Policymakers need to create cohesive, holistic and conducive frameworks in order for entrepreneurs to flourish in a post COVID-19 world. This is among the key takeaways from the Global Entrepreneurship Monitor (GEM) Policy Impact Report sponsored by Shopify, a leading global commerce company that powers over one million businesses in more than 175 countries.
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In response to the pandemic, many national governments have focused on securing workplaces, assuring financial liquidity and incentivising business model modifications. Several broad themes emerged as principles policymakers should consider moving forward based on analysis provided by 54 GEM National Teams. These principles can best be summarised by the acronym CRISP:
- Clear and concise communication of policies so as many entrepreneurs as possible can benefit from policies.
- Resilience and responsibility in public policy that is conducive to creating new ventures and growth of existing companies. Resilience requires robustness in policymaking by adopting a holistic and multi-dimensional approach (such as GEM’s Entrepreneurial Framework Conditions diagnostic tool explained below). Responsibility entails adopting long-term thinking about policies (not limited by election timelines), and taking actions that are based on thorough analysis and data related to the needs of entrepreneurs and gaps in the entrepreneurial ecosystem. This is extremely important because policy decisions – even if they produce economic payoffs – can sometimes have unintended social and environmental side effects that are harmful.
- Innovating by deploying new processes, tools and practices that are used for policy design and development, which result in better problem solving of current and future issues facing society, and ultimately help entrepreneurs grasp opportunities.
- Simplifying policies so particularly new entrants from the informal sector will be able to navigate the new, formal business context.
- Preparation, as policymakers should spend time preparing for a potential – many say even likely – new wave of COVID-19.
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“Most of our 54 GEM National Teams point towards the continued urgent need for sufficiency and transparency in financial support mechanisms for entrepreneurs,” said Aileen Ionescu-Somers, GEM Executive Director and one of the co-editors of the report. “There needs to be a reduction in bureaucratic red tape. Among developing countries, it is important to ‘formalise’ informal entrepreneurship to ensure that numerous micro-entrepreneurs do not fall into poverty, perhaps permanently.”
The GEM model acknowledges that entrepreneurial activity does not take place in isolation. It is shaped by a set of social, cultural, political and economic contextual factors that are encapsulated in the nine pillars that go into the GEM Entrepreneurial Framework conditions. Every year, at least 36 experts from each GEM country assess whether these nine conditions are supporting new and growing businesses. In summary, these include:
- Access to entrepreneurial finance
- Government policy (including support, relevance, taxes and bureaucracy)
- Government entrepreneurship programmes
- Entrepreneurship education
- Research and development transfers
- Commercial and professional infrastructure
- Ease of entry
- Physical infrastructure
- Social and cultural norms
“As we move forward, policymakers need to ensure the liquidity of entrepreneurs so that they can pay ongoing operational costs,” said Anna Tarnawa, GEM Poland National Team Lead and co-editor of the report. “They also need to be thinking further down the road. How can they hardwire entrepreneurship conditions so that they are more generally conducive to entrepreneurs moving beyond an idea and into early stage entrepreneurship?”
We have witnessed some dramatic consumer behaviour change and business shifts that show us that some changes are definitely here to stay.
“The pandemic showed us that some entrepreneurs have the resources to be resilient and thrive, while others have seen their existing challenges and barriers accelerate and exacerbated, further restricting their chances of success, said Clark Rabbior, Head of Government Relations at Shopify. “It’s crucial that policymakers build an environment that supports and encourages entrepreneurship to ensure the world’s economy includes more voices, not fewer.”
Note for Media
As part of the Policy Impact Report, many of the GEM National Teams shared the similarities and differences to how their government’s response to COVID-19 compared to previous crises, such as national catastrophes, the Global Financial Crisis and other events. In addition, they provided insights on how COVID-19 has impacted entrepreneurs, the results of immediate policy interventions and the entrepreneurship policy outlook moving forward.
We would be pleased to arrange interviews with experts from the following 54 economies: Argentina, Armenia, Australia, Austria, Belarus, Belgium, Brazil, Bulgaria, Burkina Faso, Canada, Chile, China, Colombia, Croatia, Cyprus, Ecuador, Germany, Greece, Guatemala, Indonesia, Iran, Ireland, Italy, Japan, Kazakhstan, Kuwait, Madagascar, Mexico, Morocco, Mozambique, Norway, Oman, Pakistan, Panama, Peru, Poland, Portugal, Puerto Rico, Qatar, Saudi Arabia, Slovak Republic, Slovenia, South Korea, Spain, Sudan, Sweden, Switzerland, Taiwan, Thailand, Togo, Turkey, United Arab Emirates, United Kingdom and the United States.
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