The EY G20 Entrepreneurship Barometer 2013 – Russia profile
The power of three
Russia has made substantial progress in its efforts to foster entrepreneurship — especially considering that the country only opened up as a market economy in the 1990s.
Russia performs well in comparison to other rapid-growth markets in EY G20 Entrepreneurship Barometer 2013, which underlines its solid overall performance in developing an ecosystem more conducive to entrepreneurs in recent years.
For those starting a new venture, there is certainly plenty of opportunity: a growing consumer market, rising disposable income, vast resource reserves and a highly skilled workforce.
Russia’s impressive performance in improving the coordinated support it offers entrepreneurs is notable, and it highlights the strongly positive sentiment on the ground in this respect. Business incubators, dedicated industrial parks, and other forms of support are all on the rise, ensuring the country secured first position on this pillar of its entrepreneurial ecosystem.
32% of entrepreneurs surveyed in Russia currently use of have used business incubators, compared to the G20 average of 21%.
In the EY G20 Entrepreneurship Barometer 2013, Russia ranks above average, including ahead of all other BRIC economies in the tax and regulation pillar, contrary to popular perception. This reflects important changes in the focus of the Government’s policy. Officials have been actively searching for ways to improve the business environment for entrepreneurs, as part of their drive to double the contribution of entrepreneurial businesses to GDP so that they account for roughly 50% by 2020.
For example, the number of procedures involved in starting a business fell from nine in 2011 to eight in 2012. And the time it takes to start a business fell from 29 days to 18 during the same period, while the cost of doing so dropped from 2.6% of average income in 2010 to 2.0% in 2012. The average time entrepreneurs spend annually on their tax affairs has decreased from 290 to 177 hours, freeing up around three weeks for more productive activity. Indeed, in The World Bank Doing Business Index report, Russia moved up 41 positions in Tax Administration, since 2011. This is the best improvement of any G20 country.
Also, entrepreneurship conferences and seminars are a particular growth area, with 82% pointing to an improvement over the last three years.
Of course, entrepreneurs still face challenges. Topping the list is the fact that difficulties remain in accessing finance. Thirty-five percent of local entrepreneurs consider it very, or somewhat, easy to access funding, compared to 59% who think it difficult.
This is hardly unique to Russia; however, 70% of entrepreneurs report difficulties in accessing funding across the G20. Beyond finance, Russia’s regulatory burden is often cited as an obstacle by local entrepreneurs, although the country actually scores above average here, and improvements are being made.
If sustained, the improvements mentioned above should provide a welcome boost to levels of entrepreneurial activity in Russia. This will be important, not least in countering a drop in the number of new business incorporations, which fell sharply in 2011, for example. Greater efforts will be needed to help turn this around.