27 June marks Micro, Small and Medium-sized Enterprises Day, and governments worldwide — including here in Australia — are being given ideas on how to better support these businesses to grow.
Under the hashtag #MSMEDay19, the United Nations is urging everyone from governments to academia and, of course, the business community around the world to recognise the important contribution that these businesses play in the global economy.
This includes providing the bulk of jobs to the global workforce, including a source of employment for their owners, as well developing cutting-edge innovations across virtually every sector on earth and their ability to adapt quickly to changing events.
“Micro, small and medium-sized enterprises are vital in achieving the Sustainable Development Goals, in particular in promoting innovation, creativity and decent work for all,” the UN states on a dedicated page on its website.
“Efforts to enhance access to finance for SMEs across key sectors of national economies are an important element of implementation of the [UN’s] Sustainable Development Goals.”
The UN noted that access to finance is a “primary obstacle” for these businesses around the world, as is the identification of international growth opportunities, which it said tend to favour larger competitors.
SMEs deliver ‘disproportionate dividends’
The Switzerland-based International Trade Centre (ITC) released its SME Competitiveness Outlook 2019 report to coincide with Micro, Small and Medium-sized Enterprises Day.
It found that a $US1 trillion annual boost worldwide to investment inflows to SMEs would “yield disproportionate dividends in terms of progress towards the Sustainable Development Goals while also delivering healthy returns for investors”.
“Yet, less than 1 per cent of the tens of trillions of dollars that global asset managers have under management is currently invested in developing country SMEs,” it said.
The report added that such a feat is particularly achievable given the low interest rate environment in many, particularly Western, countries, where investors are “eager to find investment opportunities with higher returns”.
4 channels for boosting investment
The ITC’s report concluded by suggesting there are four key channels for helping to grow SMEs around the world.
These channels centre around:
- Embedding accelerators into innovation hubs in order to better connect seed and venture capital for start-ups.
- Online investment platforms, such as a greater use of crowdfunding platforms, particularly to reach SMEs in remote locations or those “with innovative business models”.
- Connecting investment promotion agencies directly with SMEs as a means of scaling up foreign direct investment.
- Enabling and encouraging financial institutions to bundle small business investments, with the report saying this “has the largest potential to scale up lending and insurance to SMEs because of its wide reach”.
Australia can do more
“We all know of the critical role that small business plays not just in Australia but across the globe,” said Andrew Conway, CEO of Australia’s Institute of Public Accountants (IPA).
“With some 75 per cent of our members servicing small business, or being small businesses in their own right, it is certainly worthy of celebration.”
Mr Conway said that there is plenty of scope here in Australia to improve regulatory frameworks so as to better support the growth of micro, small and medium businesses.
“Our Australian Small Business White Paper aims to create better policy outcomes to strengthen small business productivity which is essential for our economic prosperity and protection of the living standards we currently enjoy.”
That white paper, released last year, called for a number of reforms, including the introduction of supply chain efficiency initiatives and support for older firms to take up new efficiency-generating technologies, in order to improve productivity rates among Australian SMEs.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
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