07 May 2014 #Clarkslegal
“All around the world SMEs are the lifeblood of economies and the best hope of employment for the largest number of people” Michael Sippitt, Chairman of the Commonwealth Environmental Investment Platform and Clarkslegal LLP, told an international audience in Dhaka, Bangladesh, at the inaugural Sustainable SME Development in Bangladesh conference.
Mr Sippitt was presenting his keynote paper “Cluster, Technology & Innovation: Global Perspective and relevance of Bangladesh” to leading officials from central and national Bangladeshi banks and financial institutions, in which he urged delegates that “cluster development and collaborative business must be a large part of the recipe for future success of Bangladesh SMEs. More networks and business associations will help build collaboration and information sharing.”
The importance of SMEs
Mr Sippitt outlined why so much focus must be placed on SMEs, as they have such a vital role in driving local and international economies.
“Most innovation today comes from SMEs who can disrupt markets by introducing new goods or services, displacing traditional suppliers. They are the lifeblood of the economy - starting and growing businesses and utilising the best and latest knowledge and innovation, for products and service delivery. SMEs are usually an economy’s biggest growth point, in total business generated and jobs created.”
He argued that today’s markets present the greatest opportunity for an SME to succeed, because of the technology at their disposal: “on the internet customer location is largely irrelevant. Globalisation and technology enable cheaper routes to market, reducing the diseconomies of scale small companies have traditionally faced when competing against larger corporations.”
The role of clusters
However, substantial barriers to growth face SMEs operating in isolation. SMEs are typically challenged by limited connections and resources, knowledge sharing and collaborations, finance and risk, management strength, skills and capabilities, international trade and regulatory issues, procurement barriers, track record and access to market.
To overcome these challenges, Mr Sippitt presents the case for clusters in enabling SMEs to flourish, citing the success of technology clusters in the UK (London, Oxford, Cambridge), France (Grenoble - one of Europe`s leading cities in high-tech industries) and Canada (the Kitchener-Waterloo-Cambridge region, Canada`s Technology Triangle). These clusters give wide examples of SMEs stimulating innovation, creating jobs, managing resources effectively and addressing environmental and social challenges together.
International clusters – cities in the Commonwealth
As Chairman of The Commonwealth Environmental Investment Platform, Mr Sippitt plays a key role in linking entrepreneurs, investors and companies in the Commonwealth’s fast growing environmental sector to each other. He explained how the Commonwealth can provide a ready-made cluster for the international development of SMEs:
“The Commonwealth is in effect, a trans-continental "cluster of nations", established for a very long time with great bonds through decades of business and family migration, educational ties, English language, similar legal systems and substantial shared values.
The Commonwealth can make a real difference to SMEs through its diverse networks. It includes some of the fastest growing nations and cities on earth, so is very well placed to understand and facilitate knowledge sharing.”
Sustainable SME Development in Bangladesh was jointly organised by Bangladesh Bank, Cirdap, BIBM and Midas (UK) in association of Prime Bank, Trust Bank and Islami Bank.
The importance of SMEs to the Bangladeshi economy cannot be understated, as an estimated 99% of private sector organisations in Bangladesh are SMEs.
The conference was also addressed by the Chief Guest, Dr Atiur Rahman, Honourable Governor of the central bank of Bangladesh, who explained that “employment generation is the key challenge for the country’s SME sector as more than two million young people are joining the labour force every year.”