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Argentina Macroeconomic and SMEs Overview Lic.
Evelin Goldstein Consulting Undersecretariat
of Small and Medium Enterprises and Regional
Development Secretariat of Industry, Commerce and
SMEs Ministry of Economy and Production May 2007
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Topics of the Presentation

• Crisis, Recovery and Development of Argentinas
  Economy
• SMEs Overview
• SMEs Problems
• SMEs Public Policies

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Crisis, Recovery and Development of Argentinas
Economy
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New growth drivers for Argentina after the crisis
The 90s
After devaluation (2002)
More active role of The government
Convertibility Plan
Competitive Exchange rate
Twin Surpluses (fiscal and Commercial)
Fixed and Overvaluated Exchange rate
Markets liberalization
Economic crisis
Recovery and growth
Destruction of National Industry
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Growing after the Crisis
Overvaluated exchange rate
GDP Growth 9 per years in real terms
Source Ministry of Economy and Production.
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Solving the Problem of Unemployment Employees
for every millon of product
12.2
Source Ministry of Economy and Production
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Increasing investments to support growth
FGDI/GDP 22
Source Ministry of Economy and Production Note
Fixed Gross Domestic Investment (FGDI) in Dollars.
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Results of supporting a competitive exchange rate
of GDP
Source Ministry of Economy and Production.
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ArgentinasSMEs Overview
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Growth of SMEs Start-ups
Enterprises Start-ups
Source Ministry of Labor and Social Security
Note Almost all start-ups are of SMEs. Data is
of the Second Quarter of every year.
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Also there are closings...
Evolution of Start-ups and closings
50,000 new enterprises per year
Source Ministry of Labor and Social Security.
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The role of MiSMEs in Employment
Evolution of MiSMEs Employment
Between 2002 and 2005 MiSMEs Employment increased
47, whereas in big firms 22 in the same period.
MiSMEs 47
Source Ministry of Labor and Social Security.
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Dynamic SMEs exporters

• Exports of SMEs grew 57 during the last three
  years.

• There are 6,000 exporting SMEs and about 2,000
  more
• that are starting to export.

• It is possible to find different markets
• and production sectors.

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SMEs exports tendency
I Semester 2006 17
Millons of dollars
Source Ministry of Economy and Production.
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Credits for SMEs
Evolution of SMEs Debt Millons of Dollars
Source Central Bank of Argentina. Nota SMEs
loans of less than 1 millon are considered.
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Main Problems of SMEs in Argentina
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SMEs Problems

• Financing
• Bank restrictions
• High interest rate
• Limited Guarantees for loans
• Many SMEs are not registered
• Few developed capital market

Insufficent Investment
SMEs use their own resources to finance
investment
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Other SMEs Problems

• Lack-of qualified employees
• Weak relationship between entrepreneurs
• Lack-of professionalism
• Few resources for technology and innovation
• Low productivity
• Lack-of market information

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Public Polices for SMEs
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General Areas of Action
TRAINING and START-UPS
FINANCING
DEVELOPMENT OF DIFFERENT INDUSTRIES AND REGIONS
FOREIGN TRADE

• Support of
• the first export
• Exports groups
• Trade
• promotion

• Net Agencies
• Clusters
• SW Industry
• Promotion

• Subsidized
• Credits for
• MiSMEs
• Mutual
• Guarantees
• companies

• Tax benefits for
• employee training
• Subsidies for
• quality improvent
• Start-up
• Development
• Program

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Net of Development Agencies

• The Net of Development Agencies is formed by
  non-profit
• insitutions with public and private participation

• The Agencies objective is to promote the local
  economic
• development through the SEPYMEs program.

• The Net is an instrument to improve the relation
  between
• SMEs and the SEPYME.

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Net of Development Agencies

• Northwest
• 5 Agencies

• Northeast
• 9 Agencies

• Cuyo
• 7 Agencies

• Center
• 14 Agencies

• Patagonia
• 12 Agencies

• Buenos Aires
• 16 Agencies

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• Promote the integration of the production at
  regional levels through the strengthening of the
  relation between enterprises, Public sector, and
  research institutions

Objective
Means

• SEPYMEs Programs of Financial Aid (FONDER)
• Support and advice for the design of
• association projects

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The objective is to reduce financial cost of SMEs
loans by subsiding interest rates. Credits are
offered by banks.
Subsidized Rates Regime
The purpose is to offer long-term loans for SMEs
with low interest rates. Funds are provided by
the IDB.
Global Credits Program
Business companies facilitate financial access
to SMEs through guarantees.
Mutual Guarantee Companies (SGR)
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This Program finances investment in productive
development. Projects are evaluated by SEPYME.
The interest rate is variable.
National Fund for SMEs (FONAPYME)
Entrepreneurs can borrow money without
guarantees. Interest rates are low. Funds are
provided by the National Bank of Argentina.
National Fund for Micro-Enterprises (FOMICRO)
This Program provides subsidized credits for
clusters. Funds are provided by the National
Bank of Argentina.
National Fund for Regional Development (FONDER)
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Ministry of Economy and Production Secretariat of
Industry, Commerce and SMEs Undersecretariat of
Small and Medium Enterprises and Regional
Development
Muchas Gracias Thank you Evelin Goldstein