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This is an archived USAID document retained on this web site as a matter of public record.
Polish American Enterprise Fund (PAEF)
Another USAID Model of Successful Foreign Assistance
U.S. AGENCY FOR INTERNATIONAL DEVELOPMENT
FACT SHEET
WASHINGTON, DC 20523
PRESS OFFICE
http://www.usaid.gov
(202) 712-43202000-182
FOR IMMEDIATE RELEASE
Tuesday, July 11, 2000Contact: Jennifer Brown
The Polish American Enterprise Fund (PAEF) is the first foreign assistance program in history to return a significant amount of money, $120 million scheduled over the next two years, to the U.S. Treasury. PAEF is one of ten enterprise funds created under the Support for East European Democracy (SEED) Act and the Freedom Support Act and has become a major U.S. Government foreign economic assistance success story.
In 1990, USAID gave a $240 million grant to the PAEF, which turned it over to private citizens in Poland, many of them venture capital investors. Their mission was to invest the money in fledgling businesses in Poland to help the country transition to a free market economy.
The PAEF invested $181 million in 50 medium size companies, 15 of which are now listed on the Warsaw stock exchange. It started a small business loan program that has made 7,000 loans totaling $272 million to small businesses, launched a micro-enterprise fund that has made 30,000 loans totaling $50 million, established a mortgage bank that financed 3,000 residences with $40 million, and raised $262 million in non-U.S. Government capital for investment in Poland. It converted its staff into a permanent venture capital manager in charge of three private investment funds plus the PAEF. They invested over $700 million in Poland, including reflows of capital. It is estimated this number will probably reach over $1 billion in three more years.
As the PAEF sells off its holdings, it expects net close to $300 million. After the Treasury receives its $120 million, the PAEF will give the remainder to the Polish American Freedom Foundation, a permanent not-for-profit philanthropic organization for Poland.
USAID and the Congress, with special legislation passed in 1989, established ten enterprise funds in Central and Eastern Europe and the former Soviet Union. Enterprise Funds are a powerful developmental tool because they provide both capital and technical assistance to small and medium businesses. In the United States, this is the sector that has supplied almost all of the new job growth in the last twenty years. In Poland, USAID, the Enterprise Fund, the Government of Poland and other donors, combined direct support of business with reforms in the legal, institutional and regulatory environment for business. The results were dramatic for Poland as whole and also for PAEF.
In 1999, USAID and the Department of State, along with other Departments of the Clinton Administration, negotiated an agreement with Congress and the Government of Poland that allowed USAID and PAEF to create the Polish-American Freedom Foundation. The Foundation will carry on the work of private sector development in Poland by supporting economic reforms, educational advancement programs for social and economic leaders, and the development of non-governmental organizations, plus assisting local government at the lowest levels to foster local private enterprise.
PAEF's return of $120 million to U.S. taxpayer is a concrete symbol of the benefits of foreign assistance to the U.S. taxpayer, among which we count expanded markets, cheaper consumer goods, prosperous allies, and a more stable world.
USAID is the U.S. Government agency responsible for worldwide humanitarian and development assistance.
This is an archived USAID document retained on this web site as a matter of public record.
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Last Updated on: July 12, 2001 |
