Ireland needs to generate more homegrown wealth

If we are going to provide the social care services that people desire — and in many cases, deserve — we are going to have to ensure that there is in place a large cadre of wealth creators.

If we are going to provide the social care services that people desire — and in many cases, deserve — we are going to have to ensure that there is in place a large cadre of wealth creators.

A great example is that of Brian McCarthy, an individual who arrived in Killorglin as assistant manager at the local AIB branch. A decade later he set up Fexco to provide bureau de change services. In 2017, the company had annual revenues in excess of €200 million.

It is a mainstay of the south Kerry economy. It acquired and then recently sold — at a profit — a majority stake in Goodbody Stockbrokers and in 2018, it purchased London’s largest foreign exchange firm.

It has just announced the establishment of a new technology and research hub for start ups.

Fexco has made light of what is a fairly remote geographical location.

In recent decades, the country has — to a considerable degree — imported much of its prosperity, from the US, in particular.

There is really no need to list all the big name corporations who have established their European bases in this country.

One can pick holes in this model which is based — at least in part — on competitive tax rates and an accommodating regulatory system. However, what is clear is that foreign direct investment — or FDI — has been a great engine of job and wealth creation, bringing well-paid jobs to towns across the country.

We cannot be sure that we will be able to rely on this source of economic activity to anything like the same degree in the future.

We would be well advised to consider generating more of our wealth closer to home — and by this I mean, genuine wealth creation, not the property-based activity with which so many of us are familiar.

There is evidence that the recovery in place since 2013 has led to an upsurge in entrepreneurship.

According to Emma Quinn of the European Migration Network, Ireland ranks in sixth place in the most recent Global Entrepreneurship Monitor which measures levels of such activity across 20 European countries.

As many as three in every 100 Irish adults aged between 18 and 34 are actively engaged in the early stages of starting a business while one third of this cohort have gone ahead and started one. Some 17,000 start ups were registered in the year to last October.

This attests to a degree of confidence and self reliance out there. The big question is how many of those businesses can be taken to the next level where products and services can be taken into overseas markets.

According to the Global Enterprise Monitor, one-in-nine Irish entrepreneurs are engaged in promoting ideas that are medium or high tech related. High tech clusters in areas such as Fintech have emerged.

Enterprise Ireland has put together a programme called STEP or ‘Start Up Entrepreneur Programme’. The aim is to stimulate productive investment by attracting high potential start ups. Conditions are attached including a minimum investment of €50,000 and the creation of at least 10 jobs. The firm must have an Irish headquarters. The plan must be for a business that is scalable or innovative.

Over the five years to the end of 2018, 435 applications have been received under STEP, not all of them kosher. However, 155 permissions have been granted — a 30% success rate. There is a separate Immigrant Investor Programme with a minimum requirement of €1m.

Immigrants often make good entrepreneurs, apparently. This is the view of Michael O’Connor, founder of Cork BIC, a city-based company that works with high potential start ups. Cork BIC also runs a ‘business angel’ investment network focusing on the South West and Mid Regions. Last year, it did €17m worth of deals with early stage enterprises.

Back in the 1950s, the Government went out of its way to attract in businesspeople from overseas. It generally worked well as a strategy.

Nowadays, with a better educated workforce, we are better placed to ‘grow our own’, but immigrant entrepreneurs can serve to provide a real injection of entrepreneurial energy in the process opening up markets to Irish businesses.

We would be wise not to take our current prosperity — however imbalanced it may be — for granted. Ireland, as a stable advanced society with a robust legal system is well placed to host enterprises, but we would be well advised to ignore the siren calls of those who would aim to tax business wealth to the hilt.

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