Mr. Peter Obi, the Labour Party’s presidential candidate for the 2023 election, has emphasised the significance of SMEs to global economic growth. He also outlined the reasons small firms, particularly in the areas of job creation, innovation, and domestic investment, are the driving force behind global growth.
The statements Obi made over the weekend in Dhaka, Bangladesh at a conference that was hosted by the Bangladeshi government and the Commonwealth Enterprise and Investment Council conveyed his views.
In his speech at the international conference, the leader of the Labour Party highlighted that SMEs are unquestionably the driving force behind rapid economic expansion and growth worldwide.
Buttressing his position with various data, Obi noted that “World Bank records (2020), show that SMEs account for roughly 90% of businesses and more than 50per cent of jobs created globally. While formal SMEs contribute up to 40per cent of national income (GDP) in developing and emerging markets (DEMs), their impact and contribution are significantly higher when informal ones are included (World Bank, 2020).
In Bangladesh, SMEs contribute roughly 40% to GDP, in Nigeria, 48%, and China, 60%, with about 7 out of every 10 formal jobs being produced by SMEs, according to the former governor of Anambra state.
In India, where SMEs make up more than 40% of the labour force, it has the same enormous influence.
Obi asked the Commonwealth governments to give small companies special attention because they have demonstrated to be the foundation for inclusive and sustainable growth and development across the Commonwealth.
He noted that “If we enhance the functionality and impacts of SMEs across Commonwealth countries through formalisation and internationalisation, we would have done it across the world with lives, communities, and economies positively impacted.
“Endowed with a population of about 2.5 billion people, a home to over a billion young consumers and exports of over $1 trillion, the need for better support for SMEs cannot be over-emphasized.”
He continued by saying that small enterprises, particularly those in emerging and developing economies, confront numerous difficulties because of a lack of formalisation and globalisation. He disclosed that many small enterprises lack international affiliations, are not registered or licenced, export less than large organisations, and scarcely take advantage of the advantages of international trade, which restricts the growth prospects of both SMEs and the nations.
“To harness the full contributions and impacts of SMEs, Obi admonished that reforms such as proper formalisation and internationalisation are needed to address the identified challenges.
“Formalisation involves bringing SMEs into the formal economy through registration of their businesses and complying with legal and regulatory requirements.
“Expectedly, the process of formalization will be beneficial not only to the SMEs but the overall business environment and economic stability as significant segments of SMEs operate in the informal sector due to a lack of resources or awareness of the formalization benefits.
Noting that this restricts their access to loans, markets, and government assistance, resulting in less chances for investment, innovation, and growth.
“Proper formalization and internationalization of SMEs particularly in today’s globalized economy therefore require urgency and full support of all stakeholders as it allows SMEs to tap into global markets, access international resources, and grow their businesses with immeasurable positive global impacts,” Obi said.
Obi continued by saying that this is crucial, especially for Commonwealth countries since they hold a combined wealth of approximately $150 trillion, which is more than 10 times their combined GDP of today, which is about $14.5 trillion, and more than 30 times the value of all imports and exports worldwide, which is about $4.8 trillion.
In support of his claim that these benefits are still untapped, Obi noted that the Commonwealth, which is home to one-third of the world’s population, contributes only about 15% of the $100 trillion global GDP and has a per capita GDP of $3500 as opposed to the world’s $10,700. “This shows a huge growth potential, which can be enhanced by investment in SMEs where the majority of the youths are domiciled, especially within the Commonwealth family.
“SMEs in Commonwealth countries are essential drivers of economic development and poverty reduction. Formalization and internationalization are crucial pathways to unlocking their potential, fostering innovation, and increasing competitiveness.
Although there are many obstacles, Obi said that supporting legislation, initiatives to increase capacity, and strategic collaborations can enable SMEs to prosper in the global market.
“And by investing in the formalization and internationalization of SMEs, the sustainable socio-economic growth and development of Commonwealth Organisation and Countries can be significantly enhanced.
It will take a lot of effort from all parties involved, especially the Commonwealth Organisation and the Government of Commonwealth Countries, the Presidential Candidate noted, to accomplish this,” Obi added.
In a meeting with H. E. Sheikh Hasina, the Honourable Prime Minister of Bangladesh, on the sidelines of the conference, Obi congratulated her and her team for what they had been able to accomplish in their country over the previous 15 years with the help of SMEs, while also emphasising that more still needed to be done.
Obi stated at the meeting that SMEs currently account for 80% of job creation and a larger percentage of growth in Bangledesh, which was supported by Mashrur Arefin, the managing director of City Bank in Bangledesh. “This is an illustration of what I have said over the years,” he remarked. Bangladesh’s GDP was $102 billion and its GDP per capita was $688 in 2009, the year I visited. Their current GDP is $460 billion, with a $2700 per capita GDP. In June 2009, their unemployment rate ranged from 9 to 10%; currently, it is less than 5%. Additionally, the poverty rate has significantly decreased, and above 6% growth has been sustained during that time.FG.
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