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Delhi trade declaration: Commonwealth leaves no-one behind

31 May 2017

From the heat of Africa to the humidity of India via the arid desert state of Qatar, Sekandi Abdul Karim has made a 3550-mile journey to Delhi. It is his third trip to India this year. The 49-year old entrepreneur from Kampala in Uganda flew the nine hours to the first India-Commonwealth Small and Medium Enterprises (SME) Trade Summit in search of new partnerships, new trade and new technologies. As the proprietor of Elgon Leather, he employs 75 skilled and unskilled staff in his private tanning and processing plant.

“What I have found out over the past two days is that the challenges faced by SMEs in Uganda, in India and other parts of the Commonwealth, are exactly the same,” Mr Abdul Karim said. “There is institutional disconnect between governments and private sector SME businesses. The regulatory policies, instead of helping and being a catalyst, are impediments to progress. The financing is another problem.”

These are not the only challenges he says he faces.

“The cost of doing business in Uganda is very, very high. Interest on dollar loans can range from 11 to 13 per cent. I also have a problem with skilled labour. Because I am a tanner I need people who can help me in the production area. I can’t get them easily. As I speak, I have three Indians in my tannery.”

The road blocks to trade for SMEs have been a focus of this inaugural summit. After hearing about the challenges being faced by SMEs at the high-level policy makers’ plenary session on the first day, organisers set up a working party. The group included policy makers, senior politicians and SMEs from across the Commonwealth, including Sekandi Abdul Hakim who spoke about his experiences of the global obstacles facing businesses like his.

Within hours, it came up with the ‘Delhi Declaration’, a set of ten practical points which the group hopes will help remove the challenges preventing smoother trade relations and opportunities.

The Indian Commonwealth Small Medium Enterprise Association (ICSA) will champion the proposal at the next Commonwealth trade ministers’ meeting and hopefully on to next April’s Commonwealth Heads of Government Meeting (CHOGM). But there are many hurdles to jump before that happens.

“If the declaration is adopted by CHOGM, it really gives the Commonwealth Secretariat the mandate to boost specifically cooperation among SMEs to increase intra-Commonwealth trade and investment,” said Dr Rashmi Banga, head of trade investment at the Secretariat. “We know that SMEs contribute to a country’s GDP (gross domestic product). They boost employment and lead to gender empowerment. So this declaration has the potential to link SMEs to regional and global value chains creating more trade within the Commonwealth family, leading to growth. That is one of the objectives of this declaration.”

The Federation of Indian Micro and Small and Medium Enterprises (FISME) was one of those who supported the need for a declaration. It has 750 SME associations, reaching five million enterprises.

“Now we are moving from just an idea to doing something together,” its secretary-general, Anil Bhardwaj said. “Currently the Commonwealth imports US$ 2 trillion but the intra-Commonwealth trade is barely 14 per cent, and that to only a handful of nations. The Commonwealth is trying to increase this to 25 per cent and all nations, small and large, developing and vulnerable, will have access to global markets, thanks to initiatives like this.”

The beauty of this idea is that progress, as a direct result of adopting the declaration, can be specifically measured through the new jobs created, money invested and growth in trade and partnerships intra-Commonwealth. Commonwealth Deputy-Secretary General, Deodat Maharaj believes the key to the declaration is that everyone in the Commonwealth family will benefit.

“This declaration doesn’t talk about just SMEs but micro-SMEs (MSME),” he said. “Everyone will have an opportunity to be linked. That means whether you’re a developing or developed country, whether you’re a small island state or whether you’re a vulnerable nation, you will not be left behind. The success of this summit is that we have concrete examples where we have managed to link micro-firms with people from other continents, including developed countries. This would never have happened had it not been for the India-Commonwealth summit in Delhi.”

With the 2017 summit over, thoughts have already begun for next year’s high-level meeting which will be hosted in Nairobi, Kenya. While she is pleased that there has been a start to cut trade obstacles, Usha Dwarka-Canabady, the Mauritius secretary of foreign affairs wants even more to help SME trade.

“Perhaps this is a start to something which can only get better. I hope by the time we reach Nairobi people will be bolder in their proposals and the outcomes we can take forward,” she said. “What we look forward to is a collective political will at the level of the Commonwealth. It’s not enough to have a 10 year action plan at a national level, you also need to see these MSMEs also have an opening internationally.”

The path to recognise the potential for better trade began two years ago. Research by the Secretariat suggested that India could increase its exports to developed and developing countries (LDC) by US$ 22 billion and market access to least developing countries (LDC) could rise by $12 billion by exploiting the global value chains. India’s micro, small and medium enterprises secretary, KK Jalan agrees more can still be achieved.

“There’s always scope for improvement. But India-Commonwealth summit will take the agenda forward. The declaration is important because for the first time it recognises the cooperation which is required between the SMEs and all the Commonwealth countries,” he said. “You see, what are we looking for in the various companies in the world today? Employment. And the MSMEs are the main employment providers in these countries.”

Sekandi Abdul Karim is hoping the declaration will have a smooth transition to next year’s CHOGM.

“This declaration means a lot to me,” he said. “If it succeeds then the future of my business will be bright. If the challenges I and other SMEs are facing are addressed by governments then it can only help us. SMEs contribute a lot to the economy, but I’m not sure governments realise that.”

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