The business in America is business
exclaimed President Calvin Coolidge in 1925, when the United States had an unemployment rate of 5.2% and was facing the on-set of The Great Depression in 1929. “But of course the accumulation of wealth cannot be justified as the chief end of existence” he later said.
So, who should we focus on to help promote growth? To create jobs? Does the bottom billion have a role in this process? These questions and more were proposed by moderator Dr. Ayman El Tarabishy, Executive Director of the International Council for Small Business (ICSB) and Professor at GW.
On Wednesday December 8, 2011, the George Washington University’s Department of Management, together with ICSB and GW Office of Entrepreneurship, hosted a panel session on this topic of business creation amongst the bottom billion - in other words, the 1.9 billion world citizens surviving on less than $1.50 USD per day!
Panelists from the GW School of Business, the International Finance Corporation (IFC), and the U.S. Department of State’s Global Entrepreneurship Program engaged with private sector entrepreneurs and audience members in an attempt to figure out how we can provide the bottom billion with jobs.
“The alternatives are much worse,” explained Paul Reynolds, Research Professor of Management at GW. “Piracy off Somalia, kidnapping in Latin America, mafia in Russia and even terrorism in the Middle East; are all examples of things people are faced with as a means to make their mark in the world when there is no alternative.” In Egypt, it takes more than 500 days to start a business using the legal, state guidelines. In Libya, it would cost you more than $4,000 USD to register your business. In Tunisia, you must wait nearly 143 days to begin operations.
According to research presented by Mr. Reynolds during the session, more than ⅓ of those engaged in business creation are from the bottom billion, and concentrated in developing countries. These findings support Cleveland Charles’ mission at the U.S. Department of State to improve the enabling environments for entrepreneurs around the world so that job creation, economic liberalization and civil society can all become realizations, and byproducts of entrepreneurial activity.
The Global Entrepreneurship Program (GEP), according to Mr. Charles, define entrepreneurship as a capacity and willingness to conceive, organize, and manage a productive venture – with all its risks. In this light, GEP works to ease demands on entrepreneurs like the 500 day wait times and $4,000 in registration fees. Several strategies for including the bottom billion in the world economy have been proposed. One is to encourage major multi-national corporations to expand sales and production operations; another to identify and assist high potential new and small firms in developing countries.
The latter of the two reflects more closely the opinion of Alan Johnson at the IFC. Not only has substantial research in developing countries indicated that a small percentage of high growth firms are responsible for a substantial proportion of job creation, but a term has been coined to describe these firms - Gazelles. According to the IFC, gazelles are private businesses having at least $250,000 USD in annual revenues and growing at a rate of at least 20% per year over a 4-year period. the IFC, along with other partners, recognize the value of gazelles as significant. As Mr. Johnson outlined during the session, various programs and initiatives like the online SME toolkit have been established to cultivating high-growth firms versus trying to increase entrepreneurship overall with uncertain public policy. Remember, when it comes to world economies, one size does not fit all!
Talking of Egypt, and their large youth population, Ayman Adhair of Global Integrated Management Consulting explained that reforms in the education system must be undertaken to enable the country to become a main driving factor in the development of entrepreneurship. Restructuring the educational system to foster creativity and independent thinking is of cheif importance if Egypt wishes to produce the next Facebook or Google. Without the introduction of management skills modules at secondary schools, vocational institutions and universities, young people in Egypt will be destined for the same old path - government or public sector job.
Dan Salcedo, CEO and Founder of OpenEntry.com, is optimistic that e-commerce tools and other innovations like his OpenEntry.com can be a means for the bottom billion to make their way in the world. As Mr. Salcedo explained, “recent advances have changed everything!” The proliferation of low cost devices (mobile phones, netbooks, tablets) greatly expands mobile networks. Social networking services demonstrated how to leverage the power of trust. Internet costs continue to drop (see Google Docs and Apps), while its reach/speed increase.
OpenEntry.com is developed e-commerce platform for artisans and SMEs worldwide that is supported by the World Bank, USAID, InterAmerican Development Bank, Rockefeller, Oracle, eBay, and more. Users can build an online catelog on Mr. Salcedo’s site for free using Google Applications to enable sales to be made online. Pages can be personalize with own banner/logo,
choice of templates, fonts, colors, etc. and enabled for credit card transactions.
So, the question remains, to invest in Gazelles or not? (Be careful, it’s a trick question).
Conference slideshow is available at:http://www.flickr.com/photos/46233768@N02/sets/72157628323661515/show/
Copies of PPT slides: