Mexico 2013 Blog: Backing Small Business in Mexico

Shortly after taking office, President Enrique Peña Nieto’s government recognized the role of small business in Mexico’s economy by creating a government agency dedicated to entrepreneurship. The website of the new National Institute of the Entrepreneur (INADEM) points out that micro-, small-, and medium-sized enterprises represent 99.8 percent of all jobs and 72 percent of employment in Mexico. After inking the decree to get INADEM off the ground, Peña Nieto declared that small businesses “constitute the heart of the nation's economic activity and are one of its greatest assets.”

Mexico already stood well positioned for new enterprises in Latin America; it ranked in the top five regionally both in terms of starting and conducting business, according to a 2012 World Bank report. The survey also placed it sixth when it comes to credit access—ahead of Argentina, Brazil, and Chile. Access to credit is a key part of starting a business, so the country is seeking new ways to build that access for small- and medium-sized enterprises. Here are some examples:

• Helping entrepreneurs offset franchise costs. Housed within the Secretariat of Economy, INADEM facilitates expanding credit access for SMEs by working with other government agencies and nonprofit organizations. For example, the institute is working with the Programa de Garantías, through which Mexican entrepreneurs can receive up to $162,000 to offset the costs of turning their businesses into franchises. Previously, this amount was limited to 50 percent of the initial cost of acquiring a franchise and could not exceed $20,000.
• Startup training. INADEM provides training resources for new and aspiring entrepreneurs. The organization Startup México works with INADEM, among other public and private organizations, to educate entrepreneurs on startup training, credit access, and assistance with building business capital. In 2012, approximately 1,300 Mexicans trained with Startup México.
• Increased funding for innovation. As of February 2013, the government’s National Council of Science and Technology (CONACYT) announced an increase from $150 to $230 million in annual funding for private-sector innovation projects. The program, which funded 522 projects last year, backs SMEs engaged in science and technology, as well as research by larger companies to enhance competitiveness. Total funding by CONACYT has increased by 18 percent in 2013, to $5.67 billion.