'LDCs must prioritise dynamic enterprise to transform economy'

Kathmandu, Nov. 20: The United Nations Conference on Trade and Development (UNCTAD) on Tuesday said that the governments in the world’s most disadvantaged countries must prioritise dynamic enterprise and enact policies to help them thrive, create jobs, innovate and transform the economy.

“Large numbers of people in the Least Developed Countries (LDCs) are forced into small-scale, low-value entrepreneurship by necessity,” said the Least Developed Countries Report 2018 published by the UNCTAD which was made public globally today.

“Entrepreneurship is dominated by self-employment, which accounts for 70 per cent of total employment, informal micro and small enterprises with low chances of survival and growth and little propensity to innovate. Small companies account for 58 per cent of all firms in these countries,” added the annual flagship report of the organisation.

The report also revealed that the vast majority of entrepreneurs in LDCs were ‘necessity-driven’. There were 1.7 times as many early-stage entrepreneurs in LDCs on average who described themselves as ‘opportunity-driven’ than there were who said they were ‘necessity-driven’, compared with 2.8 times as many in the developing countries.

The governments in LDCs should, therefore, focus on boosting entrepreneurs and establish firms that seize opportunities to create innovative products and services, employ more people and grow dynamic businesses that have a transformative, ripple effect throughout the economy, said UNCTAD.

While at least 20 out of the 47 LDCs have national industrial policies that articulate to a various extent the interface between entrepreneurship and structural transformation, the report says that much less attention is currently devoted to the determinants of entrepreneurship.

The report calls for a renewed ‘developmental state’ that engages in transformative mission-oriented investments and involves the private sector in a strategic vision that charts a clear path for development.

“Policymakers should provide support that is tailored to the life-cycle of firms based on objective selection criteria and linking clearly communicated time-bound rewards, advantages and incentives to performance,” read the report.

Since linking LDCs to global value chains has not provided any significant boost to the local enterprise development, the report has called for greater attention to the development of domestic supply chains.

The report said that a pragmatic, strategic and evolutionary approach was needed to increase public-sector capabilities, enact locally-appropriate institutional reforms, build on centres of excellence promote policy learning and nurture coalitions for change.

Dr. Swarnim Wagle, former Vice-Chairman of the National Planning Commission (NPC), said that the companies that had a female in top manager had larger proportion of full time women employees.

Nepali business firms with female managers have 37.3 per cent women employees while the companies that have male boss have only 14.2 per cent women workers, he said with reference to the 2013 Enterprise Survey conducted by the World Bank.

According to him, compared to the Small and Medium Enterprises, large-scale industries have more female workers percentage. Small-scale industries have 17.7 per cent female workers, medium-scale 19.4 per cent and large-scale 28.6 per cent.

Only one in five companies has their own website.

Dr. Wagle said that it was unfortunate in the part of Nepal that it couldn’t create environment to utilise the human resources, that came out from agriculture, in the manufacturing sector.

He said that entrepreneurship support should go beyond improvements to the business environment, and needed to be tailored to the firm life-cycle.

“Only entrepreneurship policies that explicitly target structural transformation ensure long-term sustainability and inclusiveness, and help reaching Sustainable Development Goals (SDGs),” he said.

Representative of the UN Women Wenny Kusuma said that economic and social growth go hand in hand.

“Promote creativity in youth in order to achieve the targets of economic and social development as well as the SDGs,” she said.

Ayushi KC, founder and Chief Executive Officer (CEO) of Khali Sisi, said that the government should create a reliable database and policy to address the demand of youth in order to promote entrepreneurship.

“International success stories mostly are not fit to our society. Therefore, we need to create our own success stories,” she said.

Sixit Bhatta, founder of Tootle, said that it was easy to start a business venture in Nepal but difficult to scale it up.

“It is better to scale up a few enterprises instead of providing livelihood support to many,” he said.

Likewise, CEO of Karkhana Pavitra Gautam said that there was a huge gap for innovation in Nepal and the stakeholders should come together to promote innovation through education.

Published in The Rising Nepal daily on 21 November 2018.