Venezuela: Seminar on financing for SMEs through the capital market

The International Seminar on Democratization of Capital: Financing SMEs through the Capital Market, organized by the Andean Development Corporation (CAF) and the Venezuelan National Securities Commission (CNV) was held on July 21 in the Antonio José de Sucre Auditorium. The event was targeted at actors in Venezuelan small- and medium-sized enterprises (SMEs), and the stock market.

This meeting of the SME actors with the Venezuelan capital market laid the bases for a continuous and fluid dialogue between the two sectors aimed at designing and implementing an action plan in the short and medium term to strengthen both sectors with a view to the economic and social development of the nation.

The event took place with the presence of Luis Enrique Berrizbeitia, CAF vice president & deputy CEO; Nelson Merentes, Venezuelan Finance Minister; Carlos Lerner, head of the SME department of the Buenos Aires Stock Exchange, Argentina; Wang Horng, commercial development manager of the Sao Paulo Stock Exchange, Brazil; and representatives from Venezuelan state agencies such as FONCREI, SOGAMPI, INAPYMI, BOLPRIAVEN, as well as the Caracas Stock Exchance and Factor AG Servicios Financieros.

The meeting was an ideal mechanism for getting to know international experiences, mainly Latin American, on initiatives and strategies for financing SMEs through the capital market; promoting the diffusion, implementation and development of SME Corporate Governance to facilitate financing of the sector; examining the possible limitations; getting to know participants’ opinions about possible courses of action, mechanisms and financial instruments; and forming a working group to prepare an action plan to develop the Venezuelan stock market for SMEs.

SMEs are the basic engine of a growing developing economy because they generate sustainable employment and stimulate innovation. International comparisons in the developed countries reveal that SMEs represent over 90% of companies, generate 40% to 50% of GDP, and employ over 60% of the labor force. However, despite their great economic and social importance, SMEs, as a group, face more obstacles to their development, including access to markets, technological barriers, shortage of technologists, and difficulties in obtaining loans from the financial sector.

This situation reveals the urgent need to create alternative mechanisms for financing SMEs. The capital market is one of the possibilities for contributing solutions to this problem.

Since interesting experiences already exist in countries like Argentina, Brazil, Peru and Colombia, it is worth studying the possibility of adapting similar methodologies to Venezuelan conditions.