Obi Emphasizes Vital Role of SMEs in Global Economic Growth

DHAKA/Bangladesh: In a compelling address at the recent international conference organized by the Bangladesh Government in conjunction with the Commonwealth Enterprise and Investment Council, Mr. Peter Obi, the Presidential Candidate of the Labour Party in the 2023 election, has underscored the crucial role of Small and Medium Enterprises (SMEs) in driving global economic growth.

The conference, held in Dhaka, Bangladesh, saw Obi highlight the profound impact of SMEs on job creation, innovation, and domestic investment.

Obi’s stance was rooted in data-driven evidence as he cited figures from the World Bank (2020), which revealed that SMEs constitute approximately 90% of global businesses and account for more than 50% of global job creation. Moreover, formal SMEs contribute up to 40% of national income (GDP) in developing and emerging markets (DEMs), with even greater contributions when informal SMEs are considered.

The former Governor of Anambra State also shed light on specific nations, stating, “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.” He further emphasized that India, too, relies heavily on SMEs, which account for over 40% of the total workforce.

Obi called upon Commonwealth nations to prioritize small businesses, asserting that they serve as the linchpin for achieving sustainable and inclusive growth and development across the Commonwealth. He asserted, “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.”

Highlighting the challenges faced by SMEs, especially in developing and emerging markets, Obi pointed to issues stemming from a lack of formalization and internationalization. He lamented that many small businesses are unregistered, lack licenses, and lack international affiliations, thereby missing out on the benefits of international trade.

“To harness the full contributions and impacts of SMEs,” Obi admonished, “reforms such as proper formalization and internationalization are needed to address the identified challenges.” Formalization involves bringing SMEs into the formal economy through registration and compliance with legal and regulatory requirements. Obi noted that this process would not only benefit SMEs but also enhance the overall business environment and economic stability.

Obi went on to stress that the Commonwealth nations, controlling a combined wealth of about $150 trillion, should invest in SMEs to unlock their potential and foster innovation. He revealed that despite having one-third of the global population, the Commonwealth contributes less than 15% of the world’s GDP and has a significantly lower GDP per capita compared to the global average.

While acknowledging the myriad challenges, Obi proposed supportive policies, capacity-building initiatives, and strategic partnerships as means to empower SMEs to thrive in the global economy. He concluded, “Investing in the formalization and internationalization of SMEs can significantly enhance the sustainable socio-economic growth and development of Commonwealth Organizations and Countries.”

During the conference, Obi also met with the Honourable Prime Minister of Bangladesh, H. E Sheikh Hasina, commending her team’s achievements over the past 15 years with the support of SMEs. Obi underscored that while Bangladesh has made remarkable progress, there is still work to be done.

Obi’s conversation with Mashrur Arefin, Managing Director of City Bank in Bangladesh, further illuminated the critical role of SMEs in Bangladesh’s growth. Arefin highlighted that 80% of job creation and a substantial portion of economic growth in Bangladesh can be attributed to SMEs, showcasing tangible results aligned with Obi’s long-standing advocacy for SME development.

Obi remarked, “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.”

Peter Obi’s impassioned address and engagements during the conference underscored the immense potential of SMEs in driving economic growth and development, not only in Bangladesh but across the Commonwealth and the world.