CM July and August 2023 digital

SMEs abandon
international expansion plans
EU PREPARING SANCTIONS
THE European Union is preparing a new
round of sanctions against Russia that
will target companies and countries that
are considered to be helping Russia evade
restrictions placed upon it by the bloc in
February 2022.
This is a new move for the EU since it
requires the application of extraterritoriality,
a contested legal principle that allows a
governmental body to sanction entities
that fall outside its jurisdiction. It’s aimed
at preventing sanctions from being
circumvented while preventing goods that
have been banned from being exported to
Russia.
The EU is bothered that EU-made goods
are going to countries in the South Caucasus
and Central Asian regions for re-routing to
Russia. China, Iran and Turkey are firmly
in the sights of Brussels. Firms fearing EU
intervention and subsequent retaliation
should be careful who they export to.
ACCORDING to the SME Empowerment
Report from currency firm HedgeFlows,
SMEs are halting plans to expand. The
report is based on a survey which asked
industry leaders about their plans for
expansion, ambitions for the year ahead,
and concerns around the economy.
The report found that resources and
training were a barrier to international
trade. 68 percent reckoned that
their businesses lack the technical
infrastructure to operate overseas, and
72 percent said that they were unable to
manage foreign payments. Further, 65
percent said that they lacked the financial
expertise to open an office overseas.
Owners want their bank to do more to
help; 72 percent felt that transfer fees were
too high and should be reduced for SMEs.
Of course, reports and surveys can be
written to prove almost anything, but if
this survey is correct, the Government
should be worried.
Destination Ethiopia?
COULD Ethiopia be the next African
business destination? Reuters has noted
that Ethiopia is to issue up to five banking
licenses to foreign investors in the next
five years as part of plans to open up
the financial services sector to foreign
competition. This follows prime minister
Abiy Ahmed’s promise to open up sectors
previously controlled by state firms to
help drive foreign investment inflows and
economic growth.
Currently, Ethiopia's banking industry
is dominated by state-owned Commercial
Bank of Ethiopia, and 29 other players, all
of them locally owned.
It’s planned that foreign investors would
be to enter the industry via joint ventures
with domestic players or establishing local
subsidiaries.
Reuters says that foreign investors have
‘long eyed sectors including banking,
telecoms, transportation and aviation in
Ethiopia.’ The country has more than 100m
people and one of the biggest economies
in Sub-Saharan Africa. Two years ago, the
Government granted a telecoms licence to
a private operator to break the monopoly of
state-owned Ethio Telecom in that sector.
Colombia moves away from oil
A report in MoneyWeek noted that
Colombia wants to wean itself off oil and
mining to cut its current account deficit;
the Government wants instead to focus
on restoring other industries, such as
textiles, fertilisers, and pharmaceuticals
manufacturing. The country is very
interested in foreign investment, but in
industry as opposed to oil and coal.
GDP growth reached 7.5 percent last year
in Latin America’s fourth-largest economy
but has since slowed, while annual
inflation is running at 13 percent.
There’s more, in other words, to Colombia
than oil, mining, and dare I say it, illegal
drugs.
BAE SYSTEMS ON TARGET
AN ‘elevated global threat environment’
has meant that BAE Systems should
meet its targets for the year. Its progress
has been helped with a contract
extension to develop fighter aircraft
technology worth £656m.
BAE reckons that it should achieve an
increase in sales of up to five percent in
2023, ahead of the £23.3bn it brought in
last year.
The company has signed £2bn of
orders in its first quarter and was
selected by the US Navy to be a supplier
on a ten-year contract worth $4.1bn.
Also, it was awarded a contract from
the Ministry of Defence to work on the
Tempest aircraft due to enter service
with the Royal Air Force in 2035. The
programme is expected to span decades.
GOOD NEWS FOR
DEFENCE EXPORTS
THE Government has reported that the UK
and Poland have signed a £1.9bn export
agreement to install a British air defence
system across Poland.
Under it, MBDA will provide Poland with
‘cutting-edge, ground-based-air-defence
capabilities that will protect the country
for generations to come.’
The deal is one of the largest bilateral
European air defence deals of its kind in
NATO and is the culmination of months
of close collaboration between the UK
and Poland as the UK equips 22 Polish
air defence batteries with UK Common
Anti-Air Modular Missiles (CAMMs) and
launchers, under a programme called
PILICA+.
Brave | Curious | Resilient / www.cicm.com / July & August 2023 / PAGE 33
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