KATHMANDU, Nov 21: Governments of least development countries (LDCs) must prioritize dynamic enterprises and enact policies to help them thrive, create jobs, innovate and transform their economies, recommends a recent report released by the United Nations Conference on Trade and Development (UNCTAD).
The report ‘The Least Developed countries Report 2018: Entrepreneurship for Structural Transformation’ released on Tuesday by UNCTAD also calls for the least developed countries to nurture dynamic businesses that create jobs and help end poverty.
The report looks at the conditions for creating and growing high-impact businesses in the LDCs, a group of 47 nations that includes most of sub-Saharan Africa, some Asian countries along with Nepal, and several island states.
Several structural features of the economies of LDCs tend to weaken entrepreneurship and the growth of enterprises, including limited finances, insufficient infrastructure, lack of institutions, poverty, restrictions on women’s empowerment, high registration costs, and elevated political, economic and environmental risks, according to the report.
“The result is that most firms in LDCs are micro or small enterprises and 58 percent of the formal firms have at most 20 employees,” read a statement of the UNCTAD issued after the release of the report.
The report states that large numbers of people in LDCs are forced into small-scale, low-value entrepreneurship by necessity. “Entrepreneurship is dominated by self-employment (which accounts for 70 percent of total employment), informal micro and small enterprises with low chances of survival and growth and little propensity to innovate. Small companies account for 58 percent of all firms in these countries,” the statement added.
Speaking at a press meet in the capital on Tuesday to brief journalists about the report, Swarnim Wagle, former vice chairman of National Planning Commission, said that the LDCs including Nepal have not been able to create conducive environment to link themselves to global supply chains.
“Global value chains (GVCs) have tightened the conditions for LDC local entrepreneurship. It’s harder competition for many of these countries,” said Wagle, adding that LDCs need to strategically reframe policy to unlock GVC potential opportunities.
Also speaking at a panel discussion, founders of some start-ups including Tootle and Khaalisisi said that scaling up their businesses has been a major challenge for them.
“The major challenge is scaling up the business owing to the lack of access to financing as the sector that we are working is not even recognized as an industry,” said Aayushi KC, the CEO of Khalisisi, an startup that works on waste management.