The Ministry of Economy and Development and the European Commission co-organized a conference titled “Policies and Financial Instruments for the Development of SMEs in Greece” today, Thursday, April 27, 2017 to support and develop SMEs in Greece.
The conference was attended by the President of GSEVEE, Mr. G. Kavathas, speaking on the thematic “Strategic Approach to Financial Support of SMEs – The Business View”.
The speech of the President of GSEBEE is as follows:
“I would like to thank you for the invitation addressed to GSEVEE and to congratulate the responsible Commission of the European Commission, the Greek delegation and the National Envoy for this important initiative of organizing a conference that goes beyond the already trivial and ineffectual debate on “Appropriate” reforms and memorandum policies and is in the essence of a central structural problem of the Greek economy: identifying the best funding policies and diffusing As the benefits to the entire business community.
At the same time, this conference is an opportunity to open a channel of honest communication between the different actors involved in financing and organizing the country (banks, intermediaries, state, enterprises, European institutions). It is important for all sides to recognize pathogens and systemic mistakes that have led us to a stiff and “sick financial sector”, to zombie businesses and to entrepreneurs who are afraid of the risk of investing, as if they were the tax authority but also to plan joint financial policies for 2020 and beyond.
In addition, this conference enables stakeholders to consult with the European Union and the European institutions and to exchange ideas on how the planned financial policy tools can be redesigned, leveraged and reach the final recipient who really needs them .
A similar effort – and we must acknowledge the positive initiatives that had been undertaken – had been done in the past years under the auspices of the Task Force for Greece, which resulted in the publication of a high-quality version of the conclusions on “SME Development in Greece” Proposals which have been ignored at the level of economic policy-making and the promotion of alternative financial instruments.
GSEVEE owes its role as a higher-level trade union organization and as an institutional social partner to promote both critically and visibly both the institutions and its members: it is not possible at the time we live that businesses only seek through the NSRF or the development law the economic Their survival. We should not think that financial aid is the most effective method of mobilizing investment, but on the other hand let us not forget that public investment – as investments made and not as capital transfers – is an important pillar of the productive formation of a place. Our different approach to this field in relation to some organizations and links is clear: the fact that the country has failed in previous years to make good use of public resources does not mean that we should abolish them, as with the same logic we should To demonize the low lending rates in the cow period, which would make us rather missionaries rather than entrepreneurs.
The fact that the multiplier of public investment in previous years did not achieve a high rate of contribution to GDP growth does not cancel out a significant pillar of actively challenging business and investment initiatives, which, combined with attracting foreign direct investment, may create conditions for rapid recovery Of the Greek economy.
Furthermore, we must not avoid that small businesses have little benefit of low-interest lending opportunities in previous years and rather the distorted structure of funding has led to a tangled growth of services and specific sectors of the national economy. Today, we are faced with this grueling, over-indebtedness, which should not be funded.
Will you allow me in the first part of the paper to refer to some important elements that outline the structure of the Greek financial class, if the condition is allowed.
It is true that in the first phase of small entrepreneurship in Greece, a large part of the transactions went beyond the official banking system, for reasons that were not exclusively about the cost of money, but with the procedures to be followed, the control of the money Flows and flexibility in competition. Before the crisis, only half of small and medium-sized enterprises developed transactions with the financial sector. A significant part of Greek entrepreneurship was served through informal payment systems, delayed payments through the use of post-dated checks and developed alternative financing solutions. The other half of the companies, when they were going to contract with the banking sector, often did it on the basis of servicing the needs for working capital, while the structure of the borrowing products was such that the investment plan was not evaluated but the borrower’s asset image.
After the crisis, the relationship between business and the banking sector becomes even more problematic.
In the primary research of IME GSEVEE, there is a clear tendency for small businesses to move away from the banking sector.
In the most recent survey, over 70% of small businesses said they had no contact with the banking sector, ie the gap between the real economy and the money market was widening.
Similarly, the behavior of businesses, in terms of financial aid and the financial instruments that are offered to them, also show similar trends. Only 6.4% of small and medium-sized enterprises have succeeded in joining a support program through NSRF for development, whereas programs such as island entrepreneurship have failed to attract interest in the past.
At the same time, the most important structural problem of small businesses, in all economic climate surveys, remains the lack of liquidity (with rates above 75%). This phenomenon also occurs systematically in the European market, especially in the southern countries. Besides, at meetings with bank representatives and executives of the Greek Banking Association, it is often noted that at the present stage of the Greek economy, there is a limited demand for financial products and business loans. That is, small businesses with the burdens of needing entrepreneurship are unable to support their project and for this they are afraid to expose and implement a co-ordinated business development plan. This is the one aspect of reality.
How does it explain the lack of systematic interconnection of the financial system and small businesses with the reported liquidity problem? Essentially, this is the essence and subject of discussion of today’s event. This is the paradox of the simultaneous existence of low demand for loans and reduced liquidity.
GSEVEE considers that the crisis and the transformation of businesses and banks into the crisis did not lead to a better matching of needs and loans but removed the two interacting players more. It is perhaps not the time or the moment to assess the mistakes in the new structure of the banking system, the new heavy scheme chosen, the successive mergers in times of thin cows, their financial burden with Greek bonds and the risk of Country and the minimum risk diversification provision. Neither can we evaluate the effectiveness of public policies in recent years as regards their growth penetration into Greek entrepreneurship. It is certain that the classic scheme of investment and incentive organization through the banking sector has failed.
In recent years, it is true that domestic and international funding schemes have been mobilized to support investment projects with multiplier benefits. In spite of the positive signal from international organizations such as the European Investment Bank, the EBRD and other stakeholders, there is a risk of money laundering and misallocation of funds. Businesses do not know where to reach out and how they can make efficient use of available funds and synergies.
GSEVEE has highlighted the goals that a strategy for funding policies should have.
Strengthening some of the policies proposed to improve the financing environment, I will set as the central issues at the dialogue table the following:
1st) An essential tool is the institutional framework that allows the diversification of funding tools and sources to suit the needs of Greek entrepreneurship. In this respect, the possibilities of promoting modern tools for microfinance, participatory financing, factoring and other forms of cooperative banking should be explored. The suffocating framework and the third program do not allow the full deployment of such policies but should be pursued because in Europe similar actions have been implemented with positive effects on local economies.
2) Coordination and dissemination of information on the role and functions of international financial institutions, the structure and feasibility of the NSRF, the analysis of the impact of the Development Law, investment opportunities and strategic investments. Especially for Strategic Investments, the state has to provide guidance for the productive model it wants with sector locomotives (constructions, creation of an agro-food chain with extroversion, alternative tourism, attracting scientists, collaborative schemes of small and medium-sized enterprises).
3) On the part of the European institutions, it is necessary to deepen the COSME and HORIZON programs to include the specificities of the countries of the South. Unfortunately, statistics show that resources are difficult for Greek small businesses, and may need to redesign actions and priorities. Similar arguments apply to EIF (European Investment Fund) actions.
4th) Establishment of a 4-year Investment Plan, with corresponding stability in the company’s obligations (tax, insurance). Ensuring an overall stable environment framework will be beneficial.
5th) Modernizing and expanding the operations of the ETEAN and the Development Funds (eg the Luxembourg Fund), possibly through a single coordinating body. In relation to ETEAN, the proper functioning of the guaranteeing practices should be ensured. From the point of view of company capital leverage, intelligent specialization of participatory financing programs through the allocation of profits to a common Small Business Development Fund. Our suggestion is that even the small business can take part in the investment risk, having received tax breaks.
6th) Specific programs for the financing of clusters, consortia, innovation synergies and open trade centers. The commitment of an enterprise to participate in an organized collaborative cluster – which may involve a single configuration of premises, warehouses, logistics, should be strengthened for outward-looking actions and the development of the internal market. At the same time, a modern legal framework for the creation of cooperative associations / formations should be developed.
7th) Systematic monitoring of the financial flows from the financial institutions by the Bank of Greece and publication of reports for reasons of transparency. Appropriate disclosure and analysis should be available for reasons of refusal of loan applications.
8th) Design of indirect funding and investment mobilization programs, such as public procurement. Information on the use of electronic systems and the widening of beneficiaries to create a local and regional multiplier. The participation of SMEs is of paramount importance to local development and technology / innovation transfer.
Ladies and gentlemen,
I know that it may escape the immediate interest of the conference, but there are two other critical aspects that need to be addressed and I have to put them in today’s meeting: a) the first relates to red loans and the need to deal directly with them, to the benefit of The banking system and businesses. Efficient management of red loans may be an international example of good practice. GSEVEE has repeatedly stressed the need to hijack thousands of professionals, through clearing and re-entry support programs. B) Entry of businesses in the new digital age should be facilitated and not hampered by legitimate and unfair means. The establishment of a bad bank account, the reduction of bank charges are interventions that will lead to a more healthy public-private-banking relationship.
I hope this workshop will be an opportunity to make some steps towards access to finance for companies, better and more efficient organization and management of resources and the orientation of the Greek economy to a more productive and competitive model, with an emphasis on the real economy . The banking sector has an important role to play, as does the state in designing the right tools and funding policies. “