Limited funding holds back the full potential of Syrian SMEs in Turkey

Syrian entrepreneurship has untapped potential in Turkey, the country hosting the largest number of refugees from the war-torn country; However, there are several challenges facing Syrian small and medium-sized enterprises (SMEs), according to a recent review by a non-governmental organization (NGO).

Spark, an international NGO, organized a virtual conference funded by the European Union on the topic entitled “Job Creation in Turkey: Access to Finance for Syrian and Turkish SMEs”.

During the event, the urgent need of Syrian and Turkish SMEs in Turkey to increase their access to finance to develop further while creating jobs was addressed.

Based on research conducted using online questionnaires and face-to-face interviews, the main issues expressed by SMEs at all levels regarding banking and financial services were developed at the conference, which took place. presented such challenges for the first time.

Syrian SMEs have substantial growth potential, according to the report, but there are structural challenges. Their temporary protection status, for example, leads to restrictions such as limitations on their free movement. In addition, other challenges include the language barrier, a lack of knowledge of the Turkish economic system and difficulties in registering their businesses and employees.

About 30% of Syrian companies surveyed are startups, while 70% are classified as SMEs with less than 100 workers. Among all the companies surveyed, 80% of the companies are micro-enterprises, 18% are small enterprises and only 2% are medium-sized enterprises according to the number of workers.

About 40% of them operate in the food and retail sector, while 20% in wholesale trade, 20% in textile and clothing manufacturing, 10% in food services. education and 10% in other sectors.

Although some companies started operating right after 2011, when war broke out and they started pouring into neighboring Turkey, most of the companies were established between 2016 and 2017.

Responses given to the online questionnaire and those obtained in face-to-face interviews revealed that almost all of them target the local market – for Syrian consumers only – and only 30% say they target the local market. export markets in addition to local markets. And although 90% of Syrian SMEs plan to stay in the country and expand their business if financial resources are provided and more space for their businesses becomes available, currently only 70% are registered in accordance with the requirements of human rights law. Turkish business.

Access to financing

Regarding the problems of access to financing, for some, it starts from very basic requirements such as opening a bank account to acquire a credit card or transfer money.

The report points out that it seems almost impossible for a Syrian under temporary protection status to obtain a bank loan, leading him to turn to informal loans from family or friends.

On the banking side, Syrian SMEs are largely overlooked as they are small and risky for the lender as they lack credibility, are unregistered, or operate with an unregistered employee.

One of the most significant points, however, from a banking perspective, is that they originate from a country subject to sanctions and are likely to export to “countries at risk”.

“Having a Syrian name on the board can be a problem for banks that fear international sanctions,” the report said.

After the outbreak of the Syrian civil war in 2011, Turkey adopted an “open door policy” for people fleeing the conflict, granting them “temporary protection” status.

Although many countries welcome the persecuted, Turkey is home to the world’s largest refugee population with 4 million refugees – over 3.7 million from Syria.

Turkey has made significant investments in social cohesion policies to enable Syrians to integrate smoothly into Turkish society.

In addition to 33,000 university students, more than half a million Syrian children are enrolled in schools across Turkey, according to UNICEF. They learn the Turkish language, as well as other disciplines.

The overall activity rate of Syrians in Turkey is 38% and Syrian entrepreneurs have started more than 20,000 businesses.

Although some Syrians are business owners or co-owners with Turkish nationals, a large number of Syrians in Turkey work in the service sector. According to United Nations figures, more than 130,000 work permits have been granted and more than 10,000 Syrian entrepreneurs have had the opportunity to set up a business in Turkey.

Ankara has so far spent around 40 billion dollars (274 billion Turkish liras) on Syrians in Turkey, while the European Union has provided only around 3 billion euros (3.34 billion dollars ) out of the 6 billion euros pledged – a gap that Turkey has been asking for for a long time.

The panel pointed out that the country generally offers the best opportunities for Syrian refugees in the region; however, the financial and public sectors are not used to working with migrants or refugees in general and it is difficult to harness their potential.

As a result, SMEs find it difficult to comply with regulations or access the Turkish market and do business with even other Turkish companies in the same industry, the report adds.

Spark Turkey – part of the NGO that operates in 14 regions in the Middle East, North Africa and Sub-Saharan Africa since its creation in 1994 – supports the development of the business plan of Turkish and Syrian entrepreneurs by providing support to education. and access to finance. Through collaborations with higher education and vocational training institutions, it also offers educational support to Syrian refugees in Turkey. It aims to meet the needs of the business world with the educational support provided to young people.

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