With 24 SMEs/1,000 inhabitants, half the EU average, Romania is still the prisoner of large companies, obsolete, state-run, hard-to-restructure companies, of multinationals bringing EUR150 billion annually into the economy (60% of the total revenue of the country’s business) and of decisions made outside the country. While entrepreneurship is said to be a priority for all the governments, it only is in official statements.
For six years, the domestic economy has been striving to go beyond 500,000 SMEs, unsuccessfully so far, and the target assumed by Ponta government, of 670,000 companies by 2020, remains an ambitious objective, with no concrete plan for its reaching.
With total budgets of EUR5 million annually, such as that of the SRL-D program, one cannot create and support a class of entrepreneurs already stifled by taxes and frequent legislative changes.
“It’s dust in the eyes,” says a young entrepreneur about the maximum EUR10,000 funding a start-up can benefit from in Romania.
The Romanian economy relies on the jobs created and the taxes paid to the state by a “small” business class made up of 470,000 SMEs (more than 99% of the firms operating in Romania) employing around 2.5 million people, more than half of the country’s number of employees.
Meanwhile, Portugal, the Netherlands, Estonia or Cyprus boast over 200 SMEs/1,000 inhabitants.
“An explanation for this would be Romania’s poor entrepreneurial culture. It is hard for Romania to compete with countries that have not had the communist experience and that have hundreds of years of capitalist tradition behind them,” believes Alexandru Medelean from PwC Romania.
In his opinion, what’s making Romania a weak entrepreneur “grower” include Romanians’ low risk appetite, the offer of well-paid jobs at multinationals for young graduates, the lack of capital and of funding mechanisms for start-ups, as well as the inadequacy of the academic curricula.
On the market, too few SMEs were created with money from the state, considering that programs such as the one for the setting up of a SRL-D (for young starters) got less money each year and the EUR5 million budget put up by the government is used up in less than 3 months and funds just 500 business ideas.
On the SME department’s website there are just two activity reports now, both signed by the former SME and tourism minister Maria Grapini. These show that programs destined to SMEs got just RON76 million (EUR17 million) in 2013 from the state budget.
Thus, it is hard to believe that the small business field is truly held as a priority by authorities.
The government’s ambition is to reach 36 companies/1,000 inhabitants in the next six years, namely 670,000 companies in the domestic economy. How this target can be reached in the context where, for instance, the budget for the SRL-D program was almost 50% smaller this year against that of 2012, and programs such as Kogalniceanu or “First Home” for SMEs were either halted or do not have remarkable results, remains a big question mark.
(English version by Catalina Apostoiu)