SME Development Report 2021

Opportunities & Challenges of the SME Development in Azerbaijan, Belarus, Georgia & Ukraine

The SME Report outlines the current development trends in the partner countries through the eyes of local small and medium-sized enterprises. The analysis identifies the needs and challenges faced by SMEs in the agricultural and tourism sectors, with a special focus on female entrepreneurship and digitalisation.

First, the outline of the general economic situation in the partner countries is presented. For this purpose, the AHKs reviewed the current status, existing policies, and support programmes intended to assist SMEs.

Second, the results of the online survey are discussed. A total of 150 companies participated in the survey and shared their experiences with SMEs in one of the four partner countries.

The survey aimed at identifying the main on-ground obstacles to SMEs current operations, especially those factors that limit the export capacity of small and medium-sized companies, as well as the effectiveness of government support measures, and eventually how German institutions can support the SME sector in these countries.

 

To conclude, the further inputs derived from the semi-structured face-to-face interviews with businesses, business associations and industry experts are presented. The interviews were conducted by the AHKs to complete the survey results and get an even more vivid picture of the SMEs business scene in the partner countries.

SME Development Report 2021

Key findings

Internationalisation & Export: Which are the main challenges for local SMEs? Which are the most relevant measures to overcome these difficulties?

Despite the pandemic situation, most of the companies surveyed remain optimistic: Only 3 out of 150 companies expect to downsize or stop their export operations in the next two years. In contrast, three-quarters of the agricultural companies and two-thirds of the tourism companies remarked they want to open up new markets.

Regardless of the economic sector, the companies surveyed agree on three main critical challenges they faced while internationalising their business, namely: access to finance, high costs of market entry, and finding reliable business partners.

To master these challenges, the respondents indicated several measures. The most relevant for agricultural and tourism companies are to participate in international trade fairs and delegation trips, followed by promotional campaigns and global market research. Specifically, agricultural companies also desire government export programmes and technical/financial support to remain competitive in foreign markets.

How do SMEs think Germany and German institutions can support and guide the SME sectors in the respective countries?

Around 89% of agricultural companies expressed that they would like to enter the German market or expand their existing business in Germany in the short and mid-term. The tourism sector also wants to focus more on the German market in the future: around 92% aim to acquire more customers from Germany in the next three years. 

The need for bilateral exchanges and B2B meetings to help local businesses in this endeavour remains constant, and the demand is growing. The surveyed see opportunities to expand their business activities abroad, especially in trade fair visits and delegation trips. Moreover, two-thirds of the sample see the organisation of delegation trips to Germany and trade fair participations in Germany, a decisive factor in how German institutions could stimulate the SME sector in their countries.

More than half of the companies surveyed ask for vocational education training based on German standards in their sector.

Female Entrepreneurship: Which particular difficulties do women encounter in opening their businesses? Which measures can support them? 

The surveyed respondents consider women and men having the same opportunities. Nevertheless, even if they formally are equal, many companies consider the family-work balance a major problem for women. 

More than half of the firms declared it is important to support more women in the start-up process. Moreover, 45% of female and 31% of male respondents considered mentoring and leadership training a useful measure to help women to start a business. 

The interviewed experts generally agreed with the participants and emphasised that despite the equal opportunities, the majority of investors and entrepreneurs are anyway male, and this depends on multiple factors. Aside from the work-family balance, which is a major issue for women in the EaP countries, the experts pointed out that it is more difficult for a woman to be issued a loan and that role model for women who want to start their business are missing.

AHK Partner Institutions