In honor of the crucial role played by micro, small, and medium-sized enterprises (MSMEs) in the global economy, the United Nations designated June 27th (2023) MSME Day. Worldwide, MSMEs account for 90% of businesses, 60 to 70% of employment, and 50% of GDP.
While there is no universally accepted definition of MSMEs, the number of employees is a commonly used indicator. And while small businesses may have as many as 500 employees, the International Finance Corporation (IFC) has estimated that 83 percent of all businesses were micro enterprises, having between 1 to 10 employees. If given the proper support, the UN states, MSMEs can promote innovation, create job opportunities, and contribute to economic growth. World MSME Day is one way to support these small businesses with many events organized to help MSMEs to exhibit their products and services, network with potential customers and investors, and to celebrate their success and raise awareness of their potential.
World MSME Day was first celebrated in 2018 and has since become an annual event. The 2023 theme – “Empowering MSMEs for a Sustainable Future” with the sub-theme, “Building a Stronger Future Together” – reflects the global commitment to achieving the U.N. Sustainable Development Goals (SDGs). MSMEs are considered indispensable to achieving these goals as they have the potential to promote sustainable and inclusive economic growth. Unfortunately, MSMEs tend to face several challenges, most notably limited access to finance, technology, and markets, which can inhibit their growth and development.
Addressing the Challenges that MSMEs Face
Access to Capital
Capital is an essential prerequisite to growth. The difficulties of getting access to loans for working capital keep many companies from being able to buy new equipment, hire new workers, or invest in new technologies. MSMEs have tended to rely on their own funds or family networks to launch and to stay afloat. To support their expansion solutions need to be found which provide access to capital and finance. One innovative approach is for financial institutions to set up policies and tools that translate the creditworthiness built by MSME owners as they pay their mortgages and utility bills into a meaningful framework for assessing risk when lending to MSMEs.
Access to Technology
Among the lessons learned from the COVID-19 pandemic is the importance of digital technologies for the survival and resilience of businesses. MSMEs that were able to adjust to the digital economy stood strong during the crisis. The 2023 World MSME Day will therefore highlight the role of digitalization and technology in empowering MSMEs. The topic was an important part of discussions during World MSME Day, emphasizing the need for MSMEs to adopt digital technologies to enhance productivity, access new markets, and streamline their operations.
Access to Markets
Despite their prominence in the business ecosystem, MSME participation in international trade has remained limited. Yet, the bulk of markets lie beyond a country’s borders. MSMEs struggle to find the information on how to enter foreign markets and to understand what can be cumbersome trade rules and regulations. Tools such as the Global Trade Help Desk – developed by UNCTAD, the WTO, and the ITC – provide a one-stop shop for access to trade data and practical information on markets of interest. Experienced trade attorneys can assist with finding cost-effective solutions to the barriers one encounters when importing and exporting. Given the high stakes, the WTO is placing increasing attention on increasing the participation of MSMEs in international trade.
Importance of World MSME Day
Raising awareness about the importance of supporting MSMEs is a significant objective of World MSME Day. In addition, governments, policymakers, and international organizations are encouraged to take concrete actions towards creating an enabling environment for MSMEs to thrive. This includes providing access to finance and technology, implementing policies and regulations that promote entrepreneurship, and facilitating market access for MSMEs. World MSME Day also aims to build partnerships and collaborations among key stakeholders. There must be a collaboration between governments, businesses, financial institutions, and civil society organizations to address the challenges faced by MSMEs and create an ecosystem that supports their growth and development.
I am a seasoned international trade and customs attorney, and policy adviser for various companies and governments with a demonstrated history of successfully developing and implementing sustainable and dynamic trade programs. I am experienced in creating partnerships with various business-support organizations to drive compliance and growth in the international market.