EDITORIAL: Seed money key to growth
Recently, entrepreneurship has been in the news yet again and the message is that it matters.
In fact, the Prime Minister emphatically declared that he thought it had a key role to play in the economy, and that the contribution of entrepreneurs was crucial to pulling the country through tough economic times.
He also said that “one of the new columns on which the economy must be rebuilt is that of entrepreneurship at all levels”.
Mr Stuart’s speech is a timely restatement of an obvious truth because too many of our people regard business as something into which one enters simply to make some money as a last resort.
Entrepreneurship involves spotting or creating a business opportunity and then exploiting it to make money for oneself while creating employment for all those whose employment assists the risk taker. But it is much more than that.
Significantly, the Prime Minister was speaking at the 15th Inter-American Forum On Microenterprise or FOROMIC 2012, and since this organization is the leading forum for supporting and financing micro, small and medium-sized businesses, one hopes that his words do not fall to the ground.
Money is a key component for these enterprises, for unless the entrepreneur has very deep pockets, he will need to borrow from lending institutions or from friends in order to start such an enterprise.
That this can be a major problem is gleaned from a revealing statistic coming out of the forum, which tells us that more than 35 per cent of the 1.1 million small and medium-sized enterprises (SMEs) in the region do not have access to credit, and that the financing gap amounts to something like US$155 billion.
This lack of proper capital can seriously inhibit the growth of small companies; and many a skilled entrepreneur has seen his dreams crash into ashes for lack of credit to keep his promising idea growing healthily.
The stimulus packages that rescued the American auto industry in 2008 amply demonstrate how a timely injection of capital or the creation of a credit line can help a business on the verge of collapse to regain prosperity.
In similar manner, small enterprises, short of capital, may go under, taking with them the chance of creating employment, and of making profits from which they could pay government taxes for the total betterment of the common welfare.
Often lenders are the more concerned about exacting watertight security for the loans, and may often stifle the risk-taking instincts of potential investors, but given that so many small and micro businesses are shown to be starved of capital, the time is surely ripe for a careful fine-tuning of the financing methods we provide for entrepreneurs.