Our economy needs 'strong mid-market of native companies'
IRELAND needs to foster a strong "middle market" of indigenous companies with the same focus that has been applied to attracting foreign direct investment (FDI), a high- level business conference has been told.
Chief executive of the Irish Stock Exchange, Deirdre Somers, said the mid-market segment of companies with a turnover between €20m and €1bn are the backbone of the economy.
In Germany, such firms, often family-owned, account for one- third of the total economy, she said.
Healthy mid-market businesses can also provide a level of leadership in the wider economy, Ms Somers said.
She made the comments at the Funding for Growth conference, organised by the Stock Exchange in Dublin yesterday.
Joe Hogan, the founder of Irish technology company Openet, which employs 1,000 people, said business owners need to be encouraged not to sell to bigger rivals when they begin to reach significant scale.
"I would like to see the energy the Government spends on attracting FDI applied to pulling Irish businesses up," he said.
He also called on the Government to change capital gains tax rates, currently at 33pc, to encourage investment.
Eugene O'Callaghan, head of the National Pension Reserve Fund (NPRF) said there is a "hole in the middle" of the economy here compared to other countries, where a solid layer of domestically owned mid-size businesses has proved to be a buffer to volatility.
The NPRF has backed three new funds to support Irish small and medium enterprises (SMEs).
But the Secretary General of the Department of Finance, John Moran, said state supports, though needed today, are not a long-term solution for industry in Ireland.
Ultimately, a way must be found to match the need of savers to make a return with the needs of business for capital, he said.
The old model where banks were the default funder is changing here, and across Europe, Mr Moran added.
Bank of Ireland's Mark Cunningham, however, insisted his bank is open for business. Business are using less of their overdrafts than at any time for 10 years, he said.
Donald Pratt of retail group Avoca said that while he is happy with his bank, his business is at a disadvantage when it comes to the cost of debt.
Bigger companies can go to the market and get bonds with a lower annual drag on cash, but that option is shut for most Irish companies, he said.
Better access to finance would help his business and others to create jobs, he added.
If ministers were serious about the jobs crisis, they would address the issue, Mr Pratt said.