Foreign Assistance: Enterprise Funds' Contributions to Private Sector Development Vary Page: 3 of 45
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SGAO
Accountability * Integrity * Reliability
United States General Accounting Office National Security and
Washington, D.C. 20548 International Affairs Division
B-283261
September 14, 1999
The Honorable Benjamin A. Gilman
Chairman, Committee on International Relations
House of Representatives
The Honorable Doug Bereuter
Chairman, Subcommittee on Asia and the Pacific
Committee on International Relations
House of Representatives
In 1989, the United States authorized enterprise funds as an experimental
model to support private sector development in selected countries of
Central and Eastern Europe as they transition from centrally planned to
market-oriented economies.1 The funds, which are private, nonprofit U.S.
corporations, are supposed to make loans to, or investments in, small- and
medium-sized businesses in which other financial institutions are reluctant
to invest. With the breakup of the Soviet Union in 1991, enterprise funds
were subsequently established in the newly independent states. Currently,
10 funds operate in Central Europe and the former Soviet Union, covering
19 countries with authorized funding of about $1.3 billion.2 Enterprise
funds receive their funding through the U.S. Agency for International
Development (USAID), and USAID has primary responsibility for
monitoring the funds' operations.
At your request, we determined (1) whether enterprise funds are assisting
private sector development; (2) what factors have affected the funds'
ability to carry out their activities; (3) whether funds still have a role in
private sector development, given other private investment and
international donor efforts; (4) whether the funds are likely to recoup their
1The Support for East European Democracy (SEED) Act of 1989 (P.L. 101-179) authorized the creation
of enterprise funds in Poland and Hungary. Later, under the SEED Act and the FREEDOM Support Act
of 1992 (P.L. 102-511), eight additional funds were established in Central and Eastern Europe and the
former Soviet Union. We reported on the first four enterprise funds in March 1994; see Enterprise
Funds: Evolving Models for Private Sector Development in Central and Eastern Euro pe
(GAO/NSIAD-94-77, Mar. 9, 1994).
2Four funds operate in multiple countries. The Baltic fund includes Estonia, Latvia, and Lithuania; the
Central Asian fund covers Kazakhstan, the Kyrgyz Republic, Tajikistan, Turkmenistan, and Uzbekistan;
the Czech-Slovak fund operates primarily in the Slovak Republic, but also covers the Czech Republic;
and the Western Newly Independent States fund covers Belarus, Moldova, and Ukraine.GAO/NSIAD-99-221 Foreign Assistance
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United States. General Accounting Office. Foreign Assistance: Enterprise Funds' Contributions to Private Sector Development Vary, report, September 14, 1999; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc294721/m1/3/: accessed April 22, 2024), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.