24 June 2014
Speaking in a debate about supporting job creation in developing countries, Alok Sharma highlights the problem of access to finance and the importance of helping businesses from African countries to come and meet businesses at UK trade events.
Alok Sharma (Reading West) (Con): I, too, commend my hon. Friend for the enormous amount of work he does, not only on the Select Committee but elsewhere. Of course, he has huge knowledge of this subject and many developing countries. He talks about jobs in a wider sense. Does he agree that another key issue for many of these economies is access to finance? Of course, access to finance for businesses is a big issue in this country, but it is a particular issue in this context, too. Perhaps he will talk later in his speech about some of the issues—or some of the solutions that have been found—with improving access to finance for individuals who want to start businesses.
Jeremy Lefroy: My hon. Friend and the hon. Member for Upper Bann (David Simpson) have obviously read my notes in advance—either that or they are most prophetic—because I will come on to that subject in a moment. Jobs, in the widest possible sense, will need to bring in more than merely an income on which people can barely survive. The World Bank has set two goals for 2030: to eliminate absolute poverty, which is vital, and to promote inclusive growth by concentrating on the lowest-income 40% in each country. I commend the World Bank president, Dr Jim Yong Kim, on his relentless focus on that. He sees that we must not only eliminate absolute poverty, vital though that is, but raise the living standards of everybody, particularly those at the lowest end of the income scale.
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Alok Sharma: My hon. Friend has a huge amount of experience of working in Africa, and in some ways the continent is an untapped resource for business links. I will be speaking at the Afro Business Expo, which is taking place in the Thames valley in a few weeks and which I believe UK Trade and Investment is supporting. Does he agree that, as individual Members of Parliament, one of the things we can do is to encourage such events that enable businesses from African countries to come and meet businesses here? Such events will provide an opportunity for creating jobs not only in the UK but in developing nations.
Jeremy Lefroy: I absolutely agree with my hon. Friend. Such events are vital. The more connection we have with markets in the developing world, the more we can trade and invest—both ways, these days—and the closer our relationship, the better. That is why I welcome DFID’s focus on livelihoods and on bringing in British business. My right hon. Friend the Secretary of State took British businesses to Tanzania to help with development work in that country through enterprise. That is absolutely vital.
My hon. Friend the Member for Reading West (Alok Sharma) has already mentioned finance. Once someone wishes to start a business, or take a business on to the next stage, they soon find that the next obstacle is finance. Banks provide very little credit to businesses other than those that are well established and fairly large. One might think that that is a familiar refrain even in this country, but what is true of this country is far truer of developing countries, where it is almost impossible for anyone other than a fairly well established, medium to large-sized business to obtain much credit from banks. There are various reasons for that. Bank overheads are high, which means that minimum loans are often far greater than the loan required by a business because the banks need to generate enough income from the loan to sustain their overheads. Bank salaries in some developing countries are not far short of bank salaries in this country, certainly at branch level.
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Alok Sharma (Reading West) (Con): I, too, commend my hon. Friend for the enormous amount of work he does, not only on the Select Committee but elsewhere. Of course, he has huge knowledge of this subject and many developing countries. He talks about jobs in a wider sense. Does he agree that another key issue for many of these economies is access to finance? Of course, access to finance for businesses is a big issue in this country, but it is a particular issue in this context, too. Perhaps he will talk later in his speech about some of the issues—or some of the solutions that have been found—with improving access to finance for individuals who want to start businesses.
Jeremy Lefroy: My hon. Friend and the hon. Member for Upper Bann (David Simpson) have obviously read my notes in advance—either that or they are most prophetic—because I will come on to that subject in a moment. Jobs, in the widest possible sense, will need to bring in more than merely an income on which people can barely survive. The World Bank has set two goals for 2030: to eliminate absolute poverty, which is vital, and to promote inclusive growth by concentrating on the lowest-income 40% in each country. I commend the World Bank president, Dr Jim Yong Kim, on his relentless focus on that. He sees that we must not only eliminate absolute poverty, vital though that is, but raise the living standards of everybody, particularly those at the lowest end of the income scale.
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Alok Sharma: My hon. Friend has a huge amount of experience of working in Africa, and in some ways the continent is an untapped resource for business links. I will be speaking at the Afro Business Expo, which is taking place in the Thames valley in a few weeks and which I believe UK Trade and Investment is supporting. Does he agree that, as individual Members of Parliament, one of the things we can do is to encourage such events that enable businesses from African countries to come and meet businesses here? Such events will provide an opportunity for creating jobs not only in the UK but in developing nations.
Jeremy Lefroy: I absolutely agree with my hon. Friend. Such events are vital. The more connection we have with markets in the developing world, the more we can trade and invest—both ways, these days—and the closer our relationship, the better. That is why I welcome DFID’s focus on livelihoods and on bringing in British business. My right hon. Friend the Secretary of State took British businesses to Tanzania to help with development work in that country through enterprise. That is absolutely vital.
My hon. Friend the Member for Reading West (Alok Sharma) has already mentioned finance. Once someone wishes to start a business, or take a business on to the next stage, they soon find that the next obstacle is finance. Banks provide very little credit to businesses other than those that are well established and fairly large. One might think that that is a familiar refrain even in this country, but what is true of this country is far truer of developing countries, where it is almost impossible for anyone other than a fairly well established, medium to large-sized business to obtain much credit from banks. There are various reasons for that. Bank overheads are high, which means that minimum loans are often far greater than the loan required by a business because the banks need to generate enough income from the loan to sustain their overheads. Bank salaries in some developing countries are not far short of bank salaries in this country, certainly at branch level.
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