PKF is organising a conference on the topic of entrepreneurship as a vital link to creating more business start-ups at the Westin Hotel on 6 July. Both Finance Minister Tonio Fenech and Education Minister Dolores Cristina have been invited to address participants.

This event marks the introduction into Malta’s laws of the Small Business Act (SBA), which was spear-headed by parliamentary secretary Dr Jason Azzopardi. One may well query the relevance of helping small businesses, when the concept of ‘Think Small First ‘has never taken root in Malta. Some say it is because of this that small and medium-sized entities employing fewer than 250 people tend to be seen as the Cinderellas of the business community. Starting from politicians and ending with banks, one hardly sees any effort to praise the uphill efforts of such entities – who strive to survive and bring home the bacon for so many families. But this is not exclusive to Malta, because in the UK last year a report prepared by the Federation of Small Business entitled Made in the UK, found that only just under a quarter of its members export their goods or services overseas. The are two main reasons for such a dismal performance. The first is a lack of knowledge about overseas trade and the range of support available. The other problem is, guess what, the difficulties experienced trying to access trade finance and/or export credit insurance.

Despite repeated commitments by the UK Government and major banks, securing affordable finance remains a considerable challenge for many SMEs in Britain. Quoting another example ,the most recent Scottish Government’s Access to Finance survey, published in March, found that overall levels of lending to Scottish SMEs was lower in November 2010 than in 2009, with more firms being rejected outright for finance than in previous years. Can you blame small businesses for not venturing into new exports when perceptions on the higher cost of credit have taken root?

It is reported in the UK that nearly 40 per cent of firms complain that the cost of new finance has risen compared to a year ago. In addition, evidence from the Bank of England shows that overall net lending to UK businesses remains negative, with net lending in April 2011 2.1 per cent down over the year. Back to Malta, and we find that courageous attempts have been made by various governments to offer aid packages. Officially, there are six types of incentive on offer by Malta Enterprise to assist growth. These are divided into: access to finance, investment aid, SME development, R & D and Innovation and Enterprise support. On paper, such incentives should act as a catalyst for more exports and, if properly administered, such aid can go a long way towards alleviating the problems faced by start-ups. The truth is, however, that most incentives are coated in bureaucracy and come with endless form-filling which, in the short term, scares away both investors and entrepreneurs alike.

So why the fuss now about helping the small business sector and encouraging more entrepreneurs? The answer is simple: post-recession, one needs more entrepreneurs to foster new business ventures, in both the eyes of the individual entrepreneur and corporate venturing. It is a shame when we see that growth is slowing down, particularly in the micro enterprises sector.

Critics also argue that not enough is done by the administration for the continued revitalisation of the field of entrepreneurship. In simple terms, this can be fostered through examining opportunities for assistance in issues covering technological change through globalisation, plus enhanced competition. Building massive colleges and new campuses makes political headlines but in practice this type of expenditure may not be the right approach to remove the high 37 per cent rate of early school leavers. Perhaps better inter-organisational cooperation with MCAST and the other colleges is the solution.

As well as guiding students/apprentices to new promising careers, it is to be hoped that the introduction of the SBA will result in more attention being given to the transformational role of entrepreneurship. Studies in Malta reveal that, since attaining independence, scant opportunity has been given by government agencies to rewarding initiatives that foster the emergence of new business ventures. Seen through the eyes of the individual entrepreneur, the rate of successful start-ups is not encouraging. It goes without saying that a fall in the number of start-ups is the result of a lack of incentives, coupled with most attempts being bogged down in bureaucracy amid endless form-filling and the demand for excessive collateral on the part of banks.

Reality shows us that more needs to be done. For a start, we seriously lack university-sponsored entrepreneurship schemes inculcating a sustained culture to focus more attention to the transformational role of entrepreneurship itself. This is easier said than done and there is no doubt that parliamentary secretary Dr Azzopardi faces an uphill climb to persuade ministers to allocate more resources on implementing the SBA legislation. On paper, the SBA introduces a sublime concept with the establishment of a College of Regulators, to actively streamline any overlapping or ‘gold-plating’ of EU laws that accumulate over the years (often the work of overzealous legislators).

Is this a pipe dream that will remain just that, or is it an illusion in daylight consciousness so poignantly depicted in the writings by the French philosopher Descartes? The bitter truth is that in a post-recession period, we must be more vigilant when it comes to exploiting our entrepreneurial potential, particularly amongst women – where we lag behind the EU and USA averages in both business start-ups and self-employment. It is a pity that, compared with men, fewer women are self-employed, fewer women start up businesses or have the ambition to do so, even though the number of graduates coming out of MCAST and university is equally divided among male and female.

Naturally, the Education Minister faces a gigantic challenge to instil a culture of entrepreneurship in young students, while offering a coherent framework in business schools to help potential entrepreneurs realise their business goals. In passing, it is a relief to hear that since 2008, when our economy entered into recession, we have improved our performance. However, grey clouds still linger over the horizons of other EU states that buy our products. Only recently, the Central Bank reported in its quarterly review that consumer confidence plunged to a record low of -41 in the first quarter. Respondents were also more pessimistic about their ability to save and about job prospects. The decline in sentiment was fairly spread across most occupational segments. There has been no improvement in industrial confidence and this is not a good omen, particularly for small businesses that depend so much on the domestic market.

We are not alone when it comes to suffering from a fall in consumer confidence. In fact, it may be no small comfort to know that consumer confidence has plummeted in the UK, as can be seen from the latest GDP statistics which show that UK household consumption was down 0.6 per cent in the first quarter of 2011, following a fall of 0.3 per cent in the last quarter of 2010. Moreover, recent consumer surveys show continued depressed consumer confidence across the UK, no doubt affected by the increase in VAT and the pick up in inflation. Another factor was poor job security, which has lowered confidence, and which in itself is a significant drag on consumer spending. Indeed, while countries such as Italy, Portugal, Greece and the UK struggle with job losses in the public sector, civil servants in Malta can find new vacancies, particularly in the professional grades. Ironically, they enjoy a golden opportunity to become the new public entrepreneurs who meet the dual demands of serving citizens and containing costs. If achieved, this will directly help SMEs by releasing more funds for initiatives aimed at targeting new ventures.

To conclude, PKF has organised the conference, with the help of sponsors, in the hope that it will lead to a wide-ranging discussion on the above-mentioned topics associated with entrepreneurship. Yes, it is about the long and winding road which Dr Azzopardi, as the anointed shepherd of SMEs, has to face in the years to come. His task is arduous and he will need all the cooperation he can muster from his Cabinet colleagues, the unions, educators and the business community in general. We wish him well.

For more information about the conference, prospective participants can call Audrey-Ann Cassingena on 2748 4375, or email [email protected]

The writer is a partner in audit

and business advisory firm PKFMALTA.

[email protected]