2021 / 3 / 8
Small businesses for sustainable economic growth.
Small and medium enterprises (SMEs) are considered as one of the most effective economic growth driver. At the global level, it is good to know, for example, that 97% of the businesses in UK are SMEs, also, it is a fact that the SMEs work as the base of innovation in USA. World wide, SMEs are the biggest jobs creator.
Most of MENA region countries, with few millions of population, may considered relatively as a "small market", which means big diffeculty in getting the benefits of mass production and economies of scale, in this case, multi-national corporations (MNCs) prefer exportation of finished & semi-finished products to like these markets, instead of investment as FDI.
In case of MENA countries, there is a great opportunity for foreign -dir-ect investment (FDI), specially in sectors like infrastructure, tourism, banking, education, and health care services. On the other side, as domestic SMEs, we have greater opportunity in success & growth if we invest more in quality enhancement, innovation, and meeting world standards, then, exportation will be ultimately the best opportunity.
Government should work seriously to support local ventures and entrepreneurship, via spending more on funding startup s costs (with low interest rate loans), preparing feasibility studies, medical insurance, social security coverage, and taxation exemption. By these measures government will minimize the risk of failure and the cost of establishment.
Since 1989, Jordan started its economic reform program with World Bank and International Monetary Fund. Inspite of privatization, market liberalization, and taxation restructuring, Jordan still suffering from stagflation, high unemployment rate, high public debt rate, and low GDP growth. Most of the reasons of that negative situation came from neighbouring countries instability, imported crude price burden, and recently COVID19 curfew and lockdown.
Small businesses require low margin of finance, at the same time they create many jobs and driving the innovations. Risk of venture failure in the first years of startup is the major inhibitor in front of entrepreneurs, government may play the major role in this risk mitigation.