Obi argued in his address that SMEs are emerging as the undisputed engine of rapid economic expansion and growth globally.
By Jeffrey Agbo
The Labour Party’s presidential candidate in the February 25 poll, Peter Obi, has underscored the importance of small and medium-scale enterprises (SMEs) to global economic growth.
In his remarks made over the weekend at a global conference organised by the Bangladesh Government in conjunction with the Commonwealth Enterprise and Investment Council in Dhaka, Bangladesh, Mr Obi also explained why small businesses are the engine of growth across the globe, especially in areas of job creation, innovation, and domestic investment.
The Labour Party’s standard bearer argued in his address at the international conference that SMEs are emerging as the undisputed engine of rapid economic expansion and growth globally.
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 50% of jobs created globally. While formal SMEs contribute up to 40% 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).
According to the former Anambra State governor, “In Bangladesh, SMEs contribute about 40% to GDP, in Nigeria 48% and China 60% with about 7 out of every 10 formal jobs created by SMEs.
“It has the same immense impact in India where SMEs account for over 40% of the total workforce.”
Obi urged the Commonwealth nations to pay very special attention to small businesses, which have proven to be the fulcrum upon which sustainable and inclusive growth and development can be achieved.
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.”
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He further explained that small businesses, especially in developing and emerging markets, face many challenges arising from a lack of formalisation and internationalisation. He revealed that many small businesses are not registered and licensed and lack international affiliations, export less than large companies, and barely exploit the benefits of international trade, which limits the growth opportunities of both the SMEs and the countries.
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.
“Formalization 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,” he said.
Arguing further on the untapped benefits, Obi said that the Commonwealth, despite controlling one-third of the global population only contributes below 15% of the World GDP of $100 trillion and with a global GDP per capita of $10,700; while that of the Commonwealth is $3500.
“This shows a huge growth potential, which can be enhanced by investment in SMEs where the bulk 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,” he said.
While noting that the challenges are many, Obi stated that supportive policies, capacity-building initiatives, and strategic partnerships can empower SMEs to thrive in the global economy.
On the sidelines of the conference, Obi in a meeting with the Prime Minister of Bangladesh, Sheikh Hasina, congratulated her and her team for what they have achieved in their nation, with the support of SMEs in the last 15 years noting, however, that more still needs to be done.
Obi agreed with the managing director of City Bank in Bangledesh, Mashrur Arefin, that 80% of job creation and a higher percentage of growth in Bangledesh today are created by SMEs.
He said, “This shows an example of what I have said over the years. In 2009 when I visited Bangladesh, their GDP was $102 billion, with a GDP per capita of $688. Today, their GDP is $460 billion and a GDP per capita of $2700. Their unemployment rate in June 2009 was between 9 and 10%, today it is below 5%. The poverty rate also greatly reduced and they have maintained growth of over 6% within the said time.”
