Unctad calls for more policy commitment
UNCTAD Secretary-General Mukhisa Kituyi
What you need to know:
In its new report, Unctad says that entrepreneurship offers 70 per cent of total employment among the LDCs.Nevertheless, very few development plans in these countries perceive micro-enterprises as potential engine for economic growth.
Unctad recommends that policymakers should provide support that is tailored to the life cycle of firms, i.e. start-up, scale-up, maturity to nurture entrepreneurship.
Dar es Salaam. Nearly 270 million workers in the Least Developed Countries (LDCs) were self-employed in 2017, a new report on entrepreneurship has shown.
This figure is equivalent to 70 per cent of total employments compared with 50 per cent in other developing countries.
However, the report released yesterday by the United Nations Conference on Trade and Development (Unctad) noted that in just one-third of development plans in LDCs, micro-enterprises and SMEs are viewed as potential engines of economic growth and sources of employment, and income to reduce poverty.
Titled, Beyond Business as Usual, the report shows that although entrepreneurship is explicitly mentioned in 36 national development plans and poverty reduction strategic frameworks reviewed, specific policy actions in most LDCs are limited and sometimes vague.
At least 20 LDCs have national industrial policies that articulate the interface between entrepreneurship and structural transformation, the report adds, however, much less attention is devoted to the determinants of entrepreneurship, and to tailoring support adequately across all the life cycles of enterprises.
No wonder that three quarters of firms in LDCs are affected by electrical outages, as the report notes, with ensuing additional costs particularly for micro- and small enterprises.
The report shows that 63 per cent of early entrepreneurs in LDCs and 57 per cent of established businesses are engaged in consumer-oriented services, typically activities which imitate already existing businesses, with low margins.
Survival rates too for start-ups in most LDCs are low, with more than 50 per cent of new firms exit the market within the first five years.
Twenty eight per cent of early entrepreneurs in LDCs are young adults (18–24 years), the report adds, while those aged 25–34 account for another 35 per cent.
While women participate nearly as much as men in early-stage entrepreneurship, they are five times less likely to own a company, the report says.
Rural households closer to large population centres are more likely to be engaged in non-farm entrepreneurship because they have easier access to market, credit and telecommunications facilities, the reported shows.
The distribution of formal firms in LDCs is heavily skewed towards smaller establishments and displays a “missing middle”: 58 per cent of firms have less than 20 employees, while only 12 per cent have more than 100 employees.
“The report establishes a more active stance for the state in steering the emergence of dynamic and transformational local entrepreneurship,” UNCTAD Secretary-General Mukhisa Kituyi said in a statement to journalists.
“By encouraging policymakers to value the benefits of entrepreneurship, this report makes an invaluable contribution to efforts to add value to the least developed countries’ implementation of the 2030 Agenda for Sustainable Development.”
Speaking shortly before the launch of the report, UN resident coordinator Alvaro Rodriguez said that nowhere else in the world is radical economic transformation more urgent than in the 47 LDCs, including Tanzania.
