Factories around the world roared into action again in the second half of 2020, following the COVID-19-related slump that brought large parts of industrial production to a standstill in early 2020. The bounce back, led by Europe, China and other parts of Asia, has been faster than expected, with most of the losses felt in the first half of 2020 recovered by early 2021, although there are big differences between regions and sectors.
By Jorge Arbache, Private Sector Vice-President, Development Bank of Latin America (CAF)
This blog is part of a series on tackling COVID-19 in developing countries. Visit the OECD dedicated page to access the OECD’s data, analysis and recommendations on the health, economic, financial and societal impacts of COVID-19 worldwide.
Statistics show that economic growth in Latin America is highly volatile, with periods of acceleration and collapse. This dynamic hides perverse implications. The combination of low growth persistence with high-growth volatility is associated with greater risk aversion, which in turn encourages financial speculation and firms to invest in lower risk, but also lower social return projects. Additionally, poverty and other social indicators are also very sensitive to the harmful combination of short growth spells and high volatility. Continue reading “COVID-19 in Latin America: Promoting entrepreneurship and reducing social vulnerabilities”
By Dr Teodorina Lessidrenska, Consultant, World Bank
Recent studies show that small and medium enterprises (SMEs) account for an overwhelming majority of private sector business and economic activity in both developed and developing countries. Given the role of micro-, small- and medium-sized enterprises (MSMEs)1 in the global economy, it is essential to understand their importance and potential contribution to the Sustainable Development Goals (SDGs)2.
According to the World Bank3 and the OECD4, multiple reasons explain why MSME development is critical for achieving the SDGs:
Au Sénégal, les Petites et Moyennes Entreprises (PME) ou structures de production et transformation des produits agricoles se trouvent essentiellement dans la banlieue de la capitale (Guédiawaye à 15 km de Dakar) et dans les zones rurales autour de Kaolack, Ziguinchor, Kédougou, Thiès et Saint-Louis. Elles disposent de peu de moyens techniques et financiers pour se développer et commercialiser leurs produits. Leurs produits manquent notoirement de visibilité et de présence sur le marché local, dans les boutiques et les grandes surfaces.
La stratégie de pénétration du marché par ces structures s’effectue, en général, à travers la participation aux foires internationales. Ce sont malheureusement les seules occasions de vente à très grande échelle. Ce déficit des produits locaux sur le marché a plusieurs causes: peu de moyens mis en œuvre pour développer le secteur, des PME insuffisamment sensibilisées aux enjeux du packaging, et un manque de d’incitation au niveau politique pour favoriser la consommation de produits locaux.
A young lady in a remote village in northern Vietnam is using new technology to create and sell her family’s traditional silver necklace designs to customers across the region and even globally who can collect their purchases directly from 3D printing facilities.
Another small firm in Bangkok has transformed its eyewear company to sell online using a mobile app that allows users to visualise glasses from different angles as the phone tilts. Shoppers are finding and increasingly buying these products from all across the region.
These small companies — and many more like them — show the promise of e-commerce and digital trade to transform business in Asia. The tiniest firm in the most remote location can become a “micromultinational.”
But this promise comes with a catch: such business practices work if, and only if, governments in the region are able to build a supportive and enabling policy environment. For smaller firms, complicated or difficult policies that cause delays and drive up costs can be impossible to overcome. Continue reading “Enabling Asian SMEs to thrive in a digital world”
African firms don’t have it easy. Among the many constraints faced by formal companies, access to finance consistently ranks as a top issue. Almost 20% of formal African companies cite access to finance as a constraint to their business.1 Overall, African micro, small and medium enterprises (SMEs) face a financing shortfall of about USD 190 billion from the traditional banking sector.2 African firms are 19% less likely to have a bank loan, compared to other regions of the world. Within Africa, small enterprises are 30% less likely to obtain bank loans than large ones and medium-sized enterprises are 13% less likely.3
To bridge this gap, governments and market players need to strengthen existing credit channels as well as expand new financing mechanisms.
L’Afrique n’est pas différente des autres continents : le dynamisme économique africain repose comme ailleurs en très grande partie sur les PME. La nouvelle classe d’entrepreneurs africains ayant émergé depuis dix à vingt ans apporte avec audace et innovation des réponses durables aux besoins d’un continent dont les économies sont encore fragiles.
Parallèlement, la situation démographique de l’Afrique s’annonce comme un défi. 133 millions il y a dix ans, les 15-24 ans sont aujourd’hui 172 millions et seront 246 millions en 2020. Alors que 74 millions d’emplois devront être créés d’ici là afin que le taux de chômage des jeunes évite simplement d’augmenter, 72% des jeunes Africains se disent attirés par l’entrepreneuriat.
Industrialisation is a key driver of sustainable development. It creates jobs, adds value and promotes trade through greater integration into global value chains. At the same time, entrepreneurship and small and medium enterprises (SMEs) are critical to every economy by creating jobs and innovative goods, promoting a competitive environment and economic growth, and facilitating income distribution. The South African government recognises the need for entrepreneurship and SMEs’ engagement with industrialisation efforts to address some of the key socio-economic challenges in the country, particularly poverty, inequality and unemployment. However, South African entrepreneurs 1still face a number of constraints that hinder greater participation in industrialisation efforts. So, what are the roadblocks standing in the way of entrepreneurs? Continue reading “What’s standing in the way of South Africa’s entrepreneurs?”
By Mike Herrington, Executive Director, GEM Global
Explore this topic further with the upcoming launch of the 2017 African Economic Outlook: Entrepreneurship and Industrialisation in Africa.
Stay tuned for details.
In the last decade, most countries in Africa underwent radical transformation, increased their GDP per capita and moved towards globalisation. Just look at Botswana where GDP per capita increased from USD 7 136 in 2013 to USD 7 505 in 2014, or Cameroon that saw an increase from USD 1 271 to USD 1 405, or Nigeria that experienced a jump from USD 1 692 to USD 3298 during the same period.1
A universal definition of small – and medium-sized enterprises (SMEs) does not exist. What is generally undisputed, however, is the fact that the overwhelming majority of private-sector businesses in the world are SMEs and that SMEs account for a very large share of world economic activity in both developed and developing countries.
Look at the data. In the OECD countries where SME definitions are comparable, the contribution of SMEs to national employment ranges between 53% in the United Kingdom to 86% in Greece. The contribution of SMEs to national value-added 1 is between 38% in Mexico and 75% in Estonia. The SME share of economic activity is typically larger in OECD economies than in emerging-market economies, reflecting a mix of stronger SME productivity levels in the former and higher rates of economic informality in the latter. In emerging-market economies, SMEs are responsible for up to 45% of jobs and up to 33% of national GDP. These numbers are significantly higher when informal businesses, which are often more than half of the total enterprise population, are included in the count. Some estimates suggest that when the informal sector is included, SMEs in emerging-market economies account for 90% of total employment. Continue reading “Unlocking the potential of SMEs for the SDGs”