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Planting the Seeds of Democracy in the North Caucasus

Posted on the 14 August 2012 by Center For International Private Enterprise @CIPEglobal
Planting the Seeds of Democracy in the North Caucasus

Vladikavkaz Institute of Management alum Azmat Gagloyev preparing for a November 2011 presentation about his recognition at a national entrepreneurship competition. (Photo: Staff)

“Looking at the sheer numbers of young people in the world today, the world does, indeed, belong to youth,” says Ruth Dueck Mbega, Program Manager of Microfinance at the MasterCard Foundation, at a recent event.

Mbega also noted this simple fact: there are 81 million unemployed youth in developing countries. 81 million. Who are these young people? Where do they go? What are their prospects, for themselves, for their districts, cities, for their countries, and, ultimately, for our global community?

For CIPE, this is a serious concern every day, and not only on International Youth Day. That is why two of our three current projects in Russia focus on this issue – specifically on unemployed youth in the restive North Caucasus region.

Since the breakup of the Soviet Union, Russia’s North Caucasus has faced staggering challenges to its economic and political development. As its Soviet legacy, the region inherited scarce local industry and poor infrastructure, representing a particularly weak foundation for growth. In addition, the emergence of an inclusive, functioning market has been hampered by corruption that is pervasive even by Russian standards. Such problems have been compounded by frequent outbreaks of violence, including two wars in Chechnya, and terrorist attacks and clashes between federal forces and insurgent groups in Ingushetia, Dagestan, Kabardino-Balkaria and elsewhere.

This combination leads to high unemployment, estimated at nearly 50 percent in some parts of the North Caucasus, which in turn feeds back into the violence and instability. Young people represent a large share of the unemployed, given their limited options for legitimate employment.

While many young people try to leave the North Caucasus to seek work across Russia, those who remain often find it difficult to enter the private sector or to become leaders in the development of civil society, especially given the domination of local clans or political structures. With few choices, many can only find work in the bureaucracy or law enforcement.

In response to this state of affairs, CIPE in 2009 began youth entrepreneurship programs in the region as a first step toward improving development prospects, recognizing the need to begin building a new generation of democratically-oriented, entrepreneurial young leaders, with an alternate perspective for the future of the North Caucasus.

The two current projects, one funded by USAID and another by the National Endowment for Democracy, are both organized training programs that provide young people with the types of skills they need to become leaders in their society, by developing their entrepreneurial talents and encouraging more active citizenship. These programs focus on closing the gap between the social classes by providing basic business training to young people who are studying in trade and technical schools, supplementing these vocational skills with a set of tools needed to enter into business independently, or to take on management-level positions in existing firms. CIPE’s work in the region is focused on stimulating entrepreneurial activity and expanding opportunities to youth for employment in the North Caucasus, thereby fostering economic growth and in turn helping to mitigate conflict and build stability.

The objectives of these projects are inextricably linked to not only empowering youth involved, but also invigorating the development of civil society for the region. Carried out in conjunction with a number of local partners and stakeholders, the programs capitalize on relationships built over several years of working in the North Caucasus with chambers of commerce, business associations, and educational institutions.

A key aspect of these programs involves leveraging the participating organizations’ relationships with regional government bodies responsible for supporting small and medium-sized enterprise. Chambers of Commerce are among the most financially independent non-governmental organizations in Russia, with members willing to pay dues to support the organizations. Second, they are able to balance independence, on the one hand, with their constructive working relationships with the government on the other. Finally, they have a direct interest in, and experience with, economic development programs, including education, training programs, and consultation for small and medium enterprise.

Both programs include 100 hours of education on the themes central to successful entrepreneurship: strategic business planning and launching a new enterprise, financial and economic literacy, entrepreneurship in a democratic society, leadership and professional growth, property rights and free market institutions, and democratic institutions and the rule of law. Students, young people drawn from trade and technical skills, may not otherwise have the opportunity for training business and economics, but have the capacity to provide needed services.  The programs provide them with both the skills and access to capital – helping them to consider going into business on their own. In one major way, these programs help to construct the bridge between the aspirations of youth and new governmental opportunities.

Following completion of these programs, graduates are well-suited to take advantage of new possibilities in the region. In gaining experience in submitting business plans for competitive review and learning how to manage and operate with financial resources, young people in the North Caucasus are increasingly prepared to engage with, and participate in,  current governmental programs that are proposed in the various republics to create, in total, nearly 20,000 jobs. These important synergies with local governments, across sectors, and among youth are an integral resource in the development of the region.

Over the life of the USAID-funded program, which started in 2010, nearly 1,225 students from across the region will have taken part in the training courses. To date, 67 graduates have been awarded certificates of state support from 6 republics throughout the region, Chechnya, Ingushetia, Karachai-Cherkess, Karbardino-Balkaria, Stavropol, and Adygei. Furthermore, 38 businesses have been successfully registered by program graduates.

The 2011 NED program has similarly seen great successes.  Roughly 150 students have completed over 100 hours of instruction each over the last year. Graduates of the NED program have also been active in competitions for government support for their business plans.

Start-up ideas have ranged from a soccer academy to a private kindergarten to a car wash. Program participants have taken part in local, regional, and national conferences where students continue to present their business start-up plans at education forums and conferences.  Despite the low-level of political stability in the region and surmounting indications of continued nationally-organized repression across the country, both training programs have continued to enjoy fruitful relationships with the local private and public sector.

Among many accomplishments of the programs’ students, in early April of this year, a four-person team of graduates won a grant of 1.2 million rubles ($41,381) to start a cucumber growing and pickling facility on the site of a former collective farm in the village of Sungzha. The money was disbursed in late June 2012. Currently, the graduates are waiting for the delivery of an Israeli-manufactured irrigation system for the 10-hectare farm in order to begin cucumber production.

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