SMEs can boost the economy with the right support - Ufuk Tandogan

CEO Clubs Int'l in Romania has several strategic partnerships with the Media, offering the opportunity to all the Members to publish articles, presenting personal opinions.

Below you may read the article from Ufuk Tandogan, CEO Garanti Group Romania.
Published on Business Review, November 2014

 

SMEs can boost the economy with the right support

 
The local small and medium enterprises play an essential role in Romania’s economy, having a positive impact on the local development and the employment rate. Currently, SMEs represent 99% of all companies established in Romania, generating around 60% of the country’s turnover, and providing jobs for around two thirds of the workforce. However, in order for them to be successful in the current challenging economic environment, to become more efficient, innovative and competitive, they need support from both the State and private institutions.
 
Statistics[*] show that close to 60% of the SMEs managed to maintain a constant level of their business in 2009-2013, over a quarter registered decreases, while only 18% managed to grow in the respective period. More than 90% of these companies are financing themselves, situation which makes it difficult for them to develop.
 
One of the biggest problems for SMEs is the insufficient external financing. Both the State and private institutions should increase the level of available financing sources for SMEs, as these companies need external support to ensure a larger working capital, so they can accomplish their growth ambitions. One of the solutions is for the State to find the proper solutions to increase the EU funds absorption rate and assist beneficiaries in the implementation of EU-funded projects. As a first step, access to information and to technical and financial consulting for SMEs should be provided. For example, this can be done through dedicated support desks, manuals and subsidized courses. Also, information campaigns are vital, as this would ensure that good and innovative project ideas get the chance to be financed.
 
Banking institutions should also play an important part in terms of financial consulting, through finding the proper source of financing for SME business solutions. For example, banks, in partnership with institutions such as IFC, can offer loans to special categories of high-potential SMEs.
 
Placing a greater emphasis on SMEs and providing them with the proper business environment and the necessary financing sources has a huge importance at a macro-economic level, because this is the best way to revive the economic growth of Romania on a sustainable pattern. Therefore, both the banking sector and the State should offer their full support to these companies.
 
 


[*] According to CNIPMMR – the National Council of the private small and medium enterprises in Romania