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Argentina Macroeconomic and SMEs Overview Lic. Evelin Goldstein Consulting

Argentina Macroeconomic and SMEs Overview Lic. Evelin Goldstein Consulting Undersecretariat of Small and Medium Enterprises and Regional Development Secretariat of Industry, Commerce and SMEs Ministry of Economy and Production May 2007.

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Argentina Macroeconomic and SMEs Overview Lic. Evelin Goldstein Consulting

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  1. Argentina Macroeconomic and SMEs Overview Lic. Evelin Goldstein Consulting Undersecretariat of Small and Medium Enterprises and Regional Development Secretariat of Industry, Commerce and SMEs Ministry of Economy and Production May 2007

  2. Crisis, Recovery and Development of Argentina’s Economy SMEs Overview SMEs Problems SMEs Public Policies Topics of the Presentation

  3. Crisis, Recovery and Development of Argentina’s Economy

  4. New growth drivers for Argentina after the crisis The 90’s After devaluation (2002) More active role of The government Convertibility Plan Competitive Exchange rate Twin Surpluses (fiscal and Commercial) Fixed and Overvaluated Exchange rate Market’s liberalization Economic crisis Recovery and growth Destruction of National Industry

  5. Growing after the Crisis Overvaluated exchange rate GDP Growth: 9% per years in real terms Source: Ministry of Economy and Production.

  6. Solving the Problem of Unemployment Employees for every millon of product +12.2% Source: Ministry of Economy and Production

  7. Increasing investments to support growth FGDI/GDP: 22% Source: Ministry of Economy and Production Note: Fixed Gross Domestic Investment (FGDI) in Dollars.

  8. Results of supporting a competitive exchange rate % of GDP Source: Ministry of Economy and Production.

  9. Argentina’sSMEs Overview

  10. Growth of SMEs Start-ups Enterprises Start-ups Source: Ministry of Labor and Social Security Note: Almost all start-ups are of SMEs. Data is of the Second Quarter of every year.

  11. Also there are closings... Evolution of Start-ups and closings +50,000 new enterprises per year Source: Ministry of Labor and Social Security.

  12. The role of MiSMEs in Employment Evolution of MiSMEs Employment Between 2002 and 2005 MiSMEs Employment increased 47%, whereas in big firms 22% in the same period. MiSMEs: +47% Source: Ministry of Labor and Social Security.

  13. Dynamic SMEs exporters • Exports of SMEs grew 57% during the last three years. • There are 6,000 exporting SMEs and about 2,000 more that are starting to export. • It is possible to find different markets and production sectors.

  14. SMEs exports tendency I Semester 2006: +17% Millons of dollars Source: Ministry of Economy and Production.

  15. Credits for SMEs Evolution of SMEs Debt Millons of Dollars Source: Central Bank of Argentina. Nota: SMEs loans of less than $ 1 millon are considered.

  16. Main Problems of SMEs in Argentina

  17. SMEs Problems • Financing: • Bank restrictions • High interest rate • Limited Guarantees for loans • Many SMEs are not registered • Few developed capital market Insufficent Investment SMEs use their own resources to finance investment

  18. Other SMEs Problems • Lack-of qualified employees • Weak relationship between entrepreneurs • Lack-of professionalism • Few resources for technology and innovation • Low productivity • Lack-of market information

  19. Public Polices for SMEs

  20. General Areas of Action DEVELOPMENT OF DIFFERENT INDUSTRIES AND REGIONS FOREIGN TRADE FINANCING TRAINING and START-UPS • Support of the first export • Exports groups • Trade promotion • Net Agencies • Clusters • SW Industry Promotion • Subsidized Credits for MiSMEs • Mutual Guarantees companies • Tax benefits for employee training • Subsidies for quality improvent • Start-up Development Program

  21. Net of Development Agencies • The Net of Development Agencies is formed by non-profit insitutions with public and private participation • The Agencies objective is to promote the local economic development through the SEPYME’s program. • The Net is an instrument to improve the relation between SMEs and the SEPYME.

  22. Net of Development Agencies Northwest • 5 Agencies Northeast • 9 Agencies Cuyo • 7 Agencies Center • 14 Agencies Patagonia • 12 Agencies Buenos Aires • 16 Agencies

  23. Clusters Objective Promote the integration of the production at regional levels through the strengthening of the relation between enterprises, Public sector, and research institutions Means • SEPYME’s Programs of Financial Aid (FONDER) • Support and advice for the design of • association projects

  24. Financing The objective is to reduce financial cost of SMEs loans by subsiding interest rates. Credits are offered by banks. Subsidized Rates Regime The purpose is to offer long-term loans for SMEs with low interest rates. Funds are provided by the IDB. Global Credits Program Business companies facilitate financial access to SMEs through guarantees. Mutual Guarantee Companies (SGR)

  25. Financing (cont.) This Program finances investment in productive development. Projects are evaluated by SEPYME. The interest rate is variable. National Fund for SMEs (FONAPYME) Entrepreneurs can borrow money without guarantees.Interest rates are low. Funds are provided by the National Bank of Argentina. National Fund for Micro-Enterprises (FOMICRO) National Fund for Regional Development (FONDER) This Program provides subsidized credits for clusters. Funds are provided by the National Bank of Argentina.

  26. Ministry of Economy and Production Secretariat of Industry, Commerce and SMEs Undersecretariat of Small and Medium Enterprises and Regional Development Muchas Gracias Thank you Evelin Goldstein

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