On the 4th of June the INSME President Sergio Arzeni gave a speech in the framework of the Essex Business School Venture Webinar Series, an initiative promoted and coordinated by Jay Mitra, Professor at the Essex Business School and INSME Board Member.
You will find below the contribution by the INSME President on the issues discussed during the webinar.
The Covid-19 economic crisis cannot be compared with the Subprime plus Lehman crisis of 2008-9, it’s much worse. As clearly stated by Mario Draghi, former President of the European Central Bank (ECB) on the Financial times “the coronavirus pandemic is a human tragedy of potentially biblical proportions and it is clear that the answer must involve a significant increase in public debt…”
In the United States, the response was swift and the government deployed a safety net of over 2 trillion UDS, not to mention the massive injection of liquidity by the Federal Reserve Bank.
In a couple of months, the US Small Business Administration has been able to channel to SMEs 620 billion USD, in two tranches approved by Congress with a bipartisan vote, through the implementation of the Paycheck Protection Program (PPP). Notwithstanding these impressive numbers, many small businesses have been left without support and some big player tried to pocket money devoted to small businesses. And a rift emerged between central and local authorities, vividly expressed by New York Governor Mario Cuomo who said that “Washington was passing the buck without passing the bucks”.
The European Union moved a bit slower but in the end displayed a package of a similar magnitude with a combination of measures enacted by the European Central Bank, with 1,350 billion euro for the Pandemic Emergency Purchase Program and 240 billion under the European Stability Mechanism (EMS) for non-conditional loans devoted to health care outlays, the European Investment Bank (EIB), with 200 billion euro mostly for SMEs, and the European Commission, with 100 billion for temporary Support to mitigate Unemployment Risks in an Emergency (SURE) and the proposed Next Generation EU recovery fund of 750 billion.
The risk we are facing is that big business will snap up the lion’s share of these relief funds leaving SMEs with crumbs.
This is why Mario Ohoven and Maurizio Casasco, respectively President and Vice President of European Entrepreneurs, both members of INSME, have written to Ursula von der Leyen, the President of the European Commission asking for the recovery fund “must go, with priority, to European SMEs – with a volume of at least 50 billion euros – and not to big industry”.
To underscore their call, they noted that “since 2015, 80 percent of new jobs in Europe have been created within SMEs and not by big industry, even if SMEs only account for 60 percent of the economy”.
We hope that the EU Commission will listen and comply, but then all organizations representing SMEs have to mobilize for the effective implementation and deployment of the resources. For the success of this bold European initiative the monitoring of the process and the exchange of best practices at local and regional, not only at national, level is crucial.
Innovation and internationalization are main drivers for growth, but to create the appropriate ecosystem for the digital and green revolution Europe is heading for it is important to invest for building the competencies needed for successful start-ups and growth of SMEs by strengthening training, up-skilling and re-skilling of entrepreneurs and workers, and create the right conditions to attract and retain talents.
Twenty years ago, in June 2000, the first OECD Ministerial Conference on SMEs held in Bologna, provided a frame of reference for the design of SME policies to contribute to economic growth and social development in a time of technological transformation and environmental concerns.
Today we have to seize the pandemic crisis as an opportunity to move decisively towards a more sustainable economic model and for that the innovation drive of entrepreneurs and SMEs is essential also to open new perspectives like the EU-Africa SME Alliance that is sponsored by INSME.
For the first time in 20 years emerging economies are losing steam and low and mid-income countries are facing social and economic disruption widening further inequalities. Therefore, it is difficult to disagree with professor Jay Mitra who is arguing that a sustainable recovery must harness the untapped potential of entrepreneurship in all its forms, targeting particularly women, youth and minority communities, everywhere.