On June 27th this year, we will hold the first-ever Micro, Small, and Medium Enterprises Day celebration. Small- and medium-sized enterprises (SMEs) are the lifeblood of many economies around the world, and they play a major role in developing countries.
Formal and informal Micro, Small, and Medium-sized Enterprises (MSMEs) account for over 90% of all businesses and on average account for 60-70% of total employment and 50% of GDP.
To highlight the contributions of these enterprises, the UN General Assembly designated June 27 as the Micro-, Small, and Medium-sized Enterprises Day, recognizing the important role these enterprises play in sustainable development.
It is believed that Micro, Small, and Medium-sized Enterprises (MSMEs) are the first responders to societal needs. This type of enterprise has been found to be a major driver of poverty alleviation and development, helping to generate jobs and generate income across the globe.
As is true for many small and medium-sized businesses, MSMEs tend to employ a larger share of vulnerable sectors of the workforce, such as women, youth, and those from lower-income households. In some rural areas, MSMEs provide the only source of employment. Small and medium-sized businesses collectively make up the major source of income for the lower part of the income distribution.
Small- and medium-sized enterprises (MSMEs) should be the first responders to society’s needs and be the foundation for inclusiveness.
The MSMEs, however, are responsible for creating a large number of new jobs, and they are contending with many obstacles that they face day-to-day in their operations and to grow. Financing for small- and medium-sized businesses is regarded as a major obstacle that impacts small businesses disproportionately. Approximately between 200 million and 245 million businesses in the world, which do not have a loan or overdraft, but find access to funding as a constraint, according to the World Bank. More than 90% of businesses are small and medium-sized enterprises (MSMEs).
For informal businesses, financing is most restrictive because they are small in size and have lower productivity, but they still contribute significantly to the economy and to jobs. MSMEs can be found in 74% of all informal firms around the world, as well as 77% of all MSMEs in developing countries. With regards to their financing, unregistered firms are heavily reliant on informal sources, which although very important in providing financing to firms, are believed to lead to reduced growth and increased illegality.
A well-developed financial sector facilitates resource mobilisation and allocation, as well as risk management, which is instrumental in promoting private sector growth. A healthy financial system underpins economic growth, which, in turn, leads to more jobs.
The global economy presents an opportunity for both government and private sector decision makers to take an active role in micro, small, and medium-sized enterprise growth by encouraging legal, participation, and growth in international, regional, and national markets, such as through financing for all, such as microfinance and credit.
Through their efforts, the Sustainable Development Goals can be achieved. The United Nations has made an unequivocal call for innovation, creativity, and well-paid work for all, for both small and large businesses.
An important element of the implementation of the Sustainable Development Goals is assisting small and medium-sized businesses (SMEs) in key sectors of national economies gain access to financing (SDGs). Both 8.3 and 9.3 call for enabling small- and medium-sized enterprises to access financial services. Furthermore, SMEs are important for SDG 8 and SDG 9. (industry, innovation and infrastructure).
The celebration of the Day
In the spirit of the United Nations General Assembly’s invitation, all UN Member States, UN system entities, and international and regional organizations as well as civil society, including NGOs, academia, private citizens, and other relevant stakeholders, are encouraged to participate in this observance by publicly recognizing their role in helping to advance sustainable development.
By encouraging the Member States to support research presentations, policy discussions, practitioner workshops, and business owner testimonials from around the world, the declaration is also urging countries to assist with observance of the day.
