Current State of SMEs in Uzbekistan
Since 2019, SMEs and private entrepreneurship activities have accounted for 50% of Uzbekistan’s gross domestic product (GDP), as per the Center for Progressive Reforms. However, in 2022, the share of SMEs and private entrepreneurship in GDP decreased by 4% compared to 2019. Additionally, during this time, the share of SMEs and private entrepreneurship in construction and employment also decreased by 2-3%.
One of the main goals of the state in Uzbekistan is to promote sustainable economic growth by developing small and medium-sized businesses (SMEs). The Uzbekistan 2030 Strategy aims to create ample opportunities for these businesses to enter international markets and support startups. This confirms the state’s interest in their development.
The most significant change was observed in imports, which decreased by about 13%. However, there was a positive change in the indicators for industry and export, with an increase of 0.2% and 2.6%, respectively.
Role of SMEs in Developing Economies
In many developing countries, including Uzbekistan, over 50% of the employed population works in the SME sector. This sector contributes over 50% to the GDP of most developing economies. The development of the SME sector is often a key factor in ensuring economic growth in both developed and developing countries.
Challenges Faced by SMEs
Difficulties in entering domestic and foreign markets, a complicated system for introducing innovations, and a lack of human capital and skills are the main obstacles to economic development.
Strategies for SME Growth
To address these issues and promote the growth of SMEs, countries should consider the following strategies:
- Fostering Entrepreneurial Mindset
In developing economies, SMEs often prioritize survival over growth and operate in low-value sectors that make minimal contributions to GDP. Improving entrepreneurial skills is essential to increase contributions to GDP and employment. Continuous training is necessary to improve skills, and financial literacy, and eliminate the gender gap among SME entrepreneurs.
- Supporting Transition to Green Economy
Many developing economies continue to rely on heavy industries that damage the environment and struggle to meet targets for reducing greenhouse gas emissions. To facilitate the transition of SMEs to the ‘green’ economy, the state must support such policies and ensure cooperation among interested parties.
- Promoting Women’s Participation in SMEs
Promote women’s participation in SMEs and support skills development and entrepreneurship in this sector. Entrepreneurial human capital is essential for innovation and economic modernization in SMEs. Emphasize financial literacy, women’s entrepreneurship, and skills development to train entrepreneurs and create a skilled labour force.
Role of SMEs in Developed Countries
SMEs have played a significant role in the economic growth of developed countries. In 2021, 99.3% of the 3.2 mn firms in Germany were SMEs, employing 56% of the total employed population, i.e. 38.4 mn. Researchers assert that SMEs in Germany form the foundation of the German economy. Famous startups that originated in the United States’ Silicon Valley also began as small businesses.
Empowering diverse entrepreneurs
These centres aim to offer practical support to small businesses run by women, persons with disabilities, and youth. This initiative aligns with the global trend where women are now running almost 40% of micro businesses. The support includes the introduction of modern technologies, employee training, and product realization. This approach is crucial as it has been observed that the most effective way to support SMEs is by pairing financial support with advisory services.
Green economy
In line with global efforts to combat climate change, the state fund for the support of entrepreneurship will establish a system of compensation and guarantees for SMEs undertaking green and energy-efficient projects. To support the introduction of green technologies in SMEs, it was suggested that the fund attract $100 mn from international and foreign financial institutions. This move is expected to fill the financing gap faced by SMEs, which is estimated to be $5.2 trillion every year.
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