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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 world’s
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                                      GDP p.c
                                        EASE DB
40
                                        SUFFERING %
20


 0
Relation GDI per capita – Ease DB - Suffering
 180                              175


 160


 140                  134
          127
                                             122                                    123
 120


 100
                                                                                                           GDI
                                                                        79
  80                                                                                                       EASE
                                                                                                           SUFFERING
  60
                                                                                                 46

  40                                                     34                                           34

                          21                     23                                      22
                                                                                  19,2        19,3
  20                                                                         14
       10,9                           11              10,3    8   7,6
                2   3,6                    1,2
                               0,32
   0
       BRAZIL       INDIA      DR CONGO    UGANDA     SOUTH       CHINA           RUSSIAN     HUNGARY
                                                      AFRICA                        FED
THRIVING in AFRICA
                                                           180
180
                                             160
160
            133        137
140

120

100                                                                  GDP p.c.
                                                                     EASE DB
80
                                                                     THRIVING
60                           52

40                25              24
20    8,5                              8,9
                                                   1   4         2
 0
      MALAWI           BOTSWANA          TOGO          BURUNDI
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
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 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.
   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                                                                                           Ethiopia
million USD




                                                                                                                         Uganda
                                                                                                                         Congo, Democratic Republic of
                                                                                                              Uganda     Kenya
              3 000
                                                                                                                         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
percent




          5

          4

          3

          2

           1

          0
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               MALI
$297,000,000               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
WUSME’s
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

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Wic budapest 2011-pres

  • 1. 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
  • 2. 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
  • 4. MSME DENSITY High income – high density Low income - low density
  • 5. MSME Employment Formal MSMEs employ more than one-third of the world’s labor force, but the percentage drops significantly with income level.
  • 7.
  • 11. EASE OF DOING BUSINESS OR SUFFERING ? 120 100 80 60 GDP p.c EASE DB 40 SUFFERING % 20 0
  • 12. Relation GDI per capita – Ease DB - Suffering 180 175 160 140 134 127 122 123 120 100 GDI 79 80 EASE SUFFERING 60 46 40 34 34 21 23 22 19,2 19,3 20 14 10,9 11 10,3 8 7,6 2 3,6 1,2 0,32 0 BRAZIL INDIA DR CONGO UGANDA SOUTH CHINA RUSSIAN HUNGARY AFRICA FED
  • 13. THRIVING in AFRICA 180 180 160 160 133 137 140 120 100 GDP p.c. EASE DB 80 THRIVING 60 52 40 25 24 20 8,5 8,9 1 4 2 0 MALAWI BOTSWANA TOGO BURUNDI
  • 14. 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.
  • 15. FROM TRADING TO INDUSTRIAL PARTNERSHIP TRADE WITH BRICS 64% IMPORTS from CHINA 58% EXPORTS to CHINA
  • 16. 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.  Erika Amoako-Agyei, Jounalist and Africa Expert
  • 17. IMF – Autumn 2011 forecast  GDP growth in percent – 2011 * 2012 – forecast spring 2011
  • 18. 7 000 Inward FDI stock 1985 -2007 Tanzania 6 000 5 000 4 000 Ethiopia million USD Uganda Congo, Democratic Republic of Uganda Kenya 3 000 Ethiopia United Republic of Tanzania 2 000 Kenya 1 000 Congo -DR - 19851986198719881989199019911992199319941995199619971998199920002001200220032004200520062007
  • 19. Uganda: Best at education
  • 20. GDP per capita – annual growth in % - 2006 10 9 8 7 6 percent 5 4 3 2 1 0
  • 21.
  • 22. II. Constraints Relation Delay in obtaining water connections (days)and GDP per capita (x 100)
  • 24. Bosnia – Herzegovina  Main Constraints for SMEs
  • 26. III. A new framework for development
  • 28.
  • 30. 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.
  • 31. MSME - Technology Park, Center of Competence
  • 32. Gallup Wellbeing in Africa Relation to SMEs Ease of Doing Business and GNI per Capita (PPP – Purchasing Power Parity) 2010
  • 33. SMEs – Ease of Doing Business Word Bank Group – Reform of Institutions
  • 34. SMEs – Start-up Reforms
  • 35. 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.
  • 36. 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.
  • 37. FTL – Finance Transaction Levy
  • 38. 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.
  • 39. 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 MALI $297,000,000 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
  • 40. 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
  • 41. WUSME’s 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

Editor's Notes

  1. There are 125 million formal MSMEs in this set ofeconomies, including 89 million in emerging markets.
  2. Source: Köllinger – Thurik, Erasmus University, Rotterdam 2010
  3. 8. How much money does it take to fund a Millennium Village?A core aspect of the Millennium Villages is that the poverty-ending investments in agriculture, health, education, and infrastructure can be financed by donors at an average incremental cost of just $50 per villager per year�$250,000 per village per year. The overhead costs of managing the project in each village are also low, $50,000 per year, since the project draws upon skilled local managers who work alongside the UN Millennium Project and the Earth Institute at Columbia University. This modest investment offers the realistic prospect that a community of 5,000 men, women, and children can achieve the Millennium Development Goals and embark on a path of self-sustaining economic development.On a per person basis, the average total village of $110 per person is comprised of:$50 Donor funding through the Millennium Village program $30 Local and national governments (this is most likely to include funding for interventions themselves and the provision of agricultural and health extension workers in the villages) $20 Partner organizations (e.g., existing programs supported by official bilateral donors) and in-kind corporate giving (for example, Sumitomo Chemical Corporation recently agreed to donate insecticide-treated bednets for the Millennium Villages)$10 Village members, typically through in-kind contributions of their time and expertise Critically, the external financing needs of $70 per capita are in line with the financial commitments made by the leaders of industrialized countries at the 2005 G8 Summit in Gleneagles. G8 countries promised to raise their development assistance to Africa to the equivalent of $70 per capita by 2010. Critically, the external financing needs of $70 per capita are in line with the financial commitments made by the leaders of industrialized countries at the 2005 G8 Summit in Gleneagles.  G8 countries promised to raise their development assistance to Africa to the equivalent of $70 per capita by 2010..