I was pleased to address the 1st Global Street Economy & Street Vendors Conference at the Valletta campus of the University of Malta this week. The event was a unique international collaboration between Giresun University of Turkey and Malta University. Several scholars, from many fields, were invited to attend, along with business, academic, cultural and political leaders. It is intended to form a global alliance dedicated to rethinking and integrating street economy issues into management practice, education and development.
It gave me time to delve into the economic challenges and opportunities of our island-region within the wider spectrum of national economic performance and beyond. The ‘street economy’ encourages self-sufficiency on a regional basis and advocates renewable energy. It also promotes the region as an economic unit with a lower reliance on imports. Buying locally matters, because it keeps wealth and jobs flowing within the community and revitalises the local economy.
Local businesses
A growing body of research is proving that small-scale, locally-owned businesses are important community assets, creating more prosperous, entrepreneurial, connected and generally better-off communities. In particular, local businesses recirculate a larger proportion of every euro in the local economy, as they create locally-owned supply chains and invest in their employees. Buying locally reduces the fuel necessary to acquire goods, reducing the carbon footprint and ensuring fresh produce. In addition, a community’s level of social capital, civic engagement and general well-being is positively related to the proportion of its economy that is held by local businesses.
In order to ensure the sustainability – as well as gain the benefits – of the street economy, regions must continuously work to invest in and improve the things that will attract people, along with their ideas and investment, to live there, work there, raise their families and build long-term, rewarding careers there. Successful local businesses – mainly small and micro firms – allow owners to remain in place and generate opportunities for inward migration and more opportunities for other entrepreneurs.
A diversity of businesses becomes the soil from which the next step is to grow a critical mass in a certain area, based on identified strengths and resources. To this end, initiatives and grants provided by governments are advocated to support the street economy. The market failures typically faced by local businesses and prospective entrepreneurs are addressed to better enable them to develop economic activity and create jobs, based on the fact that strong local communities contribute to the national economy.
Gozo’s insularity
The concept of the street economy is applicable to the island of Gozo which is the smaller of the two islands which comprise the Maltese territory. Gozo has a land area that is 25 per cent of the mainland and yet is home to around seven per cent of the population. Gozo’s insularity and peripherality distinguish it from Malta mainly due to its smaller size and relatively smaller-scale economic development. Micro firms are disproportionately the predominant form of business in Gozo, accounting for over 96 per cent of all businesses.
Despite the large influx of foreign workers in Malta – which has had some spill-over effect on the island region, micro firms in Gozo still encounter certain barriers in order to grow and gain access to higher value-added activities.
The promotion of the street economy is consistent to the socio-economic development of the Maltese archipelago with a number of provisions in the European Treaty, and is consistent with the spirit of accession negotiations, particularly with respect to overcoming the specific double insularity handicaps faced by Gozo.
Development and innovation
The need for policy to focus on Gozo in the overall development needs of Malta is justified on the basis of the indispensable contribution provided by Gozo to the national economy as well as its positive economic growth and well-educated labour force. This indicates that Gozo is not a region to be abandoned but one that requires policy actions to support the growth of micro and small business, facilitate employment, improve residential attractiveness in the territory and develop innovative approaches towards the sustainable development of the island region.
Gozo has its own success story when it comes to promoting the ‘street economy’. Efforts have been made, through investment in resources and talent within small and micro businesses, to ensure sustainable and inclusive growth. On the basis of a clear vision, the Government has provided a number of pro-active measures and has embarked on projects to attract investment in Gozo. These include more preferential tax credits to undertakings in Gozo under the Micro Invest scheme to encourage them to invest in their business, innovate, expand and develop their operations and the implementation of a new jobs scheme which provides fiscal incentives to employers when recruiting new workers.
A Malta Enterprise Office has been established in Gozo aiming to bring business incentives closer to where they are most needed. Initiatives are also in place to encourage all-year round visitors with diversified interests. Various projects have also been implemented which are in line with the ‘Street economy’. Amongst these one may mention the hubs in the Xewkija industrial estate aimed at SMEs, start-ups and the digital economy, the approval of the alternative fibre optic cable to ensure that Gozo is never cut off the grid as well as the restoration of the Citadel and works in the Gozo Museum, ports, beaches, roads and village squares - just to mention a few.
Building on success
The Gozo success story must be extended further, and there is more in the pipeline to sustain and support the restructuring of existing businesses as well as attract new small and micro business that has a strong strategic fit with Gozo’s development model. To this end, there are plans to materialise in the future covering physical, human and environmental capital in a context where framework conditions are improved.
Some examples include the enhancement of national business schemes for Gozo, incentivised training for the self-employed, the provision of office space and business incubation as well as further promoting start-ups and the show-casing of business angles. The creation of an ICT media platform is envisaged to promote the various aspects of the Gozitan lifestyle that can serve as bases for sustainable development, by enabling access to business, governance and non-government organisations to media resources in an organised set up, while in itself creating ‘new economy’ activity in Gozo.
During the past five years, the Government’s annual budgets have focused on the requirements of Gozitan business and this is the route we will follow, with the Gozo Ministry constantly consulting local entrepreneurs and raising our expectations on the national agenda.
Sustainability and competitiveness
Last but not least, the contribution of Gozitan agriculture to the Gozitan culinary tradition, its evolution and future sustainability, is also recognised. Incentives to enhance the creation of value between Gozitan agricultural producers and food-sellers as well as producers by valorising the quality of food produced using ingredients from Gozo are envisaged. These aim to improve cost competitiveness and stimulate innovation in production, which are considered to be vital for sustainable development.
It is an accepted fact that the resilience and business acumen of Gozitan businesses can ensure genuine products for the local market and can reach out to wider markets, as has already been the case with several Gozitan producers.
In my speech at the Global Street Economy Conference this week, I reiterated that the Government recognises that a sustainable ‘street economy’ ensures that the community is not only consulted but is also involved in decision-making. This is the foundation on which the ‘street economy’ concept in Gozo is based. The Government looks forward to working further to build on this solid foundation and to strengthen it in the years to come.