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. Last Updated: 07/27/2016

Savvy Pays for Siberian Squirrels

MTSergei and Igor Belimov accepting a plaque Tuesday in honor of the EBRD landmark as the bank's Elizabeth Wallace looks on.
As former Soviet military officers, Belimov brothers Sergei and Igor never expected to be walking advertisements for capitalism.

But soon after the Soviet Union stopped existing, their jobs -- and paychecks -- did too.

Fast-forward a decade or so and the Western Siberian natives were being feted in Moscow by senior diplomats of the world's economic powerhouses -- America and Europe.

The brothers' claim to fame? They turned their frozen-food kiosk in Omsk into leading local ice cream brand Siberian Squirrel and two other successful enterprises that collectively employ some 500 people.

And along the way the Belimovs took out a dozen loans from the European Bank for Reconstruction and Development's Russia Small Business Fund, or RSBF, the last of which, for $63,000, was honored Tuesday as the one that put the eight-year-old fund's loan portfolio above $1 billion.

"Today we are celebrating each and every of the 115,000 small enterprises across Russia that have become our clients over these years," RSBF director Elizabeth Wallace told reporters at a ceremony attended by U.S. Ambassador Alexander Vershbow and EU ambassador Richard Wright.

The Belimov brothers said they owed much of their success to the fund.

"When we first asked the RSBF for a loan in 1997 we had almost no other option," Sergei Belimov said.

"Its rates were relatively low and it took only a few days for the fund to approve us," Igor Belimov added.

The location chosen for the ceremony, the Avtomol auto parts market on the southern stretch of the Moscow Ring Road, or MKAD, is home to five RSBF clients, including Avtomol itself.

"We want today to be a real celebration for the little guy," Vershbow said.

Vershbow said that although the EBRD was set up by several Western nations to help former Soviet bloc countries make the transition to capitalism, Washington remains the largest shareholder and biggest contributor to the RSBF, which is playing a pivotal role in the development of the private sector.

"In the United States, small businesses account for 50 percent of gross domestic product and provide 50 percent of jobs, while in Russia these numbers are only 7 percent and 12 percent, respectively," he said.

But the EBRD is helping to change that, Wallace said.

With small business development now a top priority of the government, the EBRD expects lending volumes to the sector to rise sharply in the coming years, she said, adding that the RSBF issued 44,000 thousand loans last year worth a total of $315 million, or nearly a third of all disbursements since 1994.

"This year we expect the number of loans to at least double to 90,000," Wallace said. "We are very happy to see infrastructure, which we have been building over the last few years, at last starting to bring results."

But despite some progress, the barriers to opening a small business in Russia can still be prohibitive, Wright said.

"The recent meeting between President [Vladimir] Putin and the oligarchs demonstrated how important this question is," Wright said, referring to a Kremlin round table last week at which Severstal chief Alexei Mordashov complained that one of his friends had to collect signatures from 137 different officials just to open a small shop in the Moscow region.

Originally established with pilot projects in three regions in 1994, the RSBF now operates in 116 cities across the country. It provides dollar or ruble loans ranging in value from $1,000 to $200,000 at minimum rates of 11 percent for dollar loans and 18 percent for ruble loans.

About two-thirds of all loans are disbursed through KMB-Bank, of which EBRD is the largest shareholder. Seven Russian partner banks handle the rest.