7 May, 2013

UNCTAD Meeting Hails Vital Role Of SME Entrepreneurs In Economic Growth

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Geneva, 6 May 2013 (UNCTAD Media release) – The founding of new businesses, especially small and medium-sized enterprises (SMEs), makes economies more stable, spurs economic growth, and plays a major role in innovation and job creation, a series of experts has said.

A high-level segment of the Investment, Enterprise and Development Commission on 29 April focused on entrepreneurship, noting that if poor countries want to emulate advanced economies, they must strive to foster entrepreneurial skills and the development of SMEs, which in advanced economies provide the majority of employment and account for significant portions of total production.

Introducing the afternoon’s debate, James Zhan, Director of UNCTAD’s Division on Investment and Enterprise, said that SMEs contributed substantially to national economies and to global prosperity, accounting for more than two thirds of employment and half of gross domestic product (GDP) in developed countries, and about 40 per cent of jobs and 25 per cent of GDP in developing countries.

“Strengthening local enterprise also boosts competitiveness and increases local absorptive capacities, both of which are necessary for attracting foreign investment and for it to have positive multiplier effects,” Mr. Zhan said.

UNCTAD supports small business creation via its Empretec programme, which operates in numerous developing countries through national Empretec centres that offer introductory and continuing courses on entrepreneurship.

At the conclusion of the afternoon meeting, Viet Nam and UNCTAD signed a Memorandum of Understanding to establish an Empretec centre in Viet Nam – the thirty-fourth such centre worldwide, and the first in Asia. (See press release UNCTAD/PRESS/PR/2013/15)

During a panel discussion on the role that entrepreneurship plays in economic growth, Mayi Antillón Guerrero, Minister of Economy, Industry and Commerce of Costa Rica, told the meeting that public policies were needed that were expressly designed to promote business creation in developing countries. This approach had been taken in Costa Rica – based on a belief in social and economic inclusion, in capitalizing on human resources, and in the initiative of individuals.

The country’s recent growth and expanding trade had been a result of the many new and thriving small firms, she said. SMEs now accounted for 77 per cent of the businesses in the country and 30 per cent of the GDP. One of the intentions of the Government’s policy, she said, was to help micro-enterprises to expand to become small, medium-sized, and eventually large exporting firms.

The Ghanaian Minister of Trade and Industry, Haruna Iddrisu, said that Ghana was dedicated to the creation of an environment that encouraged the private sector and entrepreneurship. There was a special focus on fostering SMEs, he said, as they offered promise for the employment of young people, for the equal advancement of women, and for sustained and well-balanced economic growth.

Mr. Iddrisu said that another focus was science and technology, and that the country had carried out, with UNCTAD, a review of science and technology policies. In addition, the Government was carefully analysing the skills that investors were looking for in the country’s workforce, and was devising plans for Ghana’s educational institutions to meet those requirements. Steps were also being taken to make financing more easily available to those with viable business ideas, particularly youth.

Laurent Serge Etoundi Ngoa, Cameroon’s Minister of Small and Medium-Sized Enterprises, Social Economy and Handicrafts, said that building entrepreneurship was a national objective of the country. A development policy that had first been adopted in 2004 was based on encouraging the private sector and supporting business creation. The country had abundant natural resources and great potential, he said, and a vibrant SME sector was vital for speeding up the development process.

Expansion of the private sector was being encouraged via a specific bank designed solely to finance SMEs, and the Government had recently founded an SME development agency, the Minister said. In addition, the Prime Minister was now Chairman of the Cameroon Business Forum, which considered the challenges faced by small businesses and strived to solve them. Among other challenges, the Minister said that a survey of potential investors had indicated that Cameroon was considered a difficult place to do business. In response, a law had recently been passed to encourage investment, and an investment charter had been adopted to make the investment process more streamlined and secure.

Ignacio A. Méndez, Vice-Minister of Small and Medium-Sized Enterprises, of the Dominican Republic’s Ministry of Industry and Commerce, said that 97 per cent of Dominican companies were SMEs, and that such firms had a major impact on national economic growth. The country’s President regularly said that SMEs must be “at the heart” of public policies for economic growth. It was understood that steps needed to be taken to overcome “historical neglect” of the small business sector. For that reason, a Ministry had been created to focus specifically on SMEs.

A one-stop-shop platform had been created to enable SMEs to find, in one place, all the information that they needed to operate officially and efficiently, Mr. Méndez said. The intention was for all official transactions for a business start-up to be completed within seven days. In addition, steps had been taken to empower SMEs through provision of financing. Also, measures had been enacted to enable SMEs to benefit from government procurement. The intention was that SMEs should be the main purchasers and suppliers for the State. Government purchases this year alone were worth about US$1 billion, Mr. Méndez said.

Brenden Chaney, Vice-Chair of Global Entrepreneurship Week (GEW), told the meeting that the GEW, which took place each November and was powered by the Ewing Marion Kauffmann Foundation, was the occasion for thousands of events and competitions around the world to encourage people to engage in entrepreneurial activity. He said that the initiative was supported by world leaders, famous entrepreneurs, government ministers, and a wide range of partner organizations.

The objectives of the GEW were to inspire, connect, mentor, and engage entrepreneurs. Mr. Chaney went on to say that the GEW was intended to nourish a growing national entrepreneurial ecosystem and to test how well various efforts to foster entrepreneurship worked in practice.

Melissa de León, of Panama, winner of the Empretec Women in Business Award 2012, said that a forum for entrepreneurial policies had recently been held in Panama, based on UNCTAD’s Entrepreneurship Policy Framework. Measures were being taken to strengthen Panama’s Empretec centre and to improve the national ecosystem for SMEs. Such efforts and policies had enabled her company, Tropical Gourmet Panama, to set up a larger facility in a free trade zone. Eighty per cent of the employees at her firm were women, and the company was shifting from artisanal operation to a larger, export-focused company for food products based on gluten-free flour.

Aspiring entrepreneurs in Panama and elsewhere could achieve their dreams, Ms. de León told the meeting, if the proper policies were in place and effective training was available.

Do Kim Lang, Deputy General Director of the Viet Nam Trade Promotion Agency (VIETRADE) described the country’s joint Millennium Development Goals programme on green production and trade, which aimed to increase income and employment opportunities for growers and collectors of raw craft material, and for grassroots makers of handicrafts and furniture.

The target was to help 4,500 poor farming and craft-producing households in four poor northern provinces of the country, he said, and to help women and members of ethnic minorities. The focus was on products made from bamboo/rattan, seagrass, and handmade paper, and from sericulture and lacquer work.

Fiorina Mugione, Officer-in-Charge of UNCTAD’s Enterprise Development Branch, reviewed the organization’s activities to support and encourage entrepreneurship in developing nations. She outlined UNCTAD’s new Entrepreneurship Policy Framework, which will help countries design comprehensive policies to promote the creation and expansion of SMEs. The Framework contains an online tool available at www.unctad.org/epf.