Boyko Takov is an Executive Director of Bulgarian SME Promotion Agency part of the Bulgarian Ministry of Economy. He is an Assistant Professor at the University of National and World Economy and Higher School of Insurance and Finance. He is also Board Member of The International Network for Small and Medium Enterprises (INSME) and Head of Bulgarian National Contact Point for the OECD Guidelines for Multinational Enterprises. He gave an exclusive interview for Novinite.com on the topic of SMEs and their importance in Bulgaria’s economy.
Mr. Takov, your annual analysis of the state of SMEs (small and medium-sized enterprises) in Bulgaria has recently been published, what is your opinion?
I would say that SMEs are in a good shape. I will share with you some conclusions and facts from our annual analysis of the state of SMEs in Bulgaria. Nearly 75% of the employed in the economy work in SMEs, which is a trend without significant change over the years. It can be noted here that SMEs are more vulnerable given the various crises we are going through. The decline in employment in 2020 is more distinct precisely with them. After the decline of nearly 20% in 2020 of newly registered companies, now in 2021, there is an increase in newly established companies.
Speaking of export, after the decline in 2020, now in 2021, according to preliminary data, we have not only caught up, but we have even shown better results than 2019, which was one of the years with the highest levels ever. It should be noted here that SMEs are responsible for approximately 50% of the value of exports, which has also remained a trend over the years. SMEs dominate in imports, with 60% of their value being due to small and medium-sized enterprises.
All these facts show once again the importance of SMEs, as special attention should be given to the fact that over 90% of them are Micro-enterprises. Undoubtedly, SMEs are more flexible and can adjust more quickly to a crisis, which helps the whole economy, given that about 98% of it is composed of SMEs.
What are the most serious challenges facing SMEs in the current situation?
What we are seeing, and I would say is general between companies, is that they need working capital. Other obvious difficulties for SMEs are the lack of sufficient staff, including qualified workers, supply difficulties due to restrictions on international trade and the free movement of goods, and the cancellation of customer orders.
Of course, finding new partners and entering new markets is a real challenge, given all the restrictions imposed by COVID 19. I would add a few more challenges that inevitably face SMEs, such as all aspects of digitalization, cybersecurity, the transition to a circular economy, marketing skills, branding. A challenge for Bulgarian SMEs is the opportunity to join the supply chains, specifically the ones already broken, and not only that, many of them are currently being built.
In this line of thought, what will the SME Agency do regarding such challenges?
We have planned many initiatives in the different directions listed above, but in general, they are in the field of trainings, business awareness of various opportunities, upgrading the skills of managers and employees in SMEs. In general, softer measures, which are very important in these dynamic times and which, in combination with investment ones, are the right way to develop SMEs. Unfortunately, in the past two years, due to the pandemic, a lot of funds that had to go along different lines in investing and upgrading companies were used for liquidity assistance. As an Agency, we have a focus on the internationalization of SMEs and will continue to work in this direction and to support them, as this is an opportunity for the growth of our economy.
What trends do you notice worldwide?
Economies are growing, exports are also rising, inflation will slowly begin to fall, and unemployment levels will also be lower. Of course, COVID 19 will continue to be the biggest risk to the global economy. In this context, online trade will continue to grow, and working home office for the companies will also remain a lasting trend, where possible, of course. Office spaces will be more flexible, allowing employees to choose how and where to work, which will give opportunities for collaboration and will increase productivity. Future workplaces will put additional emphasis on sustainability and the adoption of smart technologies to improve employees’ physical and mental health. Supply chains will increasingly recover, but with logistics pressures, and also shortening them will also remain a trend. Companies will invest more and more in solutions related to green transformation and sustainable living. Anything as a service or so-called XaaS will increasingly enter among SMEs, and their usefulness is yet to be assessed by the companies in our country.
And finally, you hosted the 17th annual meeting of INSME and became a member of the board of the organization, what happened and what’s next?
The International Network for Small and Medium Enterprises is a great platform for exchanging experiences, sharing good practices and partnerships between its members. INSME’s mission is to bring together international policymakers, intermediaries, practitioners, researchers, and their networks working in the fields of innovation, technology transfer, and entrepreneurship. Working under the auspices of the OECD provides a great opportunity to share important information and trends in the development of economies and companies in particular. This is the place to thank the President of the organization, Mr. Sergio Arzeni, the General Secretary, Mr. Giovanni Zazzerini, and the entire team and board for the honor and trust I have been given. I can share one of the first steps is in the direction of supporting Bulgarian SMEs is a training and mentoring program EXPO 2, part of the Export Hub Bulgaria, where proven specialists from the INSME network will share their experience and contacts for 15 Bulgarian companies in finding new international markets. The program starts in January and after its quarterly duration, we will be able to share concrete results. Otherwise, the Agency and I intend to be active members of this international network, to take and share experience with colleagues and, of course, together to contribute to the active support of SMEs.