RESOLUTION(1)

on the significance of small and medium-sized enterprises for sustainable development in the ACP countries

The ACP-EU Joint Assembly,

- meeting in Strasbourg (France) from 29 March to 1 April 1999,

- having regard to its previous resolutions on economic, social, industrial and sustainable development, the significance of microloans, the role of women in the economy and the importance of the private sector,

- having regard to the Fourth Lomé Convention as amended on 4 November 1997 in Mauritius,

- having regard to the negotiating guidelines for a new ACP-EU Convention adopted by the Council of the European Union on 30 June 1998 and to the ACP negotiating mandate adopted on 30 September 1998,

- having regard to the results to date of the negotiations on a new partnership agreement, particularly the conclusions of the ACP-EU ministerial conference in Dakar on 8 and 9 February 1999,

- having regard to the communication from the Commission to the Council and the European Parliament (COM(1998)667) on a "European Community strategy for private sector development in ACP countries",

- having regard to the communication from the Commission to the Council and the European Parliament (COM(1998)527) on "microfinance and poverty reduction",

- having regard to Council Regulation (EC) No 1658/98 of 17 July 1998 on co-financing operations with European non-governmental development organisation (NGOs) in fields of interest to the developing countries,

- having regard to Council Regulation (EC) No 2836/98 of 22 December 1998 on integrating gender issues in development cooperation,

- having regard to the study of small and medium-sized enterprises, technology and development, a working document for the STOA Panel of the European Parliament, PE 167.795 (Draft Final Study), February 1999,

A. whereas two of the main challenges to be taken up under the next ACP-EU Convention are the smooth integration of the ACP countries into the world economy and the integration of poor people into the social and economic life of their country,

B. whereas, in this connection, the private sector has a decisive role to play as a driving force behind growth, social and economic development and the fight against poverty in the ACP countries,

C. whereas the creation of a stable political, institutional, economic and legal environment is a necessary (though not a sufficient) condition for the development of SMEs and micro-enterprises, which are subject to constraints of their own,

D. whereas, while using little capital, SMEs contribute substantially to job creation,

E. whereas SMEs are an important source of technological innovation and adaptation of technologies to the local situation and play a particularly significant role in training staff,

F. having regard to the objectives of development cooperation under the Fourth Lomé Convention, through the numerous national and regional indicative programmes, as regards promoting the private sector:

- to create jobs by promoting SMEs,

- to combat poverty in the informal sector by supporting microenterprises and

- to increase exports by promoting trade,

G. whereas, in the ACP countries, the private sector is dominated by small and medium-sized enterprises (SMEs) and micro-enterprises (merchants, traders, craftsmen, etc.),

H. whereas small-scale and micro-enterprises (often family-based) employ almost 80% of the labour force in the ACP countries and represent, for the most disadvantaged sections of society and for women in particular, a means of acquiring an income and social status,

I. whereas, in comparison with large enterprises, SMEs possess far greater potential for wider geographical supply, facilitating more balanced economic and industrial development,

J. whereas small and micro enterprises have lower initial costs and hence lower administrative costs, which makes it easier for people to set up enterprises who would otherwise be excluded from economic development, such as women and those without property,

K. whereas securing access to credit from major commercial banks is one of the biggest obstacles to the setting up and subsequent development of micro-enterprises in the informal sector and also (to a significant extent) to the development of SMEs,

L. whereas the STOA Panel study of small and medium-sized enterprises, technology and development found that support for SMEs is still defective, mainly because of excessively complicated administrative procedures, difficulties with local intermediaries, lack of information, inadequate transparency and politicisation of fund allocation, poor coordination between EU programmes and those of national and international agencies promoting SMEs, inadequate utilisation of local expertise and inadequate coordination between technical and economic development projects,

1. Emphasises the fact that SMEs and micro-enterprises represent the most substantial source of employment in the economies of the ACP countries and that they make a decisive contribution to the poverty alleviation strategies implemented in those countries;

2. Considers it essential, therefore, for appropriate conditions to be created in order to encourage private initiative (including small-scale private initiative) and to promote the emergence of a dense, dynamic fabric of active SMEs and micro-enterprises which generate jobs and income, including for the poorest people and for women;

3. Welcomes therefore the fact that the negotiations on a new ACP-EU partnership agreement indicate that the central role of the private sector and the significant role played by small and medium-sized enterprises in the development process are now fully acknowledged;

4. Welcomes the Commission's decision to draw up a comprehensive strategy for EU funding of measures to develop the private sector in ACP countries, which is intended to apply not only to programmes relating specifically to the private sector but to all EDF-financed measures which involve the private sector;

5. Stresses the need, by means of financial cooperation between the ACP and EU, to provide operators in the informal economy and small and medium-sized enterprises with the requisite resources and, in so doing, to assign priority to granting small and micro loans to the poor;

6. Calls in particular on the Union to introduce means of supporting the creation and development of micro-financing institutions in the ACP countries in association with the formal banking sector in order to provide a smooth transition when businesses' financial requirements grow;

7. Calls on the Governments of the ACP countries, at political level, to create the right conditions for democracy, good governance, respect for human rights and the rule of law, in order to increase the trustworthiness of State institutions, guarantee social stability and foster a climate favourable to investment;

8. Calls on the ACP countries to create a macroeconomic and regulatory framework which makes possible competitive, open and integrated markets for goods, services, labour and capital and thereby promotes the operations of SMEs and the confidence of foreign businesses in the stability of the local situation;

9. Considers that the European Union should provide greater support for the efforts made by the ACP countries to create conditions which are favourable to investment and do not harm the environment or infringe social rights, particularly as regards child labour and health and safety in the workplace;

10. Hopes that all the available instruments (in particular those of the EIB and the IDB), will be mobilised in order to encourage investment and partnerships between European SMEs and SMEs established in the ACP countries, including in the form of joint ventures;

11. Recognises, in this connection, the need to support the establishment and the strengthening of the capacities of liaison bodies such as the ACP countries' chambers of commerce or trade associations, so as to enable projects to be identified and information to be disseminated among businesses;

12. Welcomes the creation of the Association of the ACP National Chambers of Commerce, Industry and Other Economic Operators and considers it essential that this initiative should be supported in order to make a meaningful contribution to ACP-EU development cooperation and accelerate the full participation of the ACP private sector in the economic and social development of their countries;

13. Urges the Commission to allocate resources, as a matter of urgency, to the Association's Network Project, which includes the "Business Initiative for Women" training component, and to report on the progress made in this endeavour at the next meeting of the ACP-EU Joint Assembly;

14. Stresses that in order for enterprise to flourish, a reliable and effective infrastructure is needed, including roads, telecommunications, electricity and water supplies;

15. Calls on the Governments of the ACP countries, by means of the education and training system and by providing social services in the fields of public health and security, to generate the necessary human resources which are the basic precondition for the supply of skilled labour and which are among the most important considerations in business location decisions;

16. Stresses once again in this connection that special importance must be attached to the role of the State in ensuring equal access to primary education for boys and girls and thus improving the status and opportunities of women;

17. Instructs its Co-Presidents to forward this resolution to the ACP-EU Council, the Commission, the EIB, the IDB, the Economic and Social Committee and the Association of National Chambers of Commerce and Industry of the ACP countries.

(1) Adopted by the ACP-EU Joint Assembly on 1 April 1999 in Strasbourg (France).