SMEs play vital role in job creation

Geneva: 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, several experts said.

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

Director of UNCTAD's Division on Investment and Enterprise, James Zhan said that SMEs contributed substantially to national economies and global prosperity, accounting for more than two-thirds of employment and half of gross domestic product (GDP) in developed countries and about 40 percent of jobs and 25 percent 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 multiple effects," Zhan said.

UNCTAD supports small business creation through its Empretec program, 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, Vietnam and UNCTAD signed a Memorandum of Understanding to set up an Empretec centre in Vietnam, the thirty-fourth such centre worldwide, and the first in Asia.

During a panel discussion on the role that entrepreneurship plays in economic growth, Minister of Economy, Industry and Commerce of Costa Rica, Mayi Antillón Guerrero, told the meeting that public policies that were expressly designed to promote business creation in developing countries, were needed. This approach had been taken in Costa Rica, based on a belief in social and economic inclusion, in capitalising 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 percent of the businesses in the country and 30 percent of the GDP. One of the intentions of the Government's policy, she said, was to help micro enterprises expand to become small, medium-sized, and eventually large exporting firms.

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.

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. 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.

Cameroon's Minister of Small and Medium-Sized Enterprises, Social Economy and Handicrafts, Laurent Serge Etoundi Ngoa 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 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.

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.

Vice-Minister of Small and Medium-Sized Enterprises of the Dominican Republic's Ministry of Industry and Commerce, Ignacio A. Méndez, said that 97 percent of Dominican companies were SMEs, and that such firms had a major impact on national economic growth.