rank in the Doing Business joined IFC in 2006. As legal advisor, he focused on "Getting credit" indicator, moving up 38 positions from the previous year, providing legal assistance in and by July a draft law titled, "On Sharing Credit Information," which meets lobbying for UzBEE recommendations mainly in best international standards, was developed by a six-member working business liquidation group, including IFC staff and two regulators from the Central Bank of procedures as well as taxation, permits, and RIA. Uzbekistan (CBU). Pending the draft law's passage by the Parliament of Uzbekistan, this major achievement will significantly improve the still- ELBEK KHODJAEV developing regulatory environment in this sphere. These results were is ACALF's coordinator in Uzbekistan. He joined IFC in achieved thanks to a common approach and efforts of two IFC Advisory October 2007 to ensure the Services projects: the Uzbekistan Business Enabling Environment Project successful finalization of all ACALF activities in Uzbekistan, (UzBEE) and the Azerbaijan Central Asia Leasing Facility (ACALF) Project. In including arranging this SmartLesson, we describe our experience in carrying out joint activities outsourced consultancies for between two different IFC projects and the lessons learned for how to client financial companies, conducting trainings and assure successful cross-project collaboration by building an enthusiastic workshops, and ensuring that team and assigning clear objectives to individuals. the management information systems of client companies were upgraded. Background interested in the development of a sound CISS APPROVING MANAGERS in Uzbekistan, UzBEE and ACALF decided to Sanda Liepina, Senior In November 2007, at a regular semi-annual do this job jointly. Operations Manager, Business meeting in Tashkent, Uzbekistan, IFC Advisory Enabling Environment, IFC Services projects presented their progress At the same time, by the end of 2007 the CBU Advisory Services in Europe reports to their donors. At this meeting, the had already developed its own version of a and Central Asia. ACALF Project, which was launched in 2005, draft law related to sharing credit information Patrick Luternauer, Senior submitted its exit strategy and requested that that seemed anti-market and that did not Operations Manager for its donor--the State Secretariat for Economic reflect some key aspects critical for the advisory services projects in Affairs of the Swiss Confederation (SECO)-- development of a sound CISS. As none of IFC's the financial markets (except approve the use of available funds for further projects in Uzbekistan had good relations with housing finance) in Europe and Central Asia. enhancement of the still nascent Uzbekistan the CBU, which did not like to work with credit information-sharing system (CISS). The international organizations, and ACALF donor agreed with the proposal. Project would soon end, we faced some challenges in our goal of developing a sound The development of a credit information- CISS in the country. sharing system involves scrupulous regulatory work that is normally done by a policy advisor The following are the lessons learned in our experienced in this sphere. Although the joint work to assist with the drafting of the ACALF Project did not have a policy advisor in new law, which serves as the foundation for a Uzbekistan because the initial ACALF Project sound CISS. objectives did not require the presence of such a specialist, ACALF was able to obtain the Lessons Learned donor's consent to channel some of the available funds into the development of a 1) Focus on aspects that unite your projects CISS.Ontheotherside,UzBEEhadtherequired instead of those that may divide. expertise and resources but the project was dedicated to particular project-specific ACALF is a regional project that contributes to objectives related to improving the business the economic growth of the private sector, enabling environment. As both projects were increases access to finance, and creates IFC SMARTLESSONS -- MAY 2009 1 employment through the development of leasing. It has · improving the regulatory framework; been particularly successful in Uzbekistan.1 In turn, UzBEE is a country-based project with the main goal to improve the · conducting a study tour for stakeholders from the CBU, business enabling environment for small and medium Cabinet of Ministries; and enterprises (SME) in Uzbekistan. Both projects have different objectives, different counterparts, and different · organizing a seminar for regulators and future team members. However, we have cast aside those practitioners in CISS, including those at banks and insignificant differences and concentrated on the aspects nonbanking financial institutions. that bring us together, namely: We assigned each of the activities to a different specialist. · We have had a common goal. Both projects intended Additionally, working group members were to write articles to develop the CISS in Uzbekistan. Although each to popularize CISS, explaining its benefits and work project had different reasons (ACALF considered that a principles. viable CISS would support leasing companies, while UzBEE hoped that the system would make SME's access These tasks, especially the highly successful study tour to to finance easier), the final goal was the same. Prague, Czech Republic, resulted in the development of a better draft law "On Sharing Credit Information." Getting · We are one organization. All of us work in IFC, in one first-hand experience of how credit bureaus and credit country, in one office. Although we work in different information-sharing systems operate in market economies directions, we all pursue one mission: to support private- of Central Europe and understanding of IFC's global sector growth in developing countries. experience in CISS development greatly helped to further improve the Uzbek CISS regulatory framework. Specifically, During preliminary discussion between the two projects, after returning from the study tour, the CBU rejected its we agreed on these two points, which was reinforced at a ideas on total control of the private credit bureaus' activities subsequent ACALF-UzBEE working group meeting. Based and agreed to make respective amendments to the draft on these points, we then created a strong platform for our law.Inaddition,thefirsteverworkshoponthedevelopment working relationship and work plan, which let us use ACALF of CISS in Uzbekistan was held under the auspices of IFC, and UzBEE resources, such as counterparts, specialists, the CBU, and the Association of Banks of Uzbekistan. More materials, etc., with no restrictions. For example, when we than 60 financiers, bankers and regulators attended, and were preparing for the first meeting with the CBU, the one article was published. regulator of the credit bureau sector responsible for developing the draft law "On Sharing Credit Information," 3) In front of a counterpart, act as one team. we visited ACALF counterparts from financial institutions to obtain first-hand information on how financial institutions It is vital to establish good relations with our counterparts in Uzbekistan share credit information among themselves. and clients, and we should develop such comfortable Afterwards, with the support of UzBEE specialists, we held working relations with them by acting as one IFC team. negotiations with the Ministry of Justice on the prepared Often it does not matter for our counterparts and clients draft law. what kinds of projects or different business lines within IFC we represent. They should believe that we represent a 2) Assign objectives to individuals, not to projects or working group formed to work specifically with them. groups. In our initial meeting with counterparts, we presented When carrying out joint efforts with other projects, it is ourselves as members of different advisory services projects better to assign necessary objectives to each individual separately. One should keep in mind that, regardless of the similarities between the two IFC projects, there are different managers, different tasks, and different lines of reporting and responsibilities. Because it was impossible to officially appoint a person who would be responsible for the joint efforts, we found that assigning objectives individually to each team member let us achieve our targets in critical areas. In particular, at our first meeting we agreed on three possible strategic directions to assist in the development of CISS: 1 The ACALF Project has enabled two local participating financial institutions to at- tract $19 million in additional investment. Also, since 2005 ACALF also has helped the Uzbek Government to draft four legislative acts aimed at leasing development, including amendments to the "Law on Leasing," changes to the new Tax Codex, and other acts. These initiatives led to a sevenfold increase in the volume of new leases from 2003 to 2008.To develop the institutional capacity of leasing institutions, IFC has Sharing IFC global credit bureau development experience at the developed 13 training modules and trained more than 162 leasing specialists in leas- workshop held by IFC in Tashkent, November 2008. ing basics, credit analysis in leasing, micro leasing, risk management, human resource management, financial analysis, and monitoring of leases through this project. 2 IFC SMARTLESSONS -- MAY 2009 giving our business cards with the different differing motives, our enthusiasm and project names on them. This confused our commitment to assisting in the development counterparts as they did not realize who of the private sector was the great engine of specifically within the IFC office they should our work. approach on certain issues. We fixed this awkward situation by asking them to forget Conclusion about the names of the projects we represented and suggesting that they contact Our cross-project collaboration helped us to any of us when needed. convince the partner regulators to amend the draft law "On Sharing Credit Information" 4) Last, but not least, encourage people by a and transform it into a far more pro-market knockout dose of enthusiasm. document that incorporated principles of best international practice on CISS. The new draft Cross-project activities within IFC are driven by law quickly went through the interagency enthusiastic people, especially as complex clearance process and was successfully joint efforts or cross-project activities are often presented to the Cabinet of Ministries for not rewarded in contrast to a person's regular higher-level approval. (The next step is to job. Surprisingly, while IFC welcomes cross- secure passage in the Parliament of project collaboration, the Corporation does Uzbekistan.) not provide either special processes or pecuniary assistance to encourage staff to The ACALF project ended April 30, 2009, but participate in cross-project activities. IFC gives its exit strategy was successfully fulfilled. At various awards such as the "spot awards" or the present time, there is a newly approved CEO Gender Award, but there are no special Azerbaijan Central Asia Financial Markets awards for cross-project efforts. Additionally, Infrastructure project that will help to expand we have plenty of templates for procurement secure access to finance for individual contracts and advisory services contracts, but consumers and micro, small, and medium none of them are designed to match cross- enterprises in Azerbaijan and, the Kyrgyz project activities. Republic, Tajikistan, and Uzbekistan by improving the financial infrastructure and Despite this, we were fortunate to have regulatory environment that would enable supportive managers that understood the the efficient functioning of credit bureaus. necessity of the development of a sound CISS in Uzbekistan and recognized that cross- In addition to the good results of the joint project collaboration was the way to go. Our work done by ACALF and UzBEE, our managers helped us navigate sometimes counterpart, the CBU, highly appreciates our tricky waters to ensure that our cross-project efforts and is now happy cooperating with efforts were a success and, importantly, tried IFC. Our experience helped us to earn the to do their best to recognize such actions. central bank regulators' trust and to recruit However, the most important feature of our them as important respondents for the Doing successful cross-project collaboration was the Business reports. enthusiasm of the project teams. Despite DISCLAIMER IFC SmartLessons is an awards program to share lessons learned in development-oriented advisory services and investment operations. The findings, interpretations, and conclusions expressed in this paper are those of the author(s) and do not necessarily reflect the views of IFC or its partner organizations, the Executive Directors of The World Bank or the governments they represent. IFC does not assume any responsibility for the completeness or accuracy of the information contained in this document. Please see the terms and conditions at www.ifc.org/ IFC team and Uzbekistan financial market regulators studying the Czech experience, Prague, May 2008. smartlessons or contact the program at smartlessons@ifc.org. IFC SMARTLESSONS -- MAY 2009 3