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The Role of Investment in Social Sector Development
15 February 2019
14:00—15:15
KEY CONCLUSIONS
The development of social infrastructure is a prerequisite for economic growth

We are building new high-tech production plants that impose new special requirements on personnel. They are highly qualified employees that we headhunt all over the country. And, of course, these specialists ask for certain social conveniences — Aleksey Kozlov, Managing Director, SIBUR.

Russia needs significant investments in social infrastructure

According to the Ministry of Economic Development, the infrastructure requires an investment of no less than 4.7% of GDP, about 4.5 trillion roubles, to ensure economic growth. Considering that currently social projects account for about 12.5% of PPPs, the potential amount of investments in social infrastructure should be about 500 billion roubles a year — Evelina Zakamskaya, Editor-in-Chief, Doctor Channel; Anchor, Russia 24.

The infrastructure needs about 500 billion roubles of investments, that is, 200 billion is a deficit. Problems are low-quality services and low coverage. For example, palliative care covers only about 15% — Olga Zakharova, Deputy General Director, Agency for Strategic Initiatives to Promote New Projects.

Business can play an essential role in the social development of the country

Private business is more flexible, more reactive in terms of opportunities. I think we can solve the problem of regional development. Talking about kindergartens: <…> small business can solve this very problem operation and management wise in small towns also — Olga Arkhangelskaya, Partner, Head of Real Estate, Hospitality, and Construction Services, Head of the Transportation, Infrastructure and Government, and Public Group in the CIS, EY.

The state regularly measures the effectiveness of private sector and public industries. For example, the experience of some developing countries demonstrates that schools that have been transferred to private management provide a higher quality education compared to public schools — Ilya Ivaninskiy, Project leader, The Boston Consulting Group.

ISSUES
Small share of business in the social services sector of the Russian Federation

The scope of business presence in social services in Russia is substantially less than in foreign countries. The leaders here on the European continent are the United Kingdom and France, where approximately 45 to 60% of social services are provided by private companies <…>. In Russia, this share is about 5–7% — Andrei Sharonov, Dean, Moscow School of Management SKOLKOVO.

Lack of incentives for private social investment

On one hand, the state wants the investments to flow in the direction the state has chosen as a priority <…>, but, on the other, it would be interesting if the state not only made business do it but also created the conditions for it <…>. On the one hand, the state says: “Let’s do it”, and on the other, it will not allow for simple things that have already been developed to be implemented — Alexey Chichkanov, First Vice President, Gazprombank.

In the social business, one cannot count in years: today we invested 100 roubles and tomorrow we get 200 back. Social business is a complicated mathematical formula. <…> We have been doing this business for 10 years and have just now begun to earn something, but we reinvest all our profits — Alexey Mavrin, Chairman, Patronage Social Geriatric Center.

SOLUTIONS
Enabling social investment payback

Changes in legislation are necessary to predict the rates, develop a certain rates formula, guarantee not a fixed amount of revenue, but a clear rates system for compulsory medical insurance, and, of course, legalize profits — Dmitry Yalov, Deputy Chairman of the Government of Leningrad region.

It is not about the state sharing its money with the private sector. The point is that the state should give the private sector the same terms on which these services are provided by state-financed institutions — Andrei Sharonov, Dean, Moscow School of Management SKOLKOVO.

When it is possible to combine social responsibility of the state with more efficient tools an entrepreneur finds, we, as a bank, are ready to participate — Viktor Afonin, Head of Public-Private Partnership Center, Sberbank.

Best practice replication

Agency for Strategic Initiatives could make an enormous difference; taking the best practices home would bring benefit, with metrics, benchmarks, specific data who earns what, and demonstrating what is good and what is bad. Because then the regulatory agencies will have fewer questions, a governor will have fewer ‘grumbles’ about another region establishing a concession with such and such percentage, and he is failing — Alexander Malakh, Head of the center for attracting investments to the regions of the Russian Federation of the Russian direct investment Fund.

The material was prepared by the Russian news agency TASS