The chairman of the Irish Small & Medium Enterprises Association (ISME), Mr John Ryan, challenged the Government last Friday to deliver evidence of meaningful progress in addressing the concerns of SMEs, what he called “the most valuable contributors to the Irish economy.”
Making reference to the ongoing economic crisis and the specific impact it is having on SMEs, Mr Ryan said that “the main issues of concern to SMEs are the lack of accessible affordable finance, high Government-levied operational costs, and the inability of companies to get paid in a timely manner. These factors, together with the huge levels of EU and global economic uncertainty, is suffocating innovation in businesses, stopping investment and forcing companies to contract, and this ultimately results in job losses. These issues need to be tackled immediately to ensure Irish business owners and employers continue to take the risk of operating a business in Ireland.”
Mr Ryan was critical of the taxpayer-owned banks, whom he accused of failing to respond to the needs of Irish businesses, with their continued inability to allow access to credit for SMEs and their negative imposition of unfeasible terms on those few who are “deemed worthy” of receiving finance.
“It is illogical that in Ireland we have a banking sector that has been bailed out by the taxpayer but continues to fail to acknowledge and do business with the small business sector – one of the largest groups of taxpayers in the country,” said Mr Ryan. “While the majority of SMEs are refused credit, the fact that personal guarantees are demanded even for the smallest loan arrangement is reflective of the regressive and dated attitude of the banks. It is about time that the individuals who run the banks were reminded of their responsibilities to the wider economy and start contributing to economic growth instead of delaying our economic recovery.”
Mr Ryan said that the Government needs to ensure that credit is made available to viable businesses, if not by the banks, then by alternative sources of finance. This could include the introduction of a state investment bank with a specific remit to lend to small businesses, and investigating alternative forms of finance, from the European Investment Bank (EIB) to micro-finance schemes. Mr Ryan also suggested that the Government should allow owner managers to use part of their pension funds to reinvest in the business.
On the issue of costs Mr Ryan said: “The costs of doing business in this country are prohibitive, with many business inputs including energy, transport, labour costs and commercial rates well in excess of our international competitors. We need the National Competitiveness Council to immediately benchmark the costs for SMEs against those of our international competitors to allow Ireland Inc. to recognise our weaknesses and enact policies to rectify the situation. Only then will SMEs be able to compete on a level playing field.
While acknowledging the positive initiatives that the newly appointed Minister for Small Business, Mr John Perry, has introduced, Mr Ryan said that SMEs must be included at the centre of the Governments decision making processes. This can only be done via a National Representative Forum, including SME representatives, he said.
“The remit of this new forum would be to assist, advise and independently evaluate all Government economic programmes and policies to ensure compatibility with the needs of the economy as a whole. If a genuine, all-inclusive social partnership is to have any true purpose, it must include the SME sector, the drivers of economic growth. The proposal should strengthen the Government’s mandate to introduce and drive a national recovery plan,” said Mr Ryan.
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