SMEs, strangled by difficult market access, busty economy, and rising credit

Small and Medium Enterprises in the Republic of Moldova have a major share in the country's economy. Thus, at the end of 2015, they held just over 97% of the total number of enterprises and provided over half of the total work places. SMEs contribute 31% to the total economy and provide 88% of the total net profit.

"However, despite these stunning figures, the outlook for the SME sector is not as optimistic. And that's because those numbers are steadily decreasing. Thus, just 5 years earlier (at the end of 2010), the SME share in no. The total number of enterprises was almost 98% (by 0.5 pp more), the share of the SME employees in the total employment employed by 59% (by 4 pp. More) and the share of SMEs in the total sales of approx. 37% (by 6 pp more)", said economist Ion Tornea explained during the show" 15 minutes of economic realism ".

The reason for the modest evolutions of the SME sector and its decline in overall economic indicators seems to lie in the remaining obstacles to growth, especially in the growth of medium-sized companies - apparently, small companies do not grow in medium-sized companies. "The causes behind the reduction no. Medium-sized companies and no. Their employees, but also their sales growth at a rate that does not even exceed the annual inflation rate, appear to be the pressures and obstacles facing these companies, but also the worsening of business conditions, primarily linked to: More difficult access to the markets (especially after the closing of the Russian market for several product categories) and (a more volatile and unpredictable macroeconomic environment (this is mainly related to rising interest rates on loans and strong fluctuations in Exchange)", said Tornea.

In conclusion, the economist said that the biggest constraints for SMEs are: the low efficiency of the implementation of the legislative base, the strong imbalance in the development of the SME sector in the territorial profile - 2/3 of all companies are concentrated in Chisinau and the poor knowledge of Export / access techniques on foreign markets and reduced export share of SMEs.

The show is made by IDIS Viitorul in partnership with Radio Free Europe.

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