James Emejo in Abuja
The Director General, World Trade Organisation (WTO), Mr. Roberto Azevedo has said that increased participation of small and medium scale enterprises (SMEs) in export activities was essential to Nigeria’s economic performance.
He said SMEs accounted for the largest share of employment opportunities in both developed and developing countries.
Specifically, the WTO boss expressed concern that though small enterprises employ 84 percent of Nigeria’s total labour force and generate roughly 49 percent of the country’s economic output, they nevertheless contributed only 7.3 percent to total exports, according to a study undertaken in 2013.
He said though SMEs appeared much visible in the domestic economy, they are not as prominent in the global marketplace.
He said:”In developed countries, for example, smaller companies comprise 78% of exporters but ship only 34% of total exports. In developing countries the situation is even more striking. A survey of 25,000 smaller enterprises in developing countries found that exports constitute just 7.6% of their total sales.”
Meanwhile, Head of Information and External Relations Division, WTO, Marcela Rivera told THISDAY Azevedo is scheduled to make an official visit to Nigeria on February 15 next year.
However, the WTO chief said SMEs are constrained by some trade barriers including fulfilling legal requirements of different markets.
The WTO is “increasingly keen to explore what else can be done to help smaller companies to trade more effectively, with a particular focus on the potential of new online platforms.
“This is a good start – and the conversation must continue. In a difficult global economic environment, governments and international organisations should be exploring every opportunity to create more jobs, trade and sustainable growth. SMEs have huge potential here to boost trade and rekindle economic activity. It is time we paid more attention to our smaller companies.”
In a statement made available to THISDAY, he said: “The problem is that some trade barriers disproportionately affect SMEs – and the smaller the business, the bigger the barriers can seem. Meeting the required legal standards for products in different markets is often difficult for SMEs, but even the cost of finding information about those standards can be prohibitive.
“Larger companies can absorb these costs, but for SMEs it can stop them from reaching new markets and therefore prevent them from being able to grow and expand. The World Trade Organisation is looking at how we can respond to these problems and unleash the trading potential of SMEs – and we have just published a major new report on the issue.”
According to him, “Lowering tariffs would be a big boost to SMEs, as it would make information and training on how to meet legal standards more readily available. But our research has identified a range of other issues that we need to tackle. For example, smaller companies are less likely to be aware of international sales opportunities. The same challenge exists when trying to establish how to market their goods and services in different countries and how to access distribution networks.
“The internet offers a solution to many of these issues as it provides smaller companies with a way to reach customers around the world. An eBay study of 22 countries found that of small companies that do business online, 97% exported. Meanwhile, among those that did not engage in online sales, only 2%-28% generated sales abroad. So being connected is obviously essential.
However, of companies in developing countries with fewer than 10 employees, only 25% have their own websites. This compares with 85% for enterprises with more than 250 employees.”
Continuing, he said: “SMEs are also at a distinct disadvantage when it comes to accessing trade finance. Globally, banks reject over 50% of all requests for trade financing placed by smaller firms – compared to just 7% for multinational companies. SMEs cite this as a major barrier to their capacity to trade, so action is needed.
“SMEs also suffer more because of the costs involved in navigating complex and lengthy customs procedures – and this is one area where decisive action has already been taken. In 2013, WTO Members reached the Trade Facilitation Agreement which will cut trade-related red tape and slash overall trade costs by more than 14% – delivering a major benefit to SMEs.”