CCIC Complex Challenges – Innovative Cities
Good Practice Description Template
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Name of person filling
Dr. Kiril Savov Grigorov
Position
Manager
Contact details
4 “11 August” Str, fl 2
1000 Sofia,
Bulgaria
Tel: +359 2 980 9938
E-mail: k.grigorov@ogf-sofia.com, office@ogf-sofia.com
This template is designed to guide you through the process of describing a local/regional innovation-related practice that you know – either because of direct
involvement, or through observation. Each CCIC partner (a local or regional authority, or subsidiary of one) is requested to complete 10-12 such templates. The
summarized information will be used in thematic group discussions, as well as to increase partners’ awareness of good innovation practices across the different
regions.
No question requires lengthy input. Focus on description, not on analysis. Be concise and clear, and check if your answer really matches the question(s) asked.
You are advised to answer all of the questions in order to guarantee a complete description. Where you do not have the required information, try to identify a
reliable and credible source, who could provide the missing details, and include that in the description of the practice. Every time you rely on a source, please
specify at least their position and/or organization. Names, or other personally identifiable information, are not necessary.
Under question 15 you may add any other relevant information that you consider important, but missing from the rest of the questions.
Question
1. Name of the practice (can be a one-sentence
description, to be used for future referrals).
Also include a web link, if available
Page 1 of 8
Answer
Municipal Guarantee Fund for Small and Medium Enterprises (MGFSME) of Sofia Municipality
www.ogf-sofia.com
CCIC Complex Challenges – Innovative Cities
Good Practice Description Template
This version is suitable for printing.
Question
2. In which of the four thematic groups would
this practice fit the best? What other policy
areas, if any, are related?
Please write any other policy area that you find to be influenced
by the particular innovation. No further details are necessary.
3. What is it that makes your organisation
believe this practice represents an innovation?
Please state reasons why the practice represents an innovation,
according to your organisation
Page 2 of 8
Answer
 Innovative financial instruments
 Public Procurement and Innovation
 Civil society inclusion
 Publicly-owned enterprises
 Other (please specify)
Only MGFSME offers individual guarantees to small and medium enterprises (SMEs) when evaluating the
specificities of each individual project of SMEs. The guarantee of the Fund allows partner banks to offer
better crediting conditions to SMEs both from Sofia and from outside the municipality when they develop
projects that are to be realized on the territory of the municipality.
In 2008 the Fund developed another direction within its activities – information and consulting. MGFSME
offers consulting services to SMEs in the following fields:
 services for developing projects to apply for financing by the open schemes of EU Operational
Programmes ;
 accounting services;
 legal services;
 management services;
 services relevant to the receipt of international certification -- ISO 9001, 14001, granting of an initial
crediting rating, etc.
CCIC Complex Challenges – Innovative Cities
Good Practice Description Template
This version is suitable for printing.
Question
4. What change resulted from the innovation in
question? What problem(s) did it address?
What was the initial status of the problem(s) it
addressed?
Describe what changed as a result of this practice – try to
specifically link a problem, and identify how this problem has
been solved in terms of results achieved.
Answer
The interest towards the MGFSME financial instrument has been increasing, even within the context of the
economic crisis, which testifies to the mutual interest from the Fund, both for SMEs and partner banks – the
SME receives better crediting conditions while the bank increases the number of its customers. When
applying for credit most SMEs are unable to offer enough guarantees in front of crediting institutions so as
to receive the amount of financial resources they need to realize their projects. The Fund offers SMEs an
easily accessible, rapid and cost-effective financial instrument, which substantially increases their chances to
receive funding from the Fund’s partner banks.
By means of its information and consulting services MGFSME supports SMEs by providing free of charge the
most thorough and easily accessible information relevant to financing their projects.
5.
What were the main motivations behind
proposing the innovation?
Share briefly what factors motivated the implementation of the
particular innovation – external pressure, political decision,
economic/social analysis, NGO proposals or demands,
management reorganization, any inefficiencies, etc.
Page 3 of 8
In 2002 with the amendment of the Law on Privatization and Post-privatization Control the necessary legal
conditions were created for setting up municipal guarantee funds in support of SMEs.
MGFSME has been created with the mission of implementing the policies of Sofia Municipality related to
supporting SMEs and stimulating entrepreneurship on its territory and achieving the following goals:
 Cooperation and assistance in the implementation of the Plan for Development of Sofia.
Assistance in implementing the Lisbon Strategy for the introduction of policies in support of SMEs
and the creation of favorable conditions for their operation;
 Adoption and realization of initiatives for popularizing the capital city and attracting investments in
SMEs;
 Improvement of conditions for entrepreneurial initiatives in the capital city;
 Assistance in financial support for SMEs in the capital city and alleviating their access to EU structural
funds through operative programmes;
 Improvement of the quality and information environment of SMEs in the capital.
CCIC Complex Challenges – Innovative Cities
Good Practice Description Template
This version is suitable for printing.
Question
6. Which organisation initiated the innovation
process? Was it initiated by an actor from
outside or from inside the organisation? Who
were the innovations “champions” inside the
organisation? How did they interact with
“champions” from other organisations
involved, if there were any?
Describe whether the innovation was conceived internally within
the organization or prompted from an external actor. Mention
all those who worked to promote the innovation within the
organization (“champions”).
Page 4 of 8
Answer
MGFSME has been created on the initiative of the Sofia Municipal Council with the cooperation of the
administration of Sofia Municipality.
Members of the Sofia Municipal Council, highly qualified experts and consultants have been engaged with
the Fund throughout the years, which has contributed to its development.
CCIC Complex Challenges – Innovative Cities
Good Practice Description Template
This version is suitable for printing.
Question
7. Which institutions, organisations and social
groups would be considered stakeholders
(that benefit from the implementation of this
innovation)? What are their respective
“stakes”?
Identify stakeholders involved – both internal (such as a
Department Head) and external (businesses, national political
institution, citizens’ organisations or groups), as well as how
benefits from the innovation are distributed across them.
Page 5 of 8
Answer
A wide range of institutions, organizations and social groups can take advantage from the guarantee scheme
and the services of the Fund.
MGFSME has the necessary potential for fruitful cooperation with credit institutions, research institutes,
NGOs, branch organizations and associations, which give priority to working in the sphere of the small and
medium enterprises.
Until the present moment the fund has signed framework agreements for crediting SMEs with 12 trade
banks:
Allianz Bank Bulgaria, DSK Bank, Piraeus Bank Bulgaria, Bulgarian-American Credit Bank, First Investment
Bank, CIBANK, Investbank, Municipal Bank, Tokuda Bank, D Commerce Bank, Central Cooperative Bank,
Eurobank EFG Bulgaria.
MGFSME has successful partnerships with the National Association for Small and Medium Enterprise, the
Bulgarian Association for Management and Entrepreneurship Development, Sofia Chamber of Commerce
and Industry, Scientific-technical Union of Mechanical Engineering, Euro Perspectives Foundation,
Association of Women Entrepreneurs in Bulgaria “Selena”, Energy Efficiency Agency, Energy Efficiency Fund,
Sofia University.
The Fund has framework agreements with highly qualified consultants, who offer specialized services in
different spheres of problems related to SMEs: BIP Euroconsulting Group Ltd., ICAP Group Bulgaria EAD,
Global Advisors AD, Prime Consulting OOD, FIA Consult OOD.
MGFSME does not have restrictions regarding the entrepreneurs, regardless of the social group from which
they come from. In order for them to receive guarantee support from MGFSME, SMEs have to fulfill the
following requirements:
to meet the criteria for SME in accordance with the law for SMEs;
their head office has to be on the territory of Sofia Municipality or their business project has to be
realized on the territory of the Municipality;
In its annual program the Fund sets its priorities for realization of its activities according to the category of
entrepreneurs and to the types of projects to be financed.
CCIC Complex Challenges – Innovative Cities
Good Practice Description Template
This version is suitable for printing.
Question
8. How was politicalsupport built, and why was it
necessary (or why was it not)? What
challenges had to be resolved? How was the
public involved?
Answer
In the Governing Council of MGFSME, which is the main governing body of MGFSME, municipal councilors
from the main political forces represented in the Sofia Municipal Council take part.
Attempt to define the political factors influencing the realization
of the innovation, as well as why was it necessary – if at all – to
seek political support. Mention if citizens were involved as a
political actor (i.e. to demonstrate public demand) and how.
9. What lessons were learned during the
innovation planning phase?
The Fund currently updates its internal rules and organizational documents according to the changes in the
functioning legislation and its practice with partner banks in activities for crediting MSEs.
Try to address specific knowledge acquired while planning the
innovation with regard to local systems, stakeholder
relationships, political pressures, etc. Elaborate specific policy
conclusions with regard to the innovation planning phase.
10. What changes were introduced in the
organisation as a result? Were different
policies adopted (to sustain the innovation)?
Were structural changes made?
Describe specifically if the implementation of this practice also
resulted in internal changes within the organization, and what
prompted them. Address both structural/management and
policy changes.
11. What could have been done differently to
strengthen the accomplishments of the
innovation?
Give specific examples what makes the innovation success, and
think specifically about what could have been done differently to
strengthen that success, i.e earlier start, involvement of other
stakeholders, different communication strategy, etc.
Page 6 of 8
After the election of the new Governing Council of the Fund (GCF) in 2008 the main direction for redesigning
the goals and guidelines of MGFSME‘s work was formulated. The need for adopting media policy of the Fund
was realized after the ‘Communication Strategy for the Positioning of MGFSME’ was written and adopted.
In May 2008 the GCF passed for the first time criteria and requirements for the position ‘Manager of the
Fund’. After a competition, which took place in May 2008, the Sofia Municipal Council elected new Manager.
MGFSME developed and created a new direction of its activities – consultancy-informational activity and
since 2008 tasks for consulting SMEs are assigned in the annual programs for the Fund’s activities.
The internet informational web site – www.ogf-sofia.com was created for popularizing MGFSME’s activities
and for easier access of SMEs to the services provided by the Fund. The site gives complete information to
the citizens about the activities, the structure and the main goals of the Fund. It presents the procedures for
providing guarantees to SMEs, and it gives useful information about partners, institutions and organizations,
which could benefit the SMEs.
CCIC Complex Challenges – Innovative Cities
Good Practice Description Template
This version is suitable for printing.
Question
12. What procedures have been used for the
evaluation of the innovation's impact, if any?
If none were used, why?
Comment on how the practice has been evaluated, if at all (i.e.
through surveys, interviews, benchmarking, etc.; was there an
external consultant involved or was it done only in house). If it
were not formally evaluated, comment on how and who
determined if the practice is a success, and in what terms.
13. Has the innovation been recognised externally
by an independent entity (one that has not
been involved in the planning and/or
implementation phases), by means of, for
example, a public award or a detailed media
publication?
Mention any form of formal recognition about the innovative
status of this practice that you are aware of. Especially relevant
are acts of recognition coming from an NGO or a reputable
international organization.
Page 7 of 8
Answer
MGFSME is in constant contact with representatives from SMEs and it consults them with organizations and
associations of the small and medium enterprise, branch organizations, associations and other institutions
for the problems of the small and medium enterprise and in relation to popularizing the activities of the
Fund. On this level direct dialogue with the small and medium enterprise is set up, which contributes to the
effective implementation of the guarantee scheme of MGFSME.
The daily work with the partner banks also contributes to the current acquaintance of the Fund with the
problems of firm crediting, which gives the opportunity for constant improvement of the financial
instrument.
Surveys related to topical questions related to SMEs problems are published in the web site of MGFSME. The
results of the surveys are analyzed and the conclusions based on them are taken into consideration for the
purpose of improving the functioning of the Fund.
For the purpose of reaching the goals of MGFSME annual programs, which contain the main directions and
tasks of the Fund for the respective year, are developed and presented for approval to Sofia Municipal
Council.
MGFSME’s activities are reported in three-month and annual reports, in which the work of the Fund is
assessed on the basis of clearly defined grading criteria.
In November 2009 the Bulgarian National Bank (BNB) defined the statute of the Fund for the purposes of the
standardized approach for credit risk on the basis of Regulation № 8 of BNB. BNB’s legal opinion is that the
expositions towards MGFSME are treated as expositions towards institutions, on the basis of article 29.1
from Regulation № 8, and banks can respectively use its guarantees as an instrument for credit protection
and apply more favorable risk weight to the covered by the guarantee part of the exposition towards SMEs.
The guarantee support of MGFSME has been of a crucial importance for ensuring financing projects of SMEs.
In September 2011, in an interview for the ‘Funds, Programs and Projects’ magazine Dimo Nikolov, owner
and Manager of BIX.BG ‘Bulgarian Internet Exchange’ company expressed his gratitude to the Fund, which in
cooperation with Municipal Bank AD has provided the necessary financing for the realization of his project,
regardless of the rejection of other credit institutions.
CCIC Complex Challenges – Innovative Cities
Good Practice Description Template
This version is suitable for printing.
Question
14. Has the idea for the innovation been
borrowed from another successfully
implemented experience? If yes, how did the
adopting institution learn about it? If this was
an original idea, has there been interest from
other parties/entities (besides CCIC) about its
application?
In case you are aware, please comment if this practice was
transferred from another “source” and how was knowledge
about it shared.
15. Other comments
Please include any other information, which you consider
relevant and important for this practice, but has not been
already covered by previous questions.
Page 8 of 8
Answer