SMEs LOCAL DEVELOPMENT IN A GLOBALIZED WORLD MORE SMEs = MORE JOBS = BETTER QUALITY OF LIFE WORLD WIDE THE GROWTH EQUATION FOR OUR FUTURE By Prof. Dr. Norbert W. Knoll – Dornhoff General Secretary Dornhoff General Secretary WUSME INTERNATIONAL CONFERENCE 24 – 26 November 2011 in Budapest
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SMEs LOCAL DEVELOPMENT IN A GLOBALIZED WORLD
MORE SMEs = MORE JOBS = BETTER QUALITY OF LIFE WORLD WIDETHE GROWTH EQUATION FOR OUR FUTURE
By Prof. Dr. Norbert W. Knoll – DornhoffGeneral Secretary
DornhoffGeneral Secretary
WUSME INTERNATIONAL CONFERENCE24 – 26 November 2011 in Budapest
More SMEs I. Some actual economical indicatorsII. Constraints for developmentIII. A new framework for development
1. Reform of Institutions – Ease of Doing SME Biz2. Promotion of equity SME financing3. Mutual SME Funds for Crises Prevention and Development – Tobin Tax and VAT4. Reform of EIB financing
MSME Density World per 1000 peopleSource: IFC World Bank 2010
MSME DENSITYHigh income – high densityLow income - low density
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MSME EmploymentFormal MSMEs employ more than one-thirdof the world’s labor force, but the percentage drops significantly with income level.
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Constraints for MSME Development
ELECTICITY AND
ACCESS TOFINANCE
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HUNGARY
Main constraints for SMEs
DR CONGOMain constraints for SMEs
Self Employment rate and GDP
EASE OF DOING BUSINESS OR SUFFERING ?
0
20
40
60
80
100
120
GDP p.cEASE DBSUFFERING %
0
20
40
60
80
100
120
140
160
180
BRAZIL INDIA DR CONGO UGANDA SOUTH AFRICA
CHINA RUSSIAN FED
HUNGARY
10,93,6 0,32 1,2
10,3 7,6
19,2 19,3
127134
175
122
34
79
123
46
2
21
11
23
814
22
34
GDI
EASE
SUFFERING
THRIVING in AFRICA
0
20
40
60
80
100
120
140
160
180
MALAWI BOTSWANA TOGO BURUNDI
8,5
137
8,9 4
133
52
160
180
25 24
1 2
GDP p.c.
EASE DB
THRIVING
Source: How big is Africa Really ?. By Erika Amoako-Agyei
Africa is 30,3 million km² and thus is larger than the combination of:China (9,6 million km²),the US (9,4 million km²),Western Europe (4,9 million km²),India (3,2 million km²)and Argentina (2,8 million km²)plus the Scandinavian countries and the British Isles with room to spare.
FROM TRADING TO INDUSTRIAL PARTNERSHIPTRADE WITH BRICS64% IMPORTS from CHINA58% EXPORTS to CHINA
I. Essential Markets Trends for Africa 2011 and beyond Africa is, and will continue to be, one of the fastest-growing economic regions in the
world, thanks to surging demand both from abroad (from China and India in particular) and at home (fuelled by urbanization and consumerism.
Telecoms, banking, retailing, manufacturing and even agriculture will be the the region’s fastest growing sectors: Africa’s consumer market will
account for the region’s largest growth. Energy from renewable sources, sun, water,wind, biomass, waste Low cost housing Rapidly expanding, Africa’s youthful workforce, will be a key advantage. Smart phones will be the fastest-growing category of handsets, even in the poorer
areas, where they often serve as a substitute for PCs. . commerce will flourish in 2011. Africa is well positioned to profit from natural resources as global demand for
commodities continues to rise.
Companies that succeed in these neglected emerging markets are not only putting down roots in the world’s most fertile soil. They are giving themselves a chance to establish business habits for years to come.
II. ConstraintsRelation Delay in obtaining water connections (days)and GDP per capita (x 100)
Main constraints: Electricity
Bosnia – Herzegovina
Main Constraints for SMEs
Constraints: The Banks
III. A new framework for development
Millennium Villages
Millennium Village ProjectA Success
Story
Millennium Regions
The proposed WMR in Sub Saharan Countries shall be a territories which the Governments and the local Authorities declare as an area of infrastructural development to be set up in pleasant sites served by international transport and communication infrastructure; nearby Research/Training centers and Universities.
MSME - Technology Park, Center of Competence
Gallup Wellbeing in AfricaRelation to SMEs Ease of Doing Business and GNI per Capita (PPP – Purchasing Power Parity) 2010
SMEs – Ease of Doing BusinessWord Bank Group – Reform of Institutions
SMEs – Start-up Reforms
EIB European Investment Bank
The EIB has not so far produced any evidence that its loans have actually benefited local populations and not corrupted leaders and businessmen even in more stable political circumstances. The EIB has invested in North Africa since 1979 but civil society activists say the lender concentrated too much of its investments on the energy sector.Between 2006 and 2010, the energy sector accounted for about 93 percent of the 1.85 billion Euros lent by the EIB to Egypt and 46 percent of lending to Tunisia.
Promotion of SME equity financing
This can be achieved by retaining greater reserves within the firm, and by seeking sources of external private equity rather than debt finance.
FTL – Finance Transaction Levy
SME Mutual Fund for Crises Prevention and Development
Micro-financing for SMEs, said Gian Franco Terenzi, President WUSME, particularly in agro-industry will have priority for WUSME's Action Plan. This can be achieved by creating national “Mutual SME - Funds for Crises Prevention and Development”, financed with the CTL Currency Transaction Levy and a small percentage of the VAT that SMEs collect free of charge for the Finance Ministers.
Micro-financing for SMEs, said Gian Franco Terenzi, President WUSME, particularly in agro-industry will have priority for WUSME's Action Plan. This can be achieved by creating national “Mutual SME - Funds for Crises Prevention and Development”, financed with the CTL Currency Transaction Levy and a small percentage of the VAT that SMEs collect free of charge for the Finance Ministers.
Currency Transaction Levy
for economic development and crises prevention in African Countries
Estimated annual revenue of a 0.005% Currency Transaction Levy in selectCommonwealth countries.Country Estimated annual revenue (US$)4Australia $2,211,000,000Canada $1,386,000,000India $231,000,000New Zealand £627,000,000Singapore $396,000,000
WUSME’s MISSIONa) Facilitate technology transfer from WUSME member countries to the organisations and enterprises in Africa.b) Enterprise to enterprise cooperation.c) Training to African Entrepreneurs for setting up SMEs.d) Undertake mission with a view to provide policy andinstitutional reforms