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Increased Competitiveness and Changing Mindsets in the Turkish Cypriot Economy

2005-2013 || U.S. Agency for International Development

Abstract

This project increased the competitiveness of business operating in the Turkish Cypriot Community on the island of Cyprus while raising awareness about what is required to compete effectively in international markets. Farmers were introduced to high-value, non-traditional agricultural crops and provided with full spectrum technical assistance to support the production, certification, post-harvest handling and marketing of their products. Deloitte helped Turkey (or the Turkish Cypriot Community) in its efforts to transform chambers to capable service providers adhering to international leading practices. The project helped the banking sector transform its oversight and anti-money laundering policies to conform to European Union standards. It also empowered local communities through sustainable economic development models.

The Challenge

Plagued by deeply entrenched structural distortions as a result of being a small, isolated domestic economy cut-off from international trade for over three decades, the Turkish Cypriot Community in northern Cyprus had a overly extended public sector and a heavily subsidized private sector. The challenge was to help create an outward focused, competitive economy capable of competing in the international marketplace as well as the Greek Cypriot Community in southern Cyprus.

How We Helped

Deloitte has been successful  through its flexible approach, achieving success through practical interventions based on sound methodology, in addition to keeping a focus on the project’s long-term objectives and the agreed upon work-program. The project thrives in the field by harnessing a strong team of international skilled specialists with a savvy local team.

Introduction of High Value Alternative Crops and Internationally Accepted Certifications: Extensive industry analyses revealed that despite being a high impact sector and having significant growth potential, the agriculture sector failed to be competitive due largely to poor crop selection by producers. These crops, such as citrus, had lost their competitive advantage and were not suitable for the prevailing soil and water conditions anymore. Deloitte helped identify pomegranate as an alternative crop with high profit margins and demand that was rapidly expanding within international markets. The project directly engaged with growers at the grassroots level and empowered them with ongoing training and direct field assistance in orchard establishment, planting, irrigation, fertilization, winter pruning, pest management, financial management and marketing. The growers were assisted to receive GLOBALGAP certification for pomegranate production, the first certification of this type issued in Cyprus. Over 27,000 pomegranate trees were planted by the growers on 480,000m2 of land. The success of these initial plantings quickly replicated in the same amount of plantings by independent producers who drew upon the program’s success. This culminated in a harvest in excess of 370 tons of prime, quality pomegranates, some of which were exported to Europe for the first time in 2011.

The project Introduced the Concept of Competitiveness and Open and Transparent Dialogue:  By facilitating the publication and dissemination of the first two competitiveness reports on the Turkish Cypriot Economy (2009 and 2010), the concept of competitiveness was introduced and an open and transparent dialogue was initiated on this topic. The reports were prepared according to the World Economic Forum’s Global Competitiveness Index Methodology. Subsequently, the publication and the related annual Competitiveness Forum were handed over to the leading chamber and institutionalized. Deloitte introduced the notion of what competitiveness is on a global scale and how an economy should benchmark its competitiveness against other economies. Furthermore, accompanied with a wide public awareness campaign, Deloitte teamed international competitiveness leaders with local business community and academia and successfully introduced a transparent public-private dialogue among the authorities, union representatives and the businesspeople for the first time in the community.

Transformed Chambers into Leading Member Oriented Service Providers: By facilitating organizational restructuring of local chambers through tailor-made strategic planning, governance, sustainable service development and delivery, financial sustainability, communications, and advocacy programs, Deloitte was able to assist the client in its efforts to transform and restructure Turkish Cypriot chambers. The restructuring included recruiting and training new and existing Chamber executives - through the US Chamber of Commerce’s Executive Exchange Program - the development of new member services, such as international fairs and exhibitions and business development services; and assisting with a shift of focus toward customer service.

Stimulated a paradigm shift on the attitude of businesses and entrepreneurs toward economic empowerment and competitive market behavior:  By focusing on customer orientation and demand, away from a culture of subsidies, Deloitte broke ground by directly increasing organization-level competitiveness by providing assistance to 28 small and medium sized enterprises. Deloitte simultaneously collaborated with the local Chamber of Industry to introduce small and medium enterprise (SME) industrialists to international trade exhibitions, exposing them to competitive market realities and the need to meet international standards. Over a period of 5 years, 37 private businesses attended 11 international trade exhibitions with Deloitte’s technical assistance. Since 2010 the Chamber has assisted over 40 companies to participate in 6 additional exhibitions.

Upgraded and Modernized the Financial Sector:  By introducing a risk-based supervision and oversight model to the banking system, Deloitte was able to affect significant improvements in the financial sector. Through Deloitte’s assistance, the sector was able to utilize Basel Core Principles of Effective Banking Supervision, create the Financial Intelligence Unit within the banking system, and align banking legislation with those of the European Union. Deloitte complemented these modernization efforts by simultaneously creating a commercial banking training model. This shifted the existing practices of little investment in staff development by bank employers to a program that initially trained 172 bankers, and continued to evolve into an e-based bank training curriculum, comprised of 27 courses specifically targeted to the needs of the Turkish Cypriot banking sector. The local banking chamber maintains the e-learning format and continues to implement it.

Development and Implementation of a Model for Sustainable Economic Development through Community Based Tourism: With this initiative, Deloitte helped the client/Turkish Cypriot in their efforts to facilitate the development of two tourism destinations and built local capacity that empowered two local communities to increase economic activity in their region, through the promotion of the sites’ ecological, cultural, and historical advantages. The team achieved this through eco-tourism, branding (logo, labeling, marketing collateral), training, crafts facilitation, extended tourists stays, development of walking trails, website development, and the initiation of international contacts. Sunday bazaars that were initiated under this project increased incomes from $195 to $655 per day per local vendor. The locally organized twice a year festival, the Eco Day, grew its attendance from 1,100 to over 10,000 over five years. The multiplier effect of Deloitte’s initiatives manifested itself in the construction of 13 new eco-lodges, a recreational area, a 200-person capacity restaurant, and a brand new Bed & Breakfast over the past 3 years in one of the destinations.

Solution

Deloitte was the first international organization to implement an internationally-funded project in the Turkish Cypriot Community. The project is anticipated to continue until early 2013 with a focus on improving the competitiveness of the economy in general, and a new emphasis on working with dynamic counterparts to strengthen the professional services sector via implementation of needs based training and certification programs to promote a shift toward higher value professional services. As the local Chambers continue to improve in line with internationally accepted leading practices and a focus on service delivery, the private sector strives to keep the momentum going and open dialogue with the authorities on key issues of competitiveness.

As used in this document, “Deloitte” means Deloitte Consulting LLP, which provides strategy, operations, technology, and human capital consulting services, Deloitte Financial Advisory Services LLP, which provides financial advisory services, and Deloitte & Touche LLP which provides governance and risk oversight and reporting advisory services. These entities are separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

Copyright © 2012 Deloitte Development LLC. All rights reserved.
Member of Deloitte Touche Tohmatsu Limited.

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