Unleashing Latin America’s entrepreneurial spirit

In 2012, poverty in Latin America fell to a 30-year low and over the past decade 35 million additional jobs have been created, while women’s share of the labour force has grown steadily. This is a cause for celebration.

The countries where these changes have been most profound – Chile, Peru, Colombia, Brazil, Panama and Mexico – are those which recognize the power of entrepreneurialism, creating an environment in which business can grow. This demonstrates that the interests of responsible business are aligned with those of society. Where there is rule of law, good governance, effective public services, and free and fair trade, society benefits, providing an environment where investment is safe and business can thrive.

One way in which economic and social progress can be advanced is by strengthening small and microenterprises across the region. Small and microbusinesses are critical to economic growth – they play an entrepreneurial role in meeting the needs of local consumers and larger businesses, drive improvements in innovation and often play a key role within communities. More importantly, they create local jobs and incomes, lift people out of poverty and give greater economic empowerment to women.

According to the Global Entrepreneurship Monitor, Latin American countries have a high potential for generating competitiveness and well-being through the creation of new enterprises. Some of the most entrepreneurial societies in the world are in Latin America, including Colombia, Peru and Panama. World Bank data suggests that, on average, 1.31 new firms are registered every year per 1,000 people in Latin American countries, compared to four in high-income countries.

One of the missing elements for entrepreneurship to unleash its potential in Latin America is the lack of venture capital and entrepreneurial support networks beyond the family circle. Creating dynamic, resilient growth in small businesses requires more than simply offering start-up grants or seed funding. What is needed is an ecosystem approach to supporting entrepreneurship, which includes networks that provide capacity building, mentoring, and access to funds and markets.

For example, in Colombia, Peru and other parts of Latin America, we are partnering with financial institutions to provide access to credit for shopkeepers to help strengthen their businesses and increase their revenues. In Colombia, more than 4,000 shopkeepers have benefited in two years with US$ 6 million made available in microcredit financing. Based on this experience, we have decided to replicate and expand the programme to benefit 40,000 shopkeepers across six Latin American countries, benefitting close to 2 million people in total. Shopkeepers will have the opportunity to develop their skills and competencies to improve the sustainability of their businesses, the quality of life of their families, and contribute to improving the welfare and development of their communities.

We have seen how the region’s entrepreneurial spirit can, and should be, harnessed to create sustainable, equitable economic growth for the benefit of communities and societies. I would urge those participating in the World Economic Forum on Latin America in Lima, Peru, to ensure progress continues to be made by continuing to reinforce the rule of law and good governance. In short, to build and sustain the frameworks in which business can securely invest, enabling societies to succeed.

Author: Graham Mackay is Chairman of SABMiller and will be participating in the World Economic Forum on Latin America 2013

Image: A canopy is erected in the construction site of the Interoceanic Highway connecting the Pacific Ocean in Peru and the Atlantic Ocean in Brazil REUTERS/Mariana Bazo