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

1. Reform of Institutions Ease of Doing SME Biz 2. Promotion of equity SME financing 3. Mutual SME Funds for Crises Prevention and Development Tobin Tax and VAT 4. Reform of EIB financing

MSME Density World per 1000 people

Source: IFC World Bank 2010

MSME DENSITY
High income high density Low income low density

MSME Employment
Formal MSMEs employ more than one-third of the worlds labor force, but the percentage drops significantly with income level.

Constraints for MSME Development

ELECTICITY AND ACCESS TO FINANCE

HUNGARY
Main constraints for SMEs

DR CONGO
Main constraints for SMEs

Self Employment rate and GDP

EASE OF DOING BUSINESS OR SUFFERING ?

120

100

80

60

40

GDP p.c EASE DB SUFFERING %

20

Relation GDI per capita Ease DB - Suffering

180 175

160
140 134

127

122

123

120 100 79
80

GDI EASE SUFFERING

60
46 40

34 21 23
11 2 14 8 7,6 19,2

34 22 19,3

20
0

10,9 3,6 INDIA 0,32

10,3 1,2 UGANDA

BRAZIL

DR CONGO

SOUTH AFRICA

CHINA

RUSSIAN FED

HUNGARY

THRIVING in AFRICA
180
180 160 140 120 100 80 60 40 20 0

160 133 137

GDP p.c.
EASE DB THRIVING 52 25 8,5

24
8,9 1 4 BURUNDI 2

MALAWI

BOTSWANA

TOGO

Source: How big is

Africa Really ?. By Erika Amoako-Agyei
Africa is 30,3 million km and thus is larger than the combination of: China (9,6 million km), the US (9,4 million km), Western Europe (4,9 million km), India (3,2 million km) and Argentina (2,8 million km) plus the Scandinavian countries and the British Isles with room to spare.

FROM TRADING TO INDUSTRIAL PARTNERSHIP

TRADE WITH BRICS 64% IMPORTS from CHINA 58% 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 regions fastest growing sectors: Africas consumer market will account for the regions largest growth. Energy from renewable sources, sun, water,wind, biomass, waste Low cost housing Rapidly expanding, Africas 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 worlds most fertile soil. They are giving themselves a chance to establish business habits for years to come.
Erika Amoako-Agyei, Jounalist and Africa Expert

IMF Autumn 2011 forecast

GDP growth in percent 2011 * 2012 forecast spring

2011

7 000

Inward FDI stock 1985 -2007

Tanzania

6 000

5 000

4 000
million USD

Ethiopia
Uganda
Congo, Democratic Republic of

3 000

Uganda

Kenya Ethiopia United Republic of Tanzania

2 000

Kenya

1 000

Congo -DR
19851986198719881989199019911992199319941995199619971998199920002001200220032004200520062007

Uganda: Best at education

GDP per capita annual growth in % - 2006

10 9 8 7 6 5 4 3 2 1 0

percent

II. Constraints

Relation 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 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 Africa

Relation to SMEs Ease of Doing Business and GNI per Capita (PPP Purchasing Power Parity) 2010

SMEs Ease of Doing Business

Word 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

Micro-financing for SMEs, said Gian Franco Terenzi, President WUSME, particularly in agro-industry will have priority fo

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.

Currency Transaction Levy

for economic development and crises prevention in African Countries
Estimated annual revenue of a 0.005% Currency Transaction Levy in select Commonwealth countries. Country Estimated annual revenue (US$)4 Australia $2,211,000,000 Canada $1,386,000,000 India $231,000,000 New Zealand 627,000,000 Singapore $396,000,000

South Africa $297,000,000

MALI
International demand for products such as cotton has dropped, meaning many farmers can no longer afford such essentials as school fees for their children.
Helen Palmer/Oxfam

THANK YOU FOR YOUR ATTENTION

WUSME WORLD UNION OF SMEs General Secretariat 1026 Budapest, Garas utca 22 Tel: +361- 315 10 59 mailto: wus@europe.com,

web:

www.wusme.org

WUSMEs MISSION
a) 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 and institutional reforms