The SME Challenge.ppt

May 05 The SME Challenge May 10th 2005 (Pakistan) Outline Why SME Why Now Business Model Citigroup SME Role of Government Conclusion Why SME? For The Banking System SME Represents A Large Growing Opportunity Emerging Markets Banking Revenue Estimated At Over $40Billion For Policy Makers – It Is A Means To Achieve High Employment Employs Over 50% Of Labour Force Even In The Developed World High Economic Growth 50-60% Share of GDP – Engine Of Economic Growth Culture Of Entrepreneurship Wider Tax Base Alleviation Of Poverty Why Now? Economic Liberalization (Last 15 Years) Declining Public Sector Role Privatization Of Power Sector, Oil Gas, Telecommunications Other Industries Emergence Of Private Enterprise As The Engine Of Growth Central Eastern Europe, China, India, Pakistan Increasing Regional Economic Cooperation ECC/EU, NAFTA A “Freer” Trade Environment Reducing Trade Barriers (Tariffs) Privatization Of Banks Entrepreneurial Performance Driven Management Increasing Product Sophistication Better Risk Management Improving Cost Management Operating Efficiency Banking Reforms Improvements In Legislation Legal Infrastructure To Protect Rights Of The Lenders What Is SME? Various Definitions Defined By Size Of Sales Or Number Of Employees Depends On Size Of Companies Relative To Economy EU Less Than 250 Employees Sales Of Eur 50Million Or Balance Sheet Of Eur 43Million Citigroup $2-$50 Million In Sales [Up To$250MM In Some Countries] Differentiating Features Owner/Family Managed Proprietorships, Partnerships Or Small Private Or Public Limited Companies Generally Suppliers To Larger Local Or Multinational Companies Low Capitalization Limited Financial Strength Needs A Mix Of Consumer Corporate Banking Products SME - A Hybrid? Business ModelThe Challenge Of Managing Scale Diversity Citigroup – Commercial Banking Role Of Government Governments As Information Provider - Statistics in Focus Statistical Databases Default History Ownership De